Discretionary Assessment Methods Are Typically Highly Subjective and Rely Heavily

question 1

True/False

Discretionary assessment methods are typically highly subjective and rely heavily on the intuition of the decision maker.

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Definitions:

Machine-Hours

A measurement of the amount of time machines are run during production, often used as a basis for allocating manufacturing overhead.

Fixed Overhead Budget

A fixed overhead budget outlines the expected costs of fixed overheads, such as salaries and rent, that are not influenced by changes in production volume.

Volume Variance

The difference between the planned volume of output and the actual volume of output, which affects costs.

Fixed Manufacturing Overhead

Indirect manufacturing costs that do not vary with the level of production, including salaries of production supervisors, rent for the factory building, and depreciation of manufacturing equipment.