Question

Which of the following factors should NOT be considered when deciding whether to investigate a variance?

a. magnitude of the variance
b. trend of the variances over time
c. likelihood that an investigation will reduce or eliminate future occurrences of the variance
d. whether the variance is favorable or unfavorable

Answer 1

When deciding whether to investigate a variance, factors such as magnitude, trend, and likelihood of reducing future occurrences should be considered, but whether the variance is favorable or unfavorable should not be a factor.

Step-by-step explanation:

When deciding whether to investigate a variance, there are several factors to consider. However, the factor that should NOT be considered is whether the variance is favorable or unfavorable. This is because investigating a variance is not dependent on its direction but rather on the impact it has on the business processes.

The other factors that should be considered are:

1. Magnitude of the variance: It is important to assess the significance of the difference between the expected and actual outcomes.
2. Trend of the variances over time: Analyzing the trend can help identify patterns and potential underlying causes.
3. Likelihood that an investigation will reduce or eliminate future occurrences of the variance: If investigating the variance can lead to process improvements or prevent future deviations, it is worth considering.