The Actual Information Pertains to the Month of June

question 103

Multiple Choice

The actual information pertains to the month of June. As part of the budgeting process, Petrified Products Company developed the following master budget for June. The manager, Pete, is in the process of preparing the flexible budget and understanding the results.

-The PRIMARY reason for low operating profits in June was:

• A)the flexible budget variance for flexible (variable)costs.
• B)increased capacity-related (fixed)costs.
• C)a poor management accounting system.
• D)lower sales volume than planned.

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Definitions:

Capacity Utilization

The percentage of a country's production capacity that is actually being used over a certain period of time, indicating the overall economic activity and efficiency.

Labor Unemployment

A situation where individuals who are willing and able to work are unable to find employment, often measured by the unemployment rate.

Employment Discrimination

Unfair treatment of employees or job applicants based on race, age, gender, religion, national origin, physical or mental disability, or sexual orientation, among other factors.

Underemployment

Failure to use our resources efficiently. A situation in which workers are employed in positions requiring less skill and education than they have or other resources are not employed in their most productive use.