Sales Results That Are Evaluated by a Static Budget Might

question 40

Multiple Choice

Sales results that are evaluated by a static budget might show
1. favorable differences that are not justified.
2. unfavorable differences that are not justified.

• A) 1
• B) 2
• C) both 1 and 2.
• D) neither 1 nor 2.

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Definitions:

Activity-Based Costing

An accounting method that assigns costs to products or services based on the activities required to produce them, aiming for more accurate cost allocation.

Idle Capacity

Unused production capability in a given period, often resulting in inefficiency and increased costs.

Supervisory Wages

Costs associated with the salaries of supervisory personnel, considered part of manufacturing overhead in production environments.

Activity-based Costing

Activity-based costing is an accounting method that assigns costs to products based on the activities they require.