The Immediate Write-Off of Overhead Variances Is Used Because ________

question 105

Multiple Choice

The immediate write-off of overhead variances is used because ________.

• A) it is simpler
• B) the company has probably sold most of the goods produced during the period so prorating the variance to inventory accounts would not produce materially different results
• C) the extra overhead costs result from inefficiencies in the current period and therefore do not represent assets
• D) all of the above

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Definitions:

Income Elasticity

A measure of how much the demand for a good or service changes in response to a change in the income of consumers.

Demand Is Elastic

A situation where the quantity demanded of a product changes significantly with a change in its price.

Total Revenue

The overall amount of money earned by a firm from the sale of its products or services before any costs are subtracted.

Point Elasticity

A measure of elasticity that uses the slope measurement.