Why Do Variances Have Little Meaning Until Their Causes Are

question 171

Multiple Choice

Why do variances have little meaning until their causes are identified?

• A)Because they cannot be calculated correctly until the causes are known
• B)Because identifying their causes allows managers to take correct action
• C)Because identifying their causes will immediately increase net income
• D)Because identifying their causes will immediately decrease net income

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Definitions:

Marginal Utility

The increased gratification or utility derived from the consumption of an extra unit of a good or service.

Energy Drink

A type of beverage containing stimulant compounds, usually caffeine, that is marketed as providing mental and physical stimulation.

Utility

Describes the complete fulfillment derived from the use of a product or service.

Demand Curve

A graph showing the relationship between the price of a good and the amount of the good that consumers are willing to purchase at that price, ceteris paribus.