Question

Which of the following statements is correct?

A. Random variances are typically large in amount.
B. Systematic variances are considered uncontrollable.
C. Most standard cost variances call for investigation and corrective action.
D. Random variances should typically not be investigated.
E. Most variances from ideal standards will be favorable.

Answer 1

Random variances are typically large in amount, standard cost variances call for investigation and corrective action, most variances from ideal standards will not be favorable.

Step-by-step explanation:

Out of the given statements, A, C, and E are correct.

A. Random variances are typically large in amount because they represent the unexplained variation in data.

C. Most standard cost variances call for investigation and corrective action because they indicate a deviation from the expected standards.

E. Most variances from ideal standards will not be favorable because ideal standards are the desired and targeted benchmarks.