Which of the Following Statements Is False

question 45

Multiple Choice

Which of the following statements is false?

• A) All else being equal, larger firms, because they are more diversified, have an increased probability of bankruptcy.
• B) To justify a takeover based on operating losses, management would have to argue that the tax savings are over and above what the firm would save using carryback and carryforward provisions.
• C) It is possible to combine two companies with the result that the earnings per share of the merged company exceed the premerger earnings per share of either company, even when the merger itself creates no economic value.
• D) When an acquirer buys a private target, it provides the target's owners with a way to reduce their risk exposure by cashing out their investment in the private target and reinvesting in a diversified portfolio.

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Definitions:

Machine-Hours

A measurement unit representing the amount of work a machine can perform in one hour, often used in manufacturing to allocate costs based on machine usage.

Variable Manufacturing Overhead

Variable manufacturing overhead consists of costs that vary with the level of production, such as indirect materials and utilities that increase with more production.

Machine-Hours

represent the total amount of time machines are operated in the production process, typically used as a basis for allocating manufacturing overhead costs.

Efficiency Variance

A metric that measures the difference between the actual resource usage and the expected usage, highlighting efficiency in resource utilization.