Which of the Following Statements Is True with Regard to Variances

question 15

Multiple Choice

Which of the following statements is true with regard to variances requiring investigation?
i. Favourable variances do not need to be investigated.
ii. Large variances should be investigated.
iii. Consistent trends in variances should be investigated.

• A) i
• B) ii
• C) i and ii
• D) ii and iii

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Definitions:

Direct Labor Cost

The total cost of wages paid to labor directly involved in the production of goods or services.

Manufacturing Overhead Cost

Expenses related to manufacturing that are not directly tied to a specific product, such as factory rent and utilities.

Selling Expense

Costs incurred to secure customer orders and deliver the finished product to the customer, including advertising and sales staff salaries.

Product Costs

Costs that are incurred to acquire or manufacture a product, including direct materials, direct labor, and manufacturing overhead.