What Is One of the Results of Fixed Overhead Being

question 108

Multiple Choice

What is one of the results of fixed overhead being made up of many items?

• A) The fixed overhead spending variance is not meaningful.
• B) It is not possible to calculate a fixed overhead volume variance.
• C) The fixed overhead volume variance will always be unfavourable.
• D) A line-by-line comparison of budgeted costs with actual costs provides more information.

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Definitions:

Working Capital

The measure of a company's liquidity, efficiency, and its short-term financial health, calculated as current assets minus current liabilities.

Externalities

Costs or benefits that affect parties who did not choose to incur that cost or benefit, often related to environmental, public health, or economic activities.

Net Present Value (NPV)

A calculation used to assess the profitability of an investment, measuring the difference between the present value of its cash inflows and outflows.

Internal Rate of Return (IRR)

The rate of growth a project is expected to generate, calculated as the discount rate that makes the net present value (NPV) of all cash flows equal to zero.