Materiality

question 308

Multiple Choice

Materiality:

• A) Is a standard for determining whether a financial event or issue must be reported.
• B) Is no longer part of GAAP.
• C) Is the reason EBITDA is now used.
• D) Is a physical technique for managing earnings.

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Definitions:

Volume Variance

A measure used in budgeting and accounting to show the difference between expected (budgeted) and actual sales volumes, affecting revenue or costs.

Direct Labor Time Variance

The difference between the estimated time to complete a task and the actual time taken, affecting cost management in manufacturing.

Direct Labor Rate Variance

The difference between the actual cost of direct labor and the expected (or standard) cost, calculated for a specific period.

Total Cost Variance

This refers to the difference between the budgeted or standard cost of production and the actual cost incurred.