Why do variances have little meaning until their causes are identified?
A)Because they cannot be calculated correctly until the causes are known
B)Because identifying their causes allows manages to take correct action
C)Because identifying their causes will immediately increase net income
D)None of these ans choices are correct

Question

Quizplus · Accepted Answer

Variances are simply deviations from expected performance, but without identifying the root causes, managers cannot take any corrective action to address the issue. Without corrective action, variances will continue to occur and can potentially have a negative impact on future performance. Therefore, identifying the causes of variances is crucial for effective decision-making and improving the overall performance of the business. Option A is incorrect because variances can still be calculated, but they lack meaningful information without their causes being identified. Option C is incorrect because identifying the causes of variances does not necessarily equate to an immediate increase in net income. Option D is incorrect because one of the options provided must be correct.

Why Do Variances Have Little Meaning Until Their Causes Are