When investigating overhead variances,management needs to determine whether cost increases were controllable or if the cost standard needs to be updated.

Question

Quizplus · Accepted Answer

When investigating overhead variances, management needs to analyze the causes of the cost increases and determine whether they were controllable or not. If the cost increases were due to factors beyond management's control, such as changes in the market or economic conditions, then the standard should be updated to reflect the new conditions. On the other hand, if the cost increases were due to management decisions or actions, then they should be addressed and corrected to avoid similar overruns in the future.

When Investigating Overhead Variances,management Needs to Determine Whether Cost Increases