In Regards to Benchmarking,which of the Following Statements Is Incorrect

question 96

Multiple Choice

In regards to benchmarking,which of the following statements is incorrect?

• A) Benchmarking is the practice of comparing a company with other leading companies.
• B) The industry average is not a useful benchmark for evaluating a company.
• C) Providing common-size percentages in a graphical manner highlights differences.
• D) The two main types of benchmarks in financial statement analysis include benchmarking against the industry average and benchmarking against a key competitor.

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Definitions:

Unit Product Cost

The total cost incurred to produce, store, and sell one unit of a product, including direct materials, labor, and overhead.

Variable Costing

A financial accounting approach that incorporates only variable production charges (direct materials, direct labor, and variable manufacturing overhead) into the cost structure of products.

Unit Product Cost

The total cost to produce one unit of a product, including direct materials, direct labor, and allocated manufacturing overheads.

Absorption Costing

An accounting method that includes all manufacturing costs - direct labor, direct materials, and both variable and fixed overhead - in the cost of a product.