In Deciding Whether to Further Investigate a Cost Variance, Managers

question 119

Multiple Choice

In deciding whether to further investigate a cost variance, managers usually:

• A) Investigate all variances judged to be systematic in nature.
• B) Investigate all variances under a prescribed percentage limit.
• C) Investigate all variances associated with factory overhead spending, since total overhead for a firm is typically large.
• D) Investigate all variances over a given dollar amount or percentage.
• E) Investigate all flexible-budget but not volume-related variances.

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Definitions:

Selling Price

The amount of money for which a product or service is sold to customers.

Face Value

The original cost of a bond or the principal balance to be paid back at maturity, excluding interest.

Market Interest Rate

The prevailing rate at which interest is charged on loans and bonds in the broader financial market.

Bond Yield

The return an investor realizes on a bond, calculated by the coupon payments relative to the market price of the bond.