When Is a Static Budget Most Appropriate in Evaluating a Manager's

question 94

Multiple Choice

When is a static budget most appropriate in evaluating a manager's performance?

• A)when the actual costs incurred equal the amounts in the budget
• B)when the actual activity is less than the master budget activity
• C)when the company performed at the same activity level as the static budget level
• D)The static budget is not appropriate for evaluating managers.

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Definitions:

U.S. GAAP

The Generally Accepted Accounting Principles in the United States, which set the standards for financial reporting and accounting.

Seventy-Five Percent

A quantitative measure or threshold, often referenced in various contexts to signify a substantial majority of 75%.

LIFO Method

Last-In, First-Out method, an inventory valuation technique where the most recently produced or purchased items are the first to be used or sold.

Gross Profit

Gross profit is the financial measure calculated by subtracting the cost of goods sold from revenue, indicating the efficiency in production and pricing.