Which of the Following Statements Is FALSE in Relation to Using

question 83

Multiple Choice

Which of the following statements is FALSE in relation to using the distribution rate to estimate a firm-specific gamma for dividend imputation?

• A)The distribution of taxable profits is dependent upon management's surplus cash needs.
• B)A firm can pay fully franked dividends, even in periods in which it does not pay corporate income tax.
• C)The known distribution rate of a particular firm should not be used; instead, an average of all firms in the economy should be substituted.
• D)If undistributed, excess franking credits are not lost, but rather can accumulate.

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Definitions:

Materials Price Variance

The difference between the actual cost of raw materials and the standard cost expected to be paid, reflecting changes in price.

Raw Materials Price Variance

A measure of the difference between the actual cost of raw materials and the expected (standard) cost.

Labor Efficiency Variance

The difference between the budgeted and actual hours worked, multiplied by the standard labor rate, indicating efficiency in labor usage.

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the expected (standard) variable overhead rate multiplied by the actual activity level.