Normative Analysis

question 146

Multiple Choice

Normative analysis:

• A)addresses the question of whether a policy should be used.
• B)aims at determining only the economic consequences of a particular policy.
• C)does not depend on the analyst's values.
• D)focuses on the actual effects of a policy.

---

Definitions:

Standard Cost

A predetermined cost of manufacturing, which is often used in budgeting and variance analysis.

Budgeted Amount

The estimated financial expenditure or revenue for a specific period, often used as a plan or guideline for managing finances.

Overhead Volume Variance

The difference between the budgeted overhead costs and the actual costs incurred, due to changes in the level of production or activity.

Fixed Overhead

Fixed Overhead refers to the indirect costs of production that do not vary with the volume of production, such as salaries of managers, rent of factory, and depreciation of equipment.