Variable Costs Are Important for Which Type of Relevant Cost

question 65

Multiple Choice

Variable costs are important for which type of relevant cost decisions?
I. Special order
II. Outsourcing
III. Keep or drop a product

• A) I and II only
• B) II and III only
• C) I and III only
• D) I, II, and III

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Definitions:

Quantity Variance

A measure used in budgeting and accounting to compare the actual quantity of materials or products used to the expected amount under standard costing.

Cost Variance

The difference between the expected cost of a project or production and the actual cost.

Price Variance

The difference between the actual price paid for something and its standard or expected cost.

Quantity Variance

The difference between expected and actual quantities used in production, affecting cost and efficiency.