A Favourable Variance

question 23

Multiple Choice

A favourable variance

• A)is an indication that the company is not operating in an optimal manner.
• B)implies a positive result if quality control standards are met.
• C)implies a positive result if standards are flexible.
• D)means that standards are too loosely specified.

Distinguish between changes in accounting estimates and errors, and understand their respective treatment in financial statements.

Classify events after the reporting period as adjusting or non-adjusting events and understand their impact on financial statements.

Understand how to calculate expected holding-period returns for stocks.

Familiarize with calculating variance and standard deviation of stock returns.

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Definitions:

Price Ceiling

A government-imposed limit on how high a price is charged for a product, intended to protect consumers by preventing prices from reaching excessively high levels.

Supply Curve

A graph that shows the relationship between the price of a good and the quantity of the good that producers are willing to supply.

Demand Curve

A representation that shows the quantity of a particular good or service that consumers are willing and able to purchase at various prices.

Government Intervention

Actions taken by the government to influence or directly control economic or market conditions.