If the Organization Is Making Good Progress Toward Achieving an Ideal

question 56

Multiple Choice

If the organization is making good progress toward achieving an ideal standard, its management may not need to:

• A) Modify its standards.
• B) Curtail spending on variable costs.
• C) Curtail spending on fixed costs.
• D) Review and revise the management accounting system.
• E) Take any corrective action when variances are reported.

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Definitions:

Expected Profit

The forecasted or anticipated earnings from an investment or business activity, considering potential risks and returns.

Current Cost

The price that would be paid for goods or services if purchased in the current market, as opposed to historical cost.

User Cost

The cost of using a durable good or asset, which includes depreciation, interest lost on funds used to buy the asset, and maintenance costs.

Nonrenewable Resources

Natural resources that cannot be replenished within a human lifetime, such as fossil fuels or minerals.