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:

Maximax Criterion

A decision rule used under uncertainty, selecting the option with the maximum possible return, focusing on the most optimistic outcome.

Row Maximums

The highest values within each row of a matrix or table, typically used in data analysis and optimization problems.

Equally Likely Criterion

A decision-making principle where all outcomes are considered to have the same probability of occurring.

Perfect Information

Perfect information refers to a theoretical scenario where all participants in a market have complete and instantaneous knowledge of all market conditions and variables, leading to an optimal decision-making environment.