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.

---

Definitions:

Required Rate Of Return

The minimum return an investor expects to achieve by investing in a particular asset, reflecting the risk level of the investment.

Combined ROI

A measure of the total return on investment from multiple investments or projects, combined into one metric.

Investment Opportunity

An item or asset obtained with the intention of producing income or increasing in value.

Residual Income

The amount of income that an individual or company has after all personal debts and expenses, including the cost of capital, have been paid.