An Important Difference Between Financial Measures of Quality and Nonfinancial

question 108

Multiple Choice

An important difference between financial measures of quality and nonfinancial measures of quality is that ________.

• A) financial measures of quality tend to be useful indicators of future long-term performance, while nonfinancial measures have more of a short-term focus
• B) nonfinancial measures of quality tend to be useful indicators of future long-term performance, while financial measures of quality have more of a short-term focus
• C) nonfinancial measures are generally too subjective to have any long-term value, while financial measures are too
• D) nonfinancial measures are generally too subjective to have any short-term value, while financial measures are too

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Definitions:

Direct Labor-Hours

The number of hours spent by workers directly involved in the manufacturing of a product or delivery of a service.

Manufacturing Overhead

The indirect production costs that are not directly associated with the manufacturing of products, such as utilities and rent for the manufacturing facility.

Predetermined Overhead Rate

A computed rate used for applying overhead costs to products or job orders, calculated before the period begins based on estimated costs.

Machine-Hours

The total hours that machinery is operating during a specific period, often used for allocating manufacturing overhead costs.