The Transaction Approach Is Difficult to Use Because

question 45

Multiple Choice

The transaction approach is difficult to use because

• A) transactions data are not typically as reliable as the data available for multiples analysis, especially when they are associated with a private firm.
• B) transactions involving the purchase or sale of an entire business in an industry tend to occur relatively infrequently and hence the data is not very timely.
• C) the terms of the transactions can be difficult to assess.
• D) All of the above.

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Definitions:

Materials Quantity Variance

The difference between the actual quantity of materials used in production and the expected quantity, which can affect costs.

Actual Price

The real price at which a transaction occurs, as opposed to an estimated or listed price.

Direct Materials

Raw materials that can be directly traced to the production of specific goods or services, reflecting in the cost of goods sold.

Materials Price Variance

The difference between the actual cost and the standard cost of materials used in production.