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:

Standard Error

A measure that describes the dispersion or variance of sampling distribution of a statistic, most commonly the mean, indicating the precision of an estimate.

Sample Size

The number of observations or entities included in a statistical sample, impacting the study's precision and results.

Mean Increases

A term used to describe the situation where the average value of a dataset or distribution shows an upward trend.

Standard Error

The standard deviation of the sampling distribution of a statistic, often used to measure the accuracy of the sample mean.