The Emphasis on Variance Analysis and Its Use in Performance

question 76

Multiple Choice

The emphasis on variance analysis and its use in performance evaluation must be such that:

• A) managers focus on setting easy to attain targets
• B) larger unfavorable variances should result in negative consequences for personnel held accountable
• C) management should set targets that challenge but are reasonably achievable and require creativity and resourcefulness by personnel held accountable
• D) Management should stretch resources to meet goals even if continuous improvement and quality suffers

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Definitions:

T-Bill

Short-term debt obligations issued by the U.S. Treasury with maturities of one year or less, serving as a low-risk investment.

Maturity

The date on which the principal amount of a financial instrument becomes due and is repaid to the investor.

Face Value

The nominal or dollar value printed on a financial instrument, such as a bond or stock certificate, representing the amount to be returned to the holder at maturity.

German Stock Market

Refers to the stock market in Germany, primarily represented by the Frankfurt Stock Exchange, where shares of German companies are bought and sold.