Which of the Following Correctly Demonstrates the Comparison of the Four-Variance

question 16

Multiple Choice

Which of the following correctly demonstrates the comparison of the four-variance method of factory overhead analysis to the two-variance method of factory overhead analysis?

• A)The sum of the spending and budget variances in the four-variance method is equal to the controllable variance in the two-variance method.
• B)The sum of the budget, spending and efficiency variances in the four-variance method is equal to the controllable variance in the two-variance method.
• C)The sum of the spending, efficiency and volume variances in the four-variance method is equal to the controllable variance in the two-variance method.
• D)The budget variance in the four-variance method is equal to the controllable variance in the two-variance method.

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Definitions:

Purchasing Power Parity

An economic theory that compares different countries' currencies through a "basket of goods" approach, suggesting that exchange rates should adjust to equalize the price of identical goods in different countries.

Exchange Rate

The worth of a currency when converted into another, establishing the amount of one currency that can be swapped for a different one.

Exchange Rate

The value of one currency for the purpose of conversion to another, indicating how much one currency can buy of another.

Japanese Yen

The official currency of Japan, used as a medium of exchange and store of value.