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Why Is It Important to Complement Intuition with Systematic Study

question 65

Essay

Why is it important to complement intuition with systematic study in our attempts to understand behavior within organizations?


Definitions:

Variance Report

A document that compares actual financial performance to budgeted or planned financial performance, identifying differences.

Overhead Controllable Variance

The difference between the actual and budgeted overhead costs that management has control over, indicative of operational efficiency.

Overhead Volume Variance

The difference between the budgeted manufacturing overhead for the actual production volume and the actual manufacturing overhead incurred.

Two-Variance Analysis

An analytical technique in managerial accounting where variances between expected and actual performance are divided into a volume variance and a rate or efficiency variance.

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