A Sub-Unit of an Organization Is Evaluated on the Basis

question 153

Multiple Choice

A sub-unit of an organization is evaluated on the basis of its ROI. If this sub-unit's sales and expenses both increase by $30,000, how will the following measures be affected?

• A) increase increase increase
• B) indeterminate increase decrease
• C) no change increase decrease
• D) no change decrease no change

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Definitions:

Spending Variance

The difference between the budgeted or planned amount of cost and the actual amount incurred.

Total Expenses

The cumulative amount of all costs and expenses incurred by a business during a specified reporting period.

Spending Variance

The difference between the actual amount of money spent and the budgeted amount for a particular cost category or department.

Planning Budget

A planning budget is used for guiding a company's spending and operational goals before the start of a financial period.