The Total of the Deviations of Actual Returns from the Average

question 165

Multiple Choice

The total of the deviations of actual returns from the average return will:

• A) Always be positive and greater than zero.
• B) Sometimes be positive and sometimes be negative.
• C) Always be equal to zero.
• D) Always be greater than the average return.
• E) Be greater the larger the degree of volatility.

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Definitions:

Period Cost

Costs that are not directly tied to the production process and are instead expensed in the period they are incurred, such as selling, administrative, and other expenses.

Manufacturing Costs

The total expenses involved in making a product, including direct materials, direct labor, and factory overhead.

Absorption Costing

An accounting method that includes all manufacturing costs—direct materials, direct labor, and both variable and fixed manufacturing overhead—in the cost of a product.

Misleading

Presenting information in a way that creates a false impression or misconstrues facts, often to deceive.