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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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Investigating variances from standard is

  1. a. always done.
  2. b. done if the variance is inside an acceptable range.
  3. c. not done if the variance is expected to recur.
  4. d. done if the variance is outside the control limits.
  5. e. None of these.

To determine

Identify when variances are investigated by comparing with standards.

Explanation

Variance:

The amount obtained when actual cost is deducted from budgeted cost is known as variance. Variance is calculated to find whether the cost is over applied or under applied.

d.

Control limits that includes a lower limit and an upper limit, are maximum allowable deviation from the standard. The investigation of variance from standard is done if the variance moves beyond the control limits. Therefore, option d is the correct answer.

a...

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