An Unfavorable Variance Is Conclusive Evidence of Poor Performance

question 106

True/False

An unfavorable variance is conclusive evidence of poor performance.

Comprehend the impact of economies and diseconomies of scale on firm costs.

Understand the calculation and implications of fixed, variable, and total costs.

Analyze the financial viability and economic profitability of a business investment.

Understand the theories explaining global inequality and economic development, including modernization, dependency, and world-systems theory.

---

Definitions:

Initial Cost

The purchase price of a fixed asset plus all costs to obtain and ready it for use.

Cash Payback Method

A capital budgeting technique that calculates the time required to recoup the cost of an investment, based on the cash inflows generated by the investment.

Net Cash Inflows

The difference between all cash received and all cash payments over a period, reflecting the net change in cash position.

Fixed Asset

Long-term tangible assets, such as machinery, buildings, and land, used in the operation of a business that are not expected to be consumed or converted into cash within a year.