Which of the Following Is a Potential Example of the Risky

question 22

Multiple Choice

Which of the following is a potential example of the risky shift?

• A)A manager quit her secure job in a large company to start her own business even though she had to mortgage her house.
• B)Steve decided to take an elective course in statistics even though he wasn't very good at quantitative subjects.
• C)A drug company put a new drug on the market even though it was possible that the drug would provoke bad side effects.
• D)Three partners were uncertain about expanding their business.After discussing the matter, they decided to expand even though the economy was bad.
• E)The board of directors voted to proceed with the expansion even though it would cost $10 million more than originally planned.

---

Definitions:

Flexible Budgets

Budgets that adjust or flex according to changes in activity levels or other factors that influence operating expenses.

Unfavorable Variance

A situation where actual costs exceed budgeted or expected costs.

Efficiency Variance

The difference between the actual input used in production and the standard input that was expected to be used.

Spending Variance

The difference between the actual amount spent and the budgeted amount for a category or period, indicating over or underspending.