A Managerial Principle Stating That Control Is Enhanced by Concentrating

question 42

Multiple Choice

A managerial principle stating that control is enhanced by concentrating on the significant deviations from the expected result or standard is referred to as the principle of

• A)budgeting.
• B)concentration.
• C)progression.
• D)exception.
• E)standardization.

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Definitions:

Variable Costing

A bookkeeping approach that incorporates solely the variable costs of production (such as direct materials, direct labor, and variable manufacturing overhead) into the cost of goods sold while omitting fixed manufacturing overhead.

Contribution Format

A method of organizing the income statement where variable expenses are deducted from sales to show the contribution margin, highlighting the variable costs and fixed costs separately.

Income Statement

A financial document that provides an overview of a company's performance over a specific period, detailing revenues, expenses, and net earnings.

Net Operating Income

An indicator of a firm's earnings generated from its principal business activities, not accounting for interest and tax deductions.