Variances for Variable Costs Will Be Misleading When the Planned

question 23

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) calling all costs fixed.
• B) to use flexible budgeting.
• C) better prediction of output.
• D) to eliminate the budgeting process.

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Definitions:

WARP

stands for Weak Axiom of Revealed Preference, a principle in consumer theory that states if a consumer prefers bundle A to bundle B when both are affordable, then the consumer will not choose B when A is affordable.

Lender

A person, organization, or entity that provides funds to others under the agreement that the funds will be repaid, typically with interest, over a specified period.

Utility-Maximizing

The process or behavior of selecting the combination of goods and services that provide the highest utility or satisfaction to an individual, given their budget constraint.

Present Value

The worth at present of a future money amount or sequences of cash flows, applying a specified rate of return.