If Management Is Making a Decision Under Certainty, the Certainty

question 26

Multiple Choice

If management is making a decision under certainty, the certainty is related to the __________ , making the final decision ____________.

• A)payoff amounts; unimportant
• B)states of nature; almost trivial
• C)decision alternatives; depending on the state of nature
• D)states of nature; important
• E)payoff amounts: almost trivial

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Definitions:

Labor Standards

Predetermined measures of the amount of labor time necessary for the completion of a task or project.

Variable Overhead

Costs that vary with the level of production or sales, such as utilities or commissions, but not directly tied to specific units.

Direct Labor-Hours

The total hours of labor directly involved in producing goods, used as a base to allocate labor costs to products.

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the standard cost of variable overhead allotted based on the activity level.