A Static Budget Provides a Measure of the Effectiveness of a Manager

question 54

True/False

A static budget provides a measure of the effectiveness of a manager, whereas a flexible budget provides a measure of the efficiency of a manager.

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Definitions:

Economies of Scale

Refers to the cost advantage that arises with increased output of a product, where the average cost per unit decreases as production scales up.

Diseconomies of Scale

The phenomenon where a company's production costs increase as it produces more, resulting in a decrease in efficiency.

Output Units

Quantitative measures of production, representing the number of units of goods or services produced.

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output decreasing with increasing scale.