A Favorable Variance

question 27

Multiple Choice

A favorable 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.

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Definitions:

Activity-based System

An activity-based system is a method of assigning costs to products or services based on the activities that go into producing them, aiming to provide more accurate cost information.

Resource Drivers

Factors that determine the consumption of resources within a business or organization.

Cost Object

An item, activity, or project for which a separate measurement of costs is desired.

Service Industries

Sectors that provide non-physical goods or services to consumers or other businesses.