A Static Budget Is Not Appropriate in Evaluating a Manager's

question 110

Multiple Choice

A static budget is not appropriate in evaluating a manager's effectiveness if a company has

• A) substantial fixed costs.
• B) substantial variable costs.
• C) planned activity levels that match actual activity levels.
• D) no variable costs.

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Definitions:

Growth Rate

The rate at which a company's earnings, revenue, or other financial metric increases on a yearly basis, expressed as a percentage.

Stock Market

A public market for the trading of company stock and derivatives at an agreed-upon price; it's a key economic indicator and a measure of a nation's economic strength.

Discount Rate

The interest rate used to discount future cash flows to their present value, often reflective of the cost of capital or rate of return required.

Beta

A measure of a stock's volatility in relation to the overall market. A beta greater than 1 indicates a stock is more volatile than the market, while a beta less than 1 suggests it is less volatile.