The Gain from a Project Is Equally Likely to Have

question 2

Multiple Choice

The gain from a project is equally likely to have any value between -$0.15 million and +$0.85 million.What is the 99% value at risk?

• A) $0.145 million
• B) $0.14 million
• C) $0.13 million
• D) $0.10 million

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Definitions:

Direct Labor Rate Variance

The difference between the actual costs of labor and the expected (or standard) costs, based on the hourly wage rates times the number of hours worked.

Direct Labor Time Variance

The difference between the actual hours worked by employees at the standard rate and the expected hours at the standard rate, for manufacturing a product.

Total Cost Variance

The difference between the budgeted or standard cost of production and the actual cost incurred.

Direct Materials Price Variance

The difference between the actual cost of direct materials used in production and the standard cost, indicating cost management efficiency.