Which One of the Following Is a Suitable Way to Evaluate

question 24

Multiple Choice

Which one of the following is a suitable way to evaluate cost centres?

• A)Compare the actual profit generated with expected profit.
• B)Compare actual total costs with flexible budget data.
• C)Compare actual controllable costs with static budget data.
• D)Compare actual controllable costs with flexible budget data.

---

Definitions:

Committed Fixed Costs

Expenses that a company has an obligation to pay, regardless of the level of production or sales activity, such as rent, insurance, and salaries.

One-Year

A period of time consisting of 12 consecutive months.

Sunk Cost

A cost that has already been incurred and cannot be recovered.

Contribution Format

An income statement format that separates fixed and variable costs, showing contribution margin which is sales revenue minus variable costs.