Which of the Following Is a Concern of Using Prior

question 19

Multiple Choice

Which of the following is a concern of using prior performance as the starting point for developing budgets?

• A)This approach can foster a business-as-usual mentality.
• B)This approach may blind decision makers to the need for drastic changes in business by making them focus narrowly on small changes from the status quo.
• C)This approach can lead to ratcheting up performance expectations, but are less likely to ratchet down.
• D)Both A and B are concerns.
• E)A, B and C are concerns.

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Definitions:

Materials

Raw substances or components used in the manufacturing or production process.

Assembly Department

A division within a manufacturing facility where components are assembled into finished products.

First-In, First-Out Method

An accounting method for valuing inventory that assumes the first items placed into inventory are the first sold.

Manufacturing Activity

The process of converting raw materials into finished products through various stages such as assembly, machining, or processing.