If Variance Analysis Is Used for Performance Evaluation, Managers Are

question 140

True/False

If variance analysis is used for performance evaluation, managers are encouraged to meet targets using creativity and resourcefulness.

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Definitions:

Variable Cost

Costs that are directly correlated with the quantity of production or output generated.

ATC Curve

The Average Total Cost curve, a graph that shows the cost per unit of output at different levels of production, typically U-shaped due to economies and diseconomies of scale.

Marginal Cost

The charge incurred for the manufacturing of one more unit of a particular good or service.

Average Fixed Cost

The fixed costs of production divided by the quantity of output produced, typically decreasing as production increases.