Proper Risk-Return Management Means That

question 14

Multiple Choice

Proper risk-return management means that:

• A) the firm should take as few risks as possible.
• B) consistent with the objectives of the firm,an appropriate trade-off between risk and return should be determined.
• C) the firm should earn the highest return possible.
• D) the firm should value future profits more highly than current profits.

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Definitions:

Fixed Overhead Volume Variance

The difference between the budgeted and applied fixed manufacturing overhead, based on the standard volumes expected to be produced.

Standard Quantity

The expected quantity of materials or inputs required for production under normal conditions.

Standard Hours Allowed

The amount of time that should be spent on producing a certain number of units under normal conditions.

Denominator Activity

A term used in cost accounting to refer to the level of activity used to allocate fixed costs to cost units.