With Regard to Operational Risk Awareness, Which of the Following

question 403

Multiple Choice

With regard to operational risk awareness, which of the following best practices is incorrect?

• A) A report describing operational risks, the most significant incidents and corrective plans of action should be established on a quarterly basis.
• B) It is good practice to collect and analyze incidents and near-misses so as to set up preventive action plans for the future.
• C) Every time a report describing operational risks is produced, it should be provided to senior management.
• D) Whenever possible action plans should be put in place that mitigate operational risks that have been identified.

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Definitions:

Variable Overhead

Costs that fluctuate with the level of production or business activity, such as utilities or raw materials.

Rate Variance

The difference between the expected standard cost and the actual cost incurred, calculated for direct labor rate, overhead rate, or material price.

Standard Direct Labor-Hours

The estimated hours required to produce a units based on standard efficiency and productivity levels.

Labor Efficiency Variance

The difference between the actual hours worked to produce a good or service and the standard hours expected, multiplied by the standard labor rate.