The Budget for a Given Cost During a Given Period

question 2

Multiple Choice

The budget for a given cost during a given period was $80,000. The actual cost for the period was $72,000. Considering these facts, the plant manager has done a better-than-expected job in controlling the cost if: (CPA adapted)

• A) the cost is variable and actual production was 90% of budgeted production.
• B) the cost is variable and actual production equals budgeted production.
• C) the cost is variable and actual production was 80% of budgeted production.
• D) the cost is a discretionary fixed cost and actual production equals budgeted production.

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Definitions:

Expected Value

A statistical concept that calculates the weighted average of all possible values for a random variable.

Probabilities

A numerical assessment ranging from 0 to 1 that quantifies how likely an event is to take place.

Invest

To assign financial resources with the aim of achieving a return or profit.

Probability

A measure of the likelihood of a specific event or outcome occurring, often expressed as a ratio or percentage.