A Direct Labour Efficiency Variance Cannot Be Caused by

question 85

Multiple Choice

A direct labour efficiency variance cannot be caused by

• A) producing fewer finished units than originally planned.
• B) poor quality raw materials.
• C) employee inefficiency.
• D) an out-of-date labour time standard.

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Definitions:

Accounting Break-even

The point at which total costs match total revenues, indicating that a business is neither making a profit nor a loss.

Net Present Value

The variance between the current worth of cash inflows and the current worth of cash outflows over a specific duration, employed to evaluate the profitability of an investment.

Discounted Payback Period

The length of time required for an investment’s discounted cash flows to equal its initial cost.

Accounting Basis

The method by which accounting transactions are recognized and recorded, such as cash basis or accrual basis accounting.