Select the Incorrect Statement Concerning the Application of the Controllability

question 90

Multiple Choice

Select the incorrect statement concerning the application of the controllability concept to responsibility accounting.

• A) As a practical matter, control of costs or revenues may be shared rather than absolute.
• B) The concept of control is crucial to an effective responsibility accounting system.
• C) Managers lose motivation when they are held accountable for actions that are beyond their scope of control.
• D) Each manager should be evaluated on the costs but not the revenues that are under his or her control.

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Definitions:

Absolute Advantage

The ability of an entity to produce a good or service more efficiently than its competitors, using fewer resources.

Textiles

Materials made from fibers, filaments, threads, or yarns, typically used in the production of fabrics and cloth.

Comparative Advantage

The ability of an entity to produce a good or service at a lower opportunity cost compared to others.

Absolute Advantage

The ability of a country, individual, company, or region to produce a good or service at a lower cost per unit than the cost at which any other entity produces that good or service.