A Favourable Variance That Is Significant in a Cost Report

question 99

Multiple Choice

A favourable variance that is significant in a cost report

• A)is a positive result for a manager.
• B)is a negative result for a manager.
• C)can be ignored especially if it is a minor amount.
• D)should be investigated along with any negative variances.

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Definitions:

Economies of Scale

The cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output decreasing with increasing scale.

Essential Raw Materials

Fundamental inputs necessary for the production of goods, often considered critical for a country's economy and security.

Patents

Legal rights granted by the government to inventors, giving them exclusive rights to their inventions for a certain period of time.

Inelastic Segment

A portion of the demand curve where consumers are relatively unresponsive to price changes, resulting in a steep slope.