A Correlation Coefficient of ________ Provides the Greatest Possible Risk

question 17

Multiple Choice

A correlation coefficient of ________ provides the greatest possible risk reduction to the firm.

• A) −2
• B) −1
• C) 0
• D) +1

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Definitions:

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the expected overhead based on standard rates.

Variable Overhead Efficiency Variance

The difference between the actual variable overhead incurred and the standard cost allotted for the actual production achieved, indicating the efficiency of utilizing variable resources.

Materials Quantity Variance

The difference between the actual quantity of materials used in production and the expected quantity, valued at standard cost.

Favorable

A term used in variance analysis indicating that actual costs were lower than budgeted or standard costs, leading to higher profits.