Which of the Following Is Not True About the Framework

question 81

Multiple Choice

Which of the following is not true about the framework for judging performance?

• A)Budgets enable a company's managers to measure actual performance against predicted performance.
• B)A limitation of past results often incorporates past mistakes and substandard performance.
• C)Future conditions can be expected to differ from the past.
• D)The budget is not the only benchmark companies use to evaluate past performance.
• E)Using only the budget fails to create an incentive for subordinates to set targets that are relatively easy to achieve.

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Definitions:

Total Revenue

The overall revenue that originates from a company's core operations, including the sale of its products or services.

Average Fixed Cost

The total fixed costs of production divided by the quantity of output produced, which decreases as production increases.

Average Total Cost

The total cost of production divided by the number of units produced, representing the average cost per unit of output.

Average Variable Cost

The total variable costs (costs that change with production volume) divided by the quantity of output produced.