Which Statement Is True Concerning a Static Budget Report

question 54

Multiple Choice

Which statement is true concerning a static budget report?

• A)It considers performance at numerous activity levels.
• B)It is appropriate in evaluating a manager's effectiveness in controlling fixed costs.
• C)It should be used when the actual level of activity is materially different from the master budget activity level.
• D)It is most effective when evaluating a manager's effectiveness in controlling variable costs.

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Definitions:

Output

The total amount of goods or services produced by a company, industry, or economic system.

Total Variable Costs

These are expenses that change in proportion to the activity of a business, such as costs for raw materials or production.

Output

The quantity of goods or services produced within a given period by a firm, industry, or economy.

Average Variable Costs

The total variable costs divided by the number of units produced, representing the variable cost per unit of output.