The Idea Behind EVA Is That the Returns to the Company's

question 83

True/False

The idea behind EVA is that the returns to the company's stockholders and to its creditors should be less than the company's capital charge.

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Definitions:

Actual Cost

The actual expenses incurred in acquiring an asset or delivering a service, including all relevant expenditures without estimation.

Budgeted Cost

The estimated or planned amount of money allocated for a particular purpose or period of time.

Direct Materials Cost Variance

A measure that evaluates the difference between the actual costs of direct materials used in production and the standard costs.

Direct Materials Price Variance

Direct materials price variance is the difference between the actual cost of direct materials used in production and the standard cost, indicating how much more or less was spent than expected.