Which of the Following Is Not True Regarding a Target's

question 58

Multiple Choice

Which of the following is not true regarding a target's previous cash flows?

• A) They may serve as an initial base from which future cash flows may be estimated after accounting for other factors.
• B) It may be easier to estimate the cash flows to be generated by a target than to estimate the cash flows to be generated from a new foreign subsidiary.
• C) They are always good indicators of future cash flows.
• D) All of the above are true.

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Definitions:

Units

In business and accounting, units refer to the individual pieces or quantities of a product or service.

Variable Factory Overhead

Refers to the indirect, variable costs that change with the level of production output, such as utilities for the manufacturing plant.

Controllable Variance

The difference between the actual variable overhead costs and the budgeted variable overhead for actual production.

Direct Materials Quantity Variance

The difference between the actual quantity and the standard quantity of direct materials used in producing a product multiplied by the standard direct material price.