A Company Uses Sugar in Producing Its Product

question 89

Multiple Choice

A company uses sugar in producing its product. If the price of sugar doubles, which variance is directly impacted?

• A)Direct materials quantity variance
• B)Direct materials price variance
• C)Direct labor rate variance
• D)Direct labor efficiency variance

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Definitions:

Incremental Taxable Income

The additional amount of income that is subject to taxes, usually resulting from an increase in earnings or gains.

Tax Rate

The percentage at which an individual or corporation is taxed by the government on income or property.

After-Tax Discount Rate

The after-tax discount rate is the rate used to discount future cash flows back to their present value, accounting for taxes, and is crucial in evaluating the after-tax net present value of future cash flows.

Capital Budgeting

The evaluation of investment projects in terms of their potential to increase shareholder value through strategic long-term asset allocation.