Which of the Following Is True of Variance

question 154

Multiple Choice

Which of the following is true of variance?

• A) Managers should interpret a favorable variance as "good news" or assume it means their subordinates performed well.
• B) A variance within an acceptable range is considered to be an "in-control occurrence" and calls for no investigation or action by managers.
• C) The purchasing manager secured a discount for buying in bulk with fewer purchase orders which results in unfavorable material price variance.
• D) Managers' performance must be evaluated solely on single variance.

---

Definitions:

Coupon Bond

A bond that offers interest payments to its holder at fixed intervals until maturity, at which point the principal amount is repaid.

Market Return

Market return refers to the total return on investment from a market index, which includes dividend payments and capital gains or losses.

Interest Semiannually

The payment of interest two times per year on a loan or bond.

Bond Covenant

Legal agreements between bond issuers and bondholders that specify terms and conditions to protect the interests of both parties.