The Use of Debt Is Called

question 4

Multiple Choice

The use of debt is called:

• A)operating leverage.
• B)production leverage.
• C)financial leverage.
• D)total asset turnover risk.
• E)business risk.

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Definitions:

Standard Cost

A predetermined cost of manufacturing, which is often used for budgeting and measuring performance.

Purchase Price Variances

The difference between the actual cost of purchased inventory and its standard or expected cost.

Currently Attainable Standard

This refers to a standard or benchmark that can be achieved under current operating conditions with reasonable efficiency.

Unfavorable Cost Variance

A variance that occurs when the actual cost exceeds the standard cost.