The Production-Volume Variance Should Generally Not Be Calculated and Reported

question 47

Multiple Choice

The production-volume variance should generally not be calculated and reported for control purposes because, unless interpreted properly, it can:

• A) Distract top management by focusing on operational efficiencies/inefficiencies.
• B) Give information that only top management should have.
• C) Distort other variable-cost variances.
• D) Encourage overproduction by managers to achieve a favorable volume variance.
• E) Encourage underproduction by managers to avoid an unfavorable variance.

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Definitions:

Forgotten

relates to something that has been overlooked or is no longer remembered or considered.

Cooperative

Involving mutual assistance in working toward a common goal, emphasizing teamwork and collaboration.

Team Oriented

A mindset or approach that prioritizes collaboration and collective effort towards achieving a common goal.

Barriers

Obstacles that hinder progress or prevent the achievement of goals.