Investor is considering using semi-variance instead of variance. State the argument in favour of using semi-variance instead of variance. Under what circumstance would the use of semi-variance not make any difference? a) b)

Investor is considering using semi-variance instead of variance. State the argument in favour of using semi-variance instead of variance. Under what circumstance would the use of semi-variance not make any difference? a) b)

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter8: Standard Costs And Variances

Section: Chapter Questions

Problem 3PA: What makes a variance favorable? Give an example of a favorable variance involving materials. What...

See similar textbooks

Related questions

Q: Why will the standard deviation not be a good measure of risk when returns are negatively skewed

A: The standard deviation of returns is a measure of the volatility of market returns and determines…

Q: Salaries of the office staff, advertising expense, and depreciation expense would be included in the…

A: Production Budget :— This budget estimates the number of units to be produced during the period.…

Q: Describe how the FIFO method is different from the weighted-average method.

A: FIFO and weighted average method are the accounting tool for the inventory valuation. Under FIFO,…

Q: Which of the following is false of the historical VaR? a. It is based on normal distribution of…

A: Ans. Historical VaR do makes use of Monte Carlo Simulation.

Q: What is the put-call ratio? What is it used for? What are considered high and low values and what do…

A: The question is based on the concept for indicators of the stock market performance. The Put-Call…

Q: How do you decide if the variance is favorable or unfavorable?

A: The discrepancy between budgeted and actual amounts is known as a "variance" in the accounting…

Q: b) Why are separate price and quantity variances computed?

A: Variances is a word used for finding out the difference between the actual and standard levels set…

Q: In a regression analysis, the variable that is being predicted is the a. Intervening variable O b.…

A: The variable that is attempted to clarify or anticipate is known as the the response variable,…

Q: Calculate the following and determine if variances are favorable

A: Compute the total standard material cost.

Q: conditions when ratio analysis cannot be an efficient method for prudent financial decision making.

A: Introduction Ratio Analysis is a decision making tool used by management to analyse and compare the…

Q: I can use the regression beta as my estimate of beta in a valuation. True or false

A: Beta refers to the measurement of the volatility of stock related to the market as a whole. When…

Q: xplain the shape of the Markowitz (that is, mean-variance) efficient frontier, specifically what…

A: Markowitz (that is, mean-variance) efficient frontier-It is also known as mean - variance model and…

Q: Why are separate price and quantity variances computed?

Q: When using the high-low method, should you base the high and low observations on the dependent…

A: Cost Function:Cost function represents the basic change comes in the total cost due to the change in…

Q: Define variance

A: Variance in statistics is the calculation of the distribution in an information source between the…

Q: This is is used to check the effect on the recommendations of a model if the estimates turn out to…

A: solution: concept In a what if analysis we try to answer the question of what if What if the value…

Q: Differentiate between variance analysis and sensitivity analysis

A: Managers of small businesses can benefit from both variance and sensitivity analyses when trying to…

Q: How does it compare with the NPV based on the WACC method? (Select the best choice below.)…

A: WACC can be used as a discount rate to calculate the net present value of future cash flows from a…

Q: How can the sales-quantity variance be decomposed further?

A: Sales quantity variance identifies the difference between budgeted contribution margin based on…

Q: (b) Explain the reasons why Carad Co would be interested in the material price planning variance and…

A: The variations between predicted and actual results of a manufacturing process or other commercial…

Q: Describe a common but misleading interpretation of the fixed-overhead volume variance. Why is this…

A: Flexible Budget: A flexible budget is a budget that is prepared for different levels of the…

Q: How do you find the standard quantity for efficiency variance?

A: Management should pay particular attention to those that are uncommon or noteworthy. Firms may…

Q: why is the variance added to the table

A: The volatility of the returns provided by a stock, portfolio or any other assets is measured through…

Q: TaskMaster Enterprises employs a standard cost system in which direct materials inventory is carried…

A: The variance is the difference between the actual and standard cost of production data. The variance…

Q: Comment on the statement “A favourable variance is always better than an adverse variance” by…

A: Variance is the difference between actual numbers and budgeted numbers. Variance can be favourable…

Q: Explain how you find the portion of the mean-variance-frontier that is the efficient frontier and…

A: There are two parts of portfolio one is return and another is risk.

Concept explainers

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary.

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.

Question

Investor is considering using semi-variance instead of variance.
State the argument in favour of using semi-variance instead of variance.
Under what circumstance would the use of semi-variance not make any
difference?
a)
b)

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

When might a favorable variance not be a good outcome?
When might an unfavorable variance be a good outcome?
Are all variances investigated? Why or why not?
What causes a favorable variance?
What is a variance?
What causes an unfavorable variance?
Define unfavourable variance.
“The direction of a variance (favorable or unfavorable) is irrelevant in decisions regarding whetheror not to investigate the variance.” Do you agree? Why or why not?
Which of the following is FALSE regarding variances? O A favorable variance, when it occurred, are debited to the related variance account. O Mathematically, an unfavorable variance has a positive value. O Favorable variances occur whenever actual prices or actual usage of inputs are lower than standard prices or standard usage. O A variance is the remaining portion after subtracting the standard cost from the actual cost. Next Previous
If two returns are positively related to each other, they will have a ________, and if they are negatively related to each other, the ______________. Group of answer choices positive covariance, covariance will be negative positive covariance, standard deviation will be negative negative covariance, covariance will be zero negative covariance, covariance will be positive This type of risk affects a large number of assets, each to a greater or lesser degree. Group of answer choices systematic risk unsystematic risk idiosynchratic risk principle of diversification True/False. The Dividend Discount Model can be applied to firms that do not pay dividends. Group of answer choices True False
How do you decide if the variance is favorable or unfavorable?
TaskMaster Enterprises employs a standard cost system in which direct materials inventory is carried at standard cost. TaskMaster has established the following standards for the prime costs of one unit of product. Direct Materials Direct Labor Standard Quantity 8 pounds 0.25 hour Standard Price $ 3.40 per pound $ 11.20 per hour Standard Cost $ 27.20 2.80 $ 30.00 During November, TaskMaster purchased 168,000 pounds of direct materials at a total cost of $588,000. The total factory wages for November were $58,000, 90% of which were for direct labor. TaskMaster manufactured 19,800 units of product during November using 148,500 pounds of direct materials and 5,160 direct labor-hours. Is the direct labor rate variance favorable or unfavorable?