All of the Following Are True Regarding Variance Investigation Except

question 177

Multiple Choice

All of the following are true regarding variance investigation except

• A) the investigation should be undertaken only if the anticipated benefits are greater than the expected costs.
• B) managers must consider whether a variance will recur.
• C) it is difficult to assess the costs and benefits of variance analysis on a case-by-case basis.
• D) variances are not investigated unless they are large enough to be of a concern.
• E) every variance is investigated.

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Definitions:

Net Present Value

A method used to evaluate the profitability of an investment, calculating the difference between the present value of cash inflows and outflows over a period.

Discount Rate

The interest rate used in discounted cash flow (DCF) analyses to determine the present value of future cash flows.

Payback Period

The period needed to recoup the expenses of an investment.

Scrap Value

The estimated residual value of a fixed asset at the end of its useful life, often considered when calculating depreciation.