If Budgeted and Actual Machine Hours Are Equal, Spending Variance

question 65

True/False

If budgeted and actual machine hours are equal, spending variance will always be nil.

Identify the strategies for managing net operating income differences between absorption and variable costing.

Understand the difference between absorption costing and variable costing.

Determine the unit product cost under both costing methods.

Analyze the impact of production and sales volume on net operating income.

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Definitions:

Coefficient Of Variation

A standardized measure of the dispersion of a probability distribution or frequency distribution, calculated as the ratio of the standard deviation to the mean.

Standard Deviation

A measure that quantifies the amount of variation or dispersion of a set of data values, indicating how much the individual data points differ from the mean.

Median

The middle value or point in a data set, where half the data lies above and half below it.

Empirical Rules

Statistical rules that allow for the determination of probability within a normal distribution, stating percentages of data that lie within certain standard deviations from the mean.