Which of the Following Is Not Correct

question 87

Multiple Choice

Which of the following is not correct?

• A) If the denominator level of activity and the standard hours allowed for the output of the period are the same, then there is no volume variance.
• B) If the denominator level of activity is greater than the standard hours allowed for the output of the period, then the volume variance is unfavorable.
• C) If the denominator level of activity is greater than the standard hours allowed for the output of the period, then the volume variance is favorable.
• D) The volume variance is the most appropriate measure of the utilization of plant facilities.

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Definitions:

WACC

Weighted Average Cost of Capital; a calculation that reflects the cost of a company's financing (debt and equity) weighted by the proportion of each financing source in the overall capital structure.

Tax Shields

Deductions and credits available to taxpayers that lower the total tax liability by reducing taxable income.

Equity Risk

The risk of loss arising from fluctuations in the values of equity investments.

Operating Activities

Business actions that relate to the company's day-to-day functions, contributing to the generation of revenue.