Distinguishing Between Controllable and Noncontrollable Costs on a Performance Report

question 3

Multiple Choice

Distinguishing between controllable and noncontrollable costs on a performance report may result in:

• A) an increase in the effectiveness of a cost management system.
• B) a decrease in goal congruent behavior by managers.
• C) an increase in the quality of performance information.
• D) an increase in feelings of blame by managers.
• E) an increase in the effectiveness of a cost management system and an increase in the quality of performance information.

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Definitions:

Projected ROEs

Estimated returns on equity, predicting future profitability based on company's equity investments.

Restricted Policy

A restricted policy typically involves limitations or controls set on certain actions or decisions within an organization, aiming to comply with regulations, reduce risk, or achieve specific goals.

Relaxed Policy

A financial strategy or policy that is less strict or rigid, often implying a more liberal approach to lending, investing, or managing assets.

Trade Credit

The arrangement between businesses to buy goods or services on account, paying the supplier at a later date.