A Limitation of Financial Budgets Is That They Can Hide

question 14

True/False

A limitation of financial budgets is that they can hide inefficiencies,if they are based solely on precedent rather than on periodic evaluation of circumstances and standards.

Identify and describe different types of costs associated with products and operations, such as product costs, period costs, and opportunity costs.

Understand cost behavior and how changes in production levels affect costs.

Calculate the total and per unit costs under different production levels.

Understand the concepts of manufacturing overheads, conversion costs, and how they relate to product costing.

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Definitions:

Satisficing Decisions

Solutions that aim for acceptable results rather than for the best or optimal ones.

Tactical Decisions

Short-term choices made to achieve specific objectives that are part of a larger strategic plan.

Heuristics

Shortcuts or “rules of thumb” that allow us to make judgments and decisions quickly and efficiently.

Rules Of Thumb

Simple, practical guidelines or principles derived from experience and used to make decisions or solve problems quickly.