One important short-term goal for a company is to earn the projected operating income for the period.Attainment of this goal is measured by comparing the actual operating income to the:
A)Flexible-budget operating income.
B)Prior period's operating income.
C)The income reflected in the company's balanced scorecard.
D)Master budget operating income.
E)Industry average operating income.

Question

Quizplus · Accepted Answer

The best choice is the Master budget operating income as the projected operating income for the period is determined by the master budget. The flexible-budget operating income may change based on actual results, and the prior period's operating income is not a relevant benchmark for achieving short-term goals. The income reflected in the company's balanced scorecard and industry average operating income are not necessarily related to the company's specific goals for the period.

One Important Short-Term Goal for a Company Is to Earn