Planning Models Other Than the Simplistic Per Cent of Sales

question 78

Multiple Choice

Planning models other than the simplistic per cent of sales method have

• A) all variable costs change directly with sales.
• B) working capital accounts like inventory, accounts receivables, and accounts payables vary directly with sales.
• C) fixed assets that do not always vary directly with sales.
• D) All of the above are true.

Calculate and interpret financial performance metrics such as margin, turnover, and residual income.

Understand the concept of residual income as a performance evaluation metric.

Calculate divisional performance using residual income.

Analyze the impact of internal transactions on divisional and overall company profitability.

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