The Stability Strategy Is Appropriate for All of the Following

question 92

Multiple Choice

The stability strategy is appropriate for all of the following circumstances EXCEPT

• A)useful in the short-run but can be dangerous if followed too long.
• B)most appropriate for reasonably successful corporations in a reasonably predictable environment.
• C)appropriate when the industry is facing modest or no-growth potential.
• D)appropriate when the industry is in decline.
• E)popular with small business owners who have found a niche and are happy with their success.

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Definitions:

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity levels, providing a more useful tool for performance evaluation.

Variable Costs

Costs that vary directly with the level of production or business activity. Examples include raw materials, packaging, and direct labor.

Fixed Costs

Fixed Costs are business expenses that remain constant regardless of the volume of goods or services produced, such as rent, salaries, and loan payments.

Favorable Volume Variance

A metric that indicates a company has produced or sold more than initially anticipated, leading to increased profitability.