A profit variance disaggregated by income statement line item is of limited value in a responsibility accounting system because:
A) The resulting variances lack detail.
B) The resulting variances are not available in a timely fashion.
C) The resulting variances are based on external benchmarks.
D) The resulting variances are based on inadequate financial accounting measures.

Question

Quizplus · Accepted Answer

The resulting variances lack detail, making it difficult to pinpoint specific areas of responsibility or to take corrective action. In a responsibility accounting system, more detailed information is needed to effectively manage and evaluate the performance of different departments or units.

A Profit Variance Disaggregated by Income Statement Line Item Is