Indicate Whether Each of the Following Statements Is True or False

question 105

Short Answer

Indicate whether each of the following statements is true or false.
_____ a) Managerial performance can be evaluated by comparing actual amounts with standard amounts.
_____ b) Differences between standard and actual amounts are called variances.
_____ c) When actual results are compared to a flexible budget based on actual volume of activity, any variances result from differences between standard and actual per unit amounts.
_____ d) If the actual sales price per unit is higher than the standard, a company's sales price variance is unfavorable.
_____ e) Differences between flexible budget costs and revenues and the actual results are volume variances.

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Definitions:

Operating Income

Earnings generated from a company's core business operations, excluding deductions of interest and taxes.

Return on Investment

A measure of the profitability and efficiency of an investment, calculated as the net profit of the investment divided by its initial cost.

Invested Assets

Assets that are acquired for the purpose of generating income or appreciating in value, such as stocks, bonds, and real estate.

Operating Income

This is the income earned from normal business operations, excluding revenue from investments and other non-operational income.