Consider the following statements about variance investigation:
I. Variance investigation involves a look at only unfavorable variances.
II. Variance investigation is typically based on a cost-benefit analysis.
III. Variance investigation is often performed by establishing guidelines similar to the following: Investigate variances that are greater than $X or greater than Y% of standard cost.
Which of the above statements is (are) true?
A) I only.
B) II only.
C) III only.
D) II and III.
E) I, II, and III.

Question

Quizplus · Accepted Answer

Variance investigation is not limited to unfavorable variances; it also considers favorable ones. It is indeed typically based on a cost-benefit analysis to determine if the investigation's potential benefits outweigh its costs. Guidelines for investigation often include thresholds based on dollar amounts or percentages, making statements II and III true.

Consider the Following Statements About Variance Investigation