Diversification Decisions by fiRms Involve the Following Key Issues

question 31

Multiple Choice

Diversification decisions by firms involve the following key issues:

• A)The attractiveness of the industry to be entered and the potential for competitive advantage
• B)The potential for the diversification to increase growth and reduce risk
• C)The opportunities for exploiting economies of scope in resources and capabilities
• D)The benefits of synergy relative to the costs or coordination.

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Definitions:

Variable Overhead Rate

Variable Overhead Rate is the portion of indirect manufacturing costs that varies in proportion to production volume or activity levels, such as utilities or raw materials.

Actual Production

The real quantity of goods or services produced during a specific period, as opposed to planned or projected quantities.

Fixed Factory Overhead Volume Variance

The difference between the budgeted and actual fixed overhead costs attributed to a variation in produced or achieved volumes of goods.

Actual Hours

The real number of hours worked by employees, often used in comparing to budgeted or standard hours for performance analysis.