Hoppy Corporation Compares Monthly Operating Results to a Static Budget

question 272

Multiple Choice

Hoppy Corporation compares monthly operating results to a static budget prepared at the beginning of the month. When the actual level of activity is less than budgeted, which of the following would be true?

• A)Variable costs would show favorable variances.
• B)Variable costs would show unfavorable variances.
• C)Fixed costs would show favorable variances.
• D)Fixed costs would show unfavorable variances.

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Definitions:

Measuring Actual Performance

The process of evaluating the real outcomes of activities or processes against expected or planned outcomes.

Management by Exception

A management style in which the manager intervenes only when performance deviates significantly from standards, allowing for more autonomous operation of processes.

Managerial Attention

The focus and prioritization that managers give to certain issues, tasks, or information, which can significantly impact decision-making and leadership.

Actual

Pertaining to or representing the current state of affairs or reality, as opposed to potential or theoretical scenarios.