How Do Managers Decide Which Variances Are Important Enough to Investigate

question 27

Multiple Choice

How do managers decide which variances are important enough to investigate?
I. By considering whether they are favourable or unfavourable
II. By calculating and investigating all possible variances
III. By considering whether it is large enough to justify investigation

• A) I only
• B) II only
• C) III only
• D) I and III only

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Definitions:

Owner's Rights

Legal rights conferred to owners, entitling them to use, enjoy, and dispose of their property as they see fit.

Strict Foreclosure

A legal process by which the secured lender obtains the title to the mortgaged property without the sale thereof, when the borrower fails to meet the obligations.

Deficiency

The difference between the amount owed on a loan and the amount recovered from selling the asset securing the loan if the latter is less.

Mortgagor

A mortgagor is an individual or entity who borrows money to purchase property and pledges that property as security for the loan.