In a Vertical Analysis of the Income Statement, the 100

question 172

Multiple Choice

In a vertical analysis of the income statement, the 100% amount is

• A) Net income
• B) Gross profit
• C) Operating income
• D) Net sales

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Definitions:

Direct Labour Hours

The total number of hours worked by employees directly involved in the production of goods or services.

Labour Efficiency Variance

The difference between the actual labor hours used and the standard labor hours expected to produce a certain level of output.

Standard Labour Rate

The predetermined or expected cost per unit of labor, used in budgeting and cost control.

Variable Overhead Efficiency Variance

The difference between the actual level of activity (direct labor-hours, machine-hours, or some other base) and the standard activity allowed, multiplied by the variable part of the predetermined overhead rate.