Vertical Analysis Compares a Line Item on the Balance Sheet

question 103

True/False

Vertical analysis compares a line item on the balance sheet to the same line item on the balance sheet in a prior period.

---

Definitions:

Normal Capacity

The average production or operating levels that a company can sustain under normal circumstances over a period.

Direct Materials Price Variance

The difference between the actual cost of direct materials and the standard cost, multiplied by the actual quantity purchased.

Units

A measure of quantity used to quantify the products, services, or resources dealt with in business operations.

Direct Labor Time Variance

The difference between the actual hours and the standard hours of direct labor spent producing a product multiplied by the standard direct labor rate per hour.