It can help to define budget and measure performance

it can help to define budget and measure performance. However, implement these
system ca be time consuming, labor intensive, and expensive. Therefore, to cope with
some changes like environmental, economic or political changes, they must constantly
update the standards.
Importance of variance analysis
By computing and comparing the differences between the actual and planned
performance, variance analysis allows to measure the influence of each business
decision on profit. If we divide the variance analysis in 3 components, we can analyses
how much the profit changed due a to change in volume, in operating efficiency and
prices. Therefore, it can highlight the less efficient activities that deviates from the plan
and understand the possible reasons behind (investigate the significance of variance) in
order to implement corrections and improve management of resources and efficiency.
MULTIPLE CHOICE
1-Responsibility centers are important because:
X- managers rely on their subordinates so they shouldn’t be accounted for the
company’s performance;

 Allow for companies’ decentralization and accountability of results to be
allocated to individuals in the organization;
X- They remind the CEO of the company to the multiple responsibilities he/she has
within the company;
X- The unit centers of a company are not interconnected so individuals should should
only be responsible for their unit’s performance.
2- Supervisor salaries can be considered a step fixed cost
c)
3- Which manager can be considered the responsible of a profit center? 4- A relevant cost can help managers in decisions making, those decisions can be:
a) Special Pricing decisions
b) Decisions on replacement of equipment
c) Outsourcing, make or buy decisions
d) All sentences above
5- Sunk costs are A
6- Which item is not an example of a sunk cost?
7- A budget that is developed around one particular level of activity is a
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8- The Margin of Security concept is useful in Management Accounting to:
a) Compare one company’s Margin of Safety with other companies’ Margin of
Safety
b) Compare past Margin of Safety within one company
c) Both A and B
d) None of the above answers
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9- When taking into account two alternatives, which type of costs can help us make our
decision?
10- In year N-1, the Company X incurred in a cost for the asset that they are now trying to sell.
This cost…