How Might Department Stores Best Protect Themselves Against the Risk

question 146

Multiple Choice

How might department stores best protect themselves against the risk of recession?

• A) Buy insurance policies that pay off when a recession occurs.
• B) Stand ready to go out of business if a recession occurs.
• C) Sell goods that are complements to one another.
• D) Sell both substitute and complement goods.
• E) Sell both normal and inferior goods.

---

Definitions:

Fixed Overhead Volume Variance

The difference between the budgeted fixed overhead and the actual fixed overhead incurred, due to changes in production volume.

Standard Cost

A predetermined cost of manufacturing an item, including direct materials, labor, and overheads, used for budgeting and performance evaluation.

Overhead Cost Performance Report

A document that compares the actual overhead costs incurred to the budgeted or standard overhead costs, for the purpose of monitoring and controlling these costs.

Efficiency Variances

Variances that occur when the actual performance deviates from the expected standards, often analyzed in terms of time, cost, and materials.