The Fixed Budget Performance Report of Discount Sale Pty Ltd

question 35

Multiple Choice

The fixed budget performance report of Discount Sale Pty Ltd for the year ended 30 June 2011 shows budgeted manufacturing costs of $420 000 and actual manufacturing costs of $370 000.The favourable variance of $50 000 must have been due to:

• A)Cost factors
• B)Poor budgeting
• C)Lack of supervision of workers
• D)Cannot be determined from the information provided

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Definitions:

Coefficient of Variation

A measure of relative variability computed as the ratio of the standard deviation to the mean, often expressed as a percentage.

Covariance

A measure indicating the extent to which two variables change together, signifying the direction of their linear relationship.

Standard Deviation

A statistic that quantifies the amount of variation or dispersion of a set of data values, typically used to measure how spread out the numbers in a data set are.

Slope

A measure of the steepness, incline, or grade of a line, indicating the ratio of the vertical change to the horizontal change between two points on the line.