The Accounting for 3-Variance Analysis Is Simpler Than the 4-Variance

question 21

True/False

The accounting for 3-variance analysis is simpler than the 4-variance analysis, but some
information is lost because the variable and fixed overhead spending variances are combined
into a single total overhead spending variance.

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Definitions:

Compound Interest

The addition of interest to the principal sum of a loan or deposit, where interest also earns interest from then on.

Simple Interest

Simple interest is interest calculated only on the principal amount, or on that portion of the principal amount which remains unpaid.

Present Value

The present value of a sum of money or series of cash flows expected in the future, discounted at a certain rate of return.

Amortized Loan

A loan repaid in equal periodic amounts (or “killed off” over time).