Which of the Following Statements Regarding Variances Is True

question 18

Multiple Choice

Which of the following statements regarding variances is true?

• A)All the statements are true
• B)Variance calculations need to be made when budgeted costs are used to allocate indirect costs.
• C)Variances arise when an entity over estimates the expenditure level of indirect costs assigned to the cost pool or the expected usage of the cost driver.
• D)Variances arise when an entity underestimates the expenditure level of indirect costs assigned to the cost pool or the expected usage of the cost driver.

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Definitions:

Call Option Contract

A financial contract that gives the buyer the right, but not the obligation, to buy an asset at a specified price within a specific timeframe.

Underlying Asset

The financial asset upon which a derivative instrument, such as an option or a futures contract, is based.

Floating-Rate Debt

Floating-rate debt is a type of loan or security that has a variable interest rate, which adjusts periodically based on a benchmark or index rate.

Market Value

The current price at which an asset or service can be bought or sold in a public market.