Which of the Following Statements Is/are Correct

question 61

Multiple Choice

Which of the following statements is/are correct?

• A) Invested capital is the assets that an investment centre has available to generate profit.
• B) When evaluating an investment centre, only the profit is important.
• C) Return on investment focuses on how effectively each investment centre has used its investment capital.
• D) Invested capital represents the assets that an investment centre has available to generate profit AND return on investment focuses on how effectively each investment centre has used its investment capital.

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Definitions:

Activity Variances

The differences between actual and budgeted levels of activity, often analyzed to understand deviations in performance.

Revenue Variances

The differences between actual revenues and forecasted or budgeted revenues.

Relevant Range

The range of activity within which assumptions about variable and fixed cost behavior are valid.

Variable Cost

Expenses that change in proportion to the volume of goods or services produced by a business.