The Chief Weakness with Using the Dollar Threshold Decision Rule

question 18

Multiple Choice

The chief weakness with using the dollar threshold decision rule to determine which variances to investigate is

• A) Although the dollar amount may be large it could be a very low percentage of total outlays for an input
• B) It would require investigation of small dollar variance that are a high percentage of the total outlay for an input
• C) It may allow expenses to over-run their budgets by large dollars amounts or percentages and not be examined
• D) It maximizes the number of line items that must be examined
• E) All of the above

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Definitions:

Foreign Marketplace

An external market outside of one’s own country where goods, services, and financial instruments are traded.

Customs Union

An agreement between two or more countries to remove trade barriers and reduce tariffs among them, and to establish a common external tariff against other countries.

Common External Tariff

A uniform tariff rate adopted by a customs union or common market on imports from countries outside the union.

Free Trade Area

A region where member countries have agreed to reduce or eliminate trade barriers, such as tariffs and quotas, among themselves.