Which of the Following Factors Should Not Be Considered When

question 55

Multiple Choice

Which of the following factors should not be considered when deciding whether to investigate a variance?

• A)Absolute or relative magnitude of the variance.
• B)Trend or pattern of the variance over time.
• C)Chance that an "out-of-control" situation can be corrected.
• D)Cost of investigating the underlying production process.
• E)Whether the variance is favorable or unfavorable.

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Definitions:

Accounting Period

A specific time period for which financial statements are prepared, such as a month, quarter, or year.

First-In, First-Out

Another explanation: An accounting principle for valuing inventory where older stock is sold or used first before newer inventory.

In Process

Relating to materials or products that are in the course of being manufactured but are not yet completed.

Equivalent Units

A concept used in process costing that converts partially completed units into a number of fully completed units.