The Tendency for People to Base Their Judgments on Information

question 97

Multiple Choice

The tendency for people to base their judgments on information that is readily available to them, although it might not be accurate, is called:

• A) a bias toward implicit favorites.
• B) an escalation of commitment.
• C) a representativeness heuristic.
• D) the availability heuristic.

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Definitions:

Volume Overhead Variances

The difference between the expected (budgeted) overhead costs based on standard volume and the actual overhead costs incurred.

Flexible Manufacturing Budget

A budget that adjusts to changes in the volume of production, providing variable costs based on different levels of activity.

Standard Cost Accounting System

A standard cost accounting system estimates the cost of production in advance, using standard costs for materials, labor, and overhead for cost control and performance evaluation.

Direct Labor Payroll

The total cost of wages and benefits paid to employees who are directly involved in the production of goods or delivery of services.