The Only Variances That Should Be Investigated Are Those for Which

question 128

True/False

The only variances that should be investigated are those for which the expected benefits of correction exceed the costs of investigating and correcting.

---

Definitions:

Fixed Manufacturing Overhead

The portion of manufacturing costs that do not vary with the level of production, such as salaries of supervisors and rent for factory buildings.

Variable Costing

A costing method that includes only variable production costs in the cost of goods sold, excluding fixed manufacturing overhead.

Absorption Costing

A method of product costing that captures all costs associated with manufacturing a product, including overhead expenses.

Variable Production Costs

Variable production costs fluctuate with the level of production output and include expenses like raw materials and labor directly tied to the production process.