Variances for Variable Costs Will Be Misleading When the Planned

question 3

Multiple Choice

Variances for variable costs will be misleading when the planned output differs from budgeted output.A solution to this problem would be

• A)to use a stricter budgeting process.
• B)to use flexible budgeting.
• C)to better predict the final output.
• D)to allow more judgement involve in the budgeting process.

---

Definitions:

Sales Returns

Transactions where customers return previously purchased merchandise, resulting in a refund or credit.

Bad Debt Expense

An expense recorded to account for receivables that are not expected to be collected, reflecting credit losses in the financial statements.

Accounts Receivable

Outstanding payments from customers for goods or services a company has already delivered.

Average Collection Period

The average number of days it takes for a business to receive payments from its customers for invoices issued, indicative of the effectiveness of a company's credit and collection policies.