Managers Investigate

question 50

Multiple Choice

Managers investigate:

• A) All variances
• B) All unfavourable variances
• C) Variances they consider important
• D) Variances that are reported in the financial statements

---

Definitions:

Step-Down Method

An indirect method of cost allocation that allocates costs of service departments to producing departments in a sequential manner.

Service Department Cost Allocation

The process of assigning indirect costs from service departments (like maintenance or HR) to producing departments based on their usage of services.

Step-Down Method

The step-down method is an accounting technique used to allocate service department costs to production departments, often in a sequential manner that recognizes service departments' interdependencies.

Direct Method

A method of computing the net cash provided by operating activities in which the income statement is reconstructed on a cash basis from top to bottom.