Question

Which of the following statements is false?

O variance analysis enhances responsibility accounting.

O standard costs (e.g., how much should be paid for each unit of input) are benchmarks for measuring performance.

O a variance is the difference between the budgeted amount and actual amount.

O managers should investigate only unfavorable variances.

Answer 1

The false statement is that managers should investigate only unfavorable variances. In variance analysis, managers should investigate both favorable and unfavorable variances. Variance analysis enhances responsibility accounting, and standard costs are benchmarks for measuring performance. The last one option is true.

Step-by-step explanation:

The false statement is that managers should investigate only unfavorable variances. In variance analysis, managers should investigate both favorable and unfavorable variances. A variance is the difference between the budgeted amount and actual amount, so it is necessary to analyze both positive and negative variances to understand the reasons behind the deviations from the budget.

Variance analysis enhances responsibility accounting by assigning responsibility for the variances to the appropriate individuals or departments. Standard costs are benchmarks for measuring performance and help in identifying deviations from expected costs, enabling managers to take corrective actions.

Answer 2

The false statement is that managers should investigate only unfavorable variances. In variance analysis, managers should investigate both favorable and unfavorable variances. Variance analysis enhances responsibility accounting, and standard costs are benchmarks for measuring performance. The last one option is true.

Step-by-step explanation:

The false statement is that managers should investigate only unfavorable variances. In variance analysis, managers should investigate both favorable and unfavorable variances. A variance is the difference between the budgeted amount and actual amount, so it is necessary to analyze both positive and negative variances to understand the reasons behind the deviations from the budget.

Variance analysis enhances responsibility accounting by assigning responsibility for the variances to the appropriate individuals or departments. Standard costs are benchmarks for measuring performance and help in identifying deviations from expected costs, enabling managers to take corrective actions.