By Convention, Short-Term Financial Control Is Accomplished by All the Following

question 110

Multiple Choice

By convention, short-term financial control is accomplished by all the following except:

• A) Comparing actual to budgeted financial results.
• B) Calculating a series of cost and revenue variances at the end of the period.
• C) The use of flexible budgets and standard costs.
• D) Explaining the total operating-income variance for a given period.
• E) The use of productivity analysis.

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Definitions:

Manufacturing Overhead Costs

Indirect costs associated with manufacturing, which are not directly attributable to specific units produced, such as maintenance, utilities, and salaries of indirect labor.

Net Operating Income

Earnings from a company's core business operations, excluding deductions for interest and taxes.

Gross Margin

represents the difference between revenue and cost of goods sold divided by revenue, showcasing the percentage of sales that exceeds the cost of goods sold.

Arbitrary Allocation

The distribution of indirect costs to specific cost objects without a clear or direct basis, often based on convenience or convention rather than actual usage or benefits derived.