Net Cash Build Occurs When the Sum of Cash Flows

question 31

True/False

Net cash build occurs when the sum of cash flows from operations and investing is negative.

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Definitions:

Labour Efficiency Variance

A metric that measures the difference between the actual labor hours used in production and the standard or expected hours, often indicating labor performance.

Variable Overhead

Indirect production costs that fluctuate with the level of production output, such as utilities for the manufacturing plant.

Labour Rate Variance

The difference between the actual cost of direct labor and the expected (or standard) cost, based on the standard rate times the actual hours worked.

Flexible Budget

A budget that adjusts or flexes with changes in the volume or activity level, allowing for more accurate budgeting and analysis.