The Emphasis on Variance Analysis and Its Use in Performance

question 76

Multiple Choice

The emphasis on variance analysis and its use in performance evaluation must be such that:

• A) managers focus on setting easy to attain targets
• B) larger unfavorable variances should result in negative consequences for personnel held accountable
• C) management should set targets that challenge but are reasonably achievable and require creativity and resourcefulness by personnel held accountable
• D) Management should stretch resources to meet goals even if continuous improvement and quality suffers

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Definitions:

Budgeted

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Final-Average Formula

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Financial programs typically funded by employers or the government that provide income to individuals after retirement.

Earnings

The amount of money that an individual or business receives in exchange for providing a good or service or through investing capital.