The Economic Impact of the Inability to Reach a Target

question 7

Multiple Choice

The economic impact of the inability to reach a target denominator level of activity would best be measured by which of the following?

• A) The amount of the volume variance.
• B) The contribution margin lost by failing to meet the target denominator level of activity.
• C) The amount of the fixed overhead budget variance.
• D) The amount of the variable overhead efficiency variance.

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Definitions:

Revoking

The action of withdrawing, canceling, or annulling something previously granted, such as a privilege, right, or contract.

Offer

A proposal by one party to enter into a contract upon specified terms, subject to acceptance.

Postbox Rule

A principle in contract law where an offer is considered accepted the moment the acceptance is sent, rather than when it is received by the offeror.

Mail

The system of transporting documents and other small packages through an organization dedicated to this task, traditionally utilizing physical delivery but also electronic means.