Risk Needs to Be Analyzed Using Models in Order to

question 26

Multiple Choice

Risk needs to be analyzed using models in order to

• A) make decisions better than those based on informed guesses
• B) obtain a feasible solution
• C) obtain an optimal solution
• D) confound the decision-making process

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Definitions:

Labor Rate Variance

The difference between the actual hourly labor cost and the standard or budgeted hourly labor cost, multiplied by the total hours worked.

Materials Quantity Variance

The variance between the real amount of materials consumed in the production process and what was anticipated, calculated by the standard cost for each unit.

Materials Price Variance

Difference between the actual cost of material and the standard cost multiplied by the amount of material purchased.

Cash Account

An account reflecting the amount of cash a company or individual has available.