A Limitation of Comparing a Company's Performance Against Actual Results

question 67

Multiple Choice

A limitation of comparing a company's performance against actual results of last year is that

• A)it includes adjustments for future conditions.
• B)feedback is no longer a possibility.
• C)the benchmark may be unrealistic.
• D)past results can contain inefficiencies of the past year.
• E)the budgeting time period is set at one year.

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Definitions:

Technology

The application of scientific knowledge for practical purposes, especially in industry and in our daily lives to solve problems or create useful products.

Inventory

A company's merchandise, raw materials, and finished and unfinished products which have not yet been sold. These are considered liquid assets.

Standard Price

A predetermined cost or selling price of a product or service, often used in budgeting and accounting to measure variances in actual cost or price.

Direct Materials

Raw materials directly used in the manufacturing of a product, easily traceable to the finished product.