A Favorable Cost Variance of Significant Magnitude

question 122

Multiple Choice

A favorable cost variance of significant magnitude:

• A) Is likely the result of exceptional planning.
• B) May lead to future improvements in production.
• C) Is strong evidence of excellent operating performance.
• D) Indicates tight financial control.
• E) Does not need to be investigated as to its underlying cause (because it is "favorable").

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Definitions:

Mid-ocean Ridge

An underwater mountain range, formed by plate tectonics, that encircles the globe and is the site of seafloor spreading.

Oceanic Trench

A deep, narrow depression in the ocean floor, often formed by the subduction of one tectonic plate beneath another.

Ocean-continent Convergent

A tectonic boundary where an oceanic plate collides with a continental plate, often forming mountain ranges.

Continental Rift

A low trough or series of troughs bounded by normal faults, especially where two parts of a continent begin to rift apart.