Which of the Following Is a Limitation of Using Past

question 25

Multiple Choice

Which of the following is a limitation of using past performance as a basis for judging actual results?

• A) It does not account for productivity increases over the periods.
• B) It increases the incentive for managers to introduce budgetary slack.
• C) It assumes inefficiencies of previous periods without considering possible efficiencies of the budget period.
• D) It increases the tendency of senior managers exaggerating changes in future conditions as opposed to changes in current conditions.

Understand the differences between single price profit maximization and perfect price discrimination.

Identify and calculate deadweight loss in different market structures.

Understand the effects of regulatory policies on monopolistic markets.

Calculate profit under different pricing strategies and market structures.

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Definitions:

Average Cost

A calculation that divides the total cost of goods available for sale by the total units available for sale, offering a way to determine the cost of an item's inventory.

First-In, First-Out

An inventory valuation method where the oldest inventory items are recorded as sold first, used in both accounting and inventory management.

Last-In, First-Out

An inventory valuation method where the most recently produced items are the first to be expensed, often used in industries where inventory items are indistinguishable.

Lower-Of-Cost-Or-Market

The lower-of-cost-or-market rule is an accounting principle requiring companies to record the cost of inventory at the lower value between its original cost and current market price.