Operating, Random and Planning Variances Are All Examples of Divergence

question 27

True/False

Operating, random and planning variances are all examples of divergence from actual performance compared to budgeted performance.

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Definitions:

Economic Profits

The difference between total revenue and total costs, including both explicit and implicit costs, indicating the profitability of a firm beyond normal returns.

Quantity of Resources

The total amount of inputs available for the production process, including labor, capital, land, and raw materials.

Price-Taker Market

A market situation in which individual buyers or sellers have no influence on the price of a product, often due to the product being completely standardized and numerous participants.