In the Absence of Full and Accurate Information, People Often

question 109

Multiple Choice

In the absence of full and accurate information, people often make decisions based on whatever information is most easily retrieved from memory, even though this information may not be accurate. This process of decision-making is called ________.

• A) the availability heuristic
• B) compensatory modeling
• C) the representativeness heuristic
• D) hill-climbing

---

Definitions:

Standard Labor Rate

The predetermined hourly wage rate used in cost accounting to calculate labor costs.

Standard Hours Allowed

The number of hours that should have been worked for the actual production achieved, based on pre-established standards.

Standard Costing System

A cost accounting method that assigns a fixed cost to inventory and measures variances against actual production costs to manage business expenses.

Labor Efficiency Variance

The difference between the actual hours worked and the standard hours expected, multiplied by the standard labor rate, indicating efficiency in labor usage.