Which of the following statements is incorrect? Choose One:

a. In deciding whether to investigate a variance, managers should not consider the materiality of the variance.

b. A material variance is one that will influence stockholder's investment decisions.

c. The primary advantage of a standard cost system is to price products consistently.

d. None of these answers is correct.

Question

Social Studies

Guest

6 January, 14:08

Which of the following statements is incorrect? Choose One:

a. In deciding whether to investigate a variance, managers should not consider the materiality of the variance.

b. A material variance is one that will influence stockholder's investment decisions.

c. The primary advantage of a standard cost system is to price products consistently.

d. None of these answers is correct.

+4

Answers (1)

Know the Answer?

Malcolm · Answer 1

The correct option is B, a material variance is one that will influence stockholders investment decisions

Explanation:

An information is material if its misstatement or omission from the financial reports influences the decisions taken by stakeholders while relying on the reports.

Such omission or misstatement applies in financial reporting not management accounting which deals with information that are internal to the business, hence material variance stems from management accounts which are not being used by shareholders in making their buy, sell or hold decisions.

Option A is correct as how material (significant) or immaterial (insignificant) a variance should be considered in deciding whether it is worthy of investigation or not

Option C is also correct as standard costing provides a basis for consistency in cost determination.