Which of the Following Statements Regarding Trade-Offs Among Variances Is

question 76

Multiple Choice

Which of the following statements regarding trade-offs among variances is true?

• A) Managers generally do not need to consider trade-offs in variance analysis
• B) Managers may sometimes make trade-offs between favorable and unfavorable variances
• C) Unfavorable direct material price variances often lead to unfavorable direct labor efficiency variances
• D) Favorable direct material price variances often lead to favorable direct material efficiency variances

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Definitions:

Additional Revenues

Extra income generated from sources outside of the company's main business operations.

Sunk Cost

Costs that have already been incurred and cannot be recovered or reversed.

Incremental Overhead Costs

Additional overhead expenses directly resulting from a specific business decision or activity.

Relevant Costs

Costs that should be considered when making decisions because they will be affected by the decision.