Which of the Following Cognitive Biases Occurs When Decision-Makers Allocate

question 18

Multiple Choice

Which of the following cognitive biases occurs when decision-makers allocate even more resources to a project after they receive feedback that the project is failing?

• A) Prior hypothesis bias
• B) Reasoning by analogy
• C) Illusion of control
• D) Escalating commitment
• E) Representativeness

Identify and analyze activity and spending variances in performance reports.

Determine how changes in activity levels affect variable costs, fixed costs, and overall budget performance.

Understand the role of cost drivers in budgeting and how they contribute to budget accuracy.

Calculate budgeted costs based on different cost formulas and activity measures.

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Definitions:

Standard Costs

The predetermined expenses for the production of a product or operation of a service, used as a baseline to measure performance.

Direct Labor Wage Variance

The difference between the expected cost of direct labor for production and the actual cost incurred.

Direct Labor Efficiency Variance

The difference between the actual hours worked and the standard hours expected, multiplied by the standard labor rate.