A Static Budget Report

question 23

Multiple Choice

A static budget report

• A) shows costs at only 2 or 3 different levels of activity.
• B) is appropriate in evaluating a manager's effectiveness in controlling variable costs.
• C) should be used when the actual level of activity is materially different from the master budget activity level.
• D) may be appropriate in evaluating a manager's effectiveness in controlling costs when the behavior of the costs in response to changes in activity is fixed.

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Definitions:

Service Department Charge Rate

The rate at which internal service departments charge other parts of the same organization for the services rendered.

Accounting Department

The division within a company responsible for managing financial records, ensuring compliance with accounting standards, and producing financial statements.

Service Department Cost

Involves the expenses associated with the departments that do not directly produce goods but provide support or services to other departments within an organization.

ABC Corporation

A hypothetical or generic naming convention used to represent a company in examples or case studies.