When Applied to Budgets, Responsibility Accounting Provides Feedback to Top

question 14

Essay

When applied to budgets, responsibility accounting provides feedback to top management about the performance of different responsibility-centre managers relative to the budget.Name and briefly describe the three ways, presented in the textbook, that properly used variances can be helpful.

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Definitions:

International Trade

The trade of products and services across the borders of different countries or territories.

Consumer Surplus

The difference between the total amount that consumers are willing and able to pay for a good or service versus the total amount that they actually pay.

Producer Surplus

The gap between the price producers are willing to accept for offering a good or service and the actual price they receive.

World Price

The global equilibrium price of a good or service determined by worldwide supply and demand.