When Analyzing Period End Variance Reports, If a Variance Amount

question 21

Multiple Choice

When analyzing period end variance reports, if a variance amount is small the manager should

• A)consider the variance within normal terms and ignore it for that period.
• B)combine all such small variances and if they show a larger variance, investigate them then.
• C)consider investigating the variance as there may be undetected swings in the intervening period that require investigation.
• D)focus his or her attention on more material variances.

---

Definitions:

Manufacturing Activities

Tasks and processes involved in converting raw materials into finished goods, often including assembly, fabrication, and quality control.

Time Variance

The difference between the actual time taken to complete a task and the estimated time planned for it.

Direct Labor Hours

The total number of hours worked directly on a product or service by employees, usually used to allocate manufacturing costs.

Price Variances

Differences between actual and expected or standard costs that are attributed to changes in the price of goods or services.