How does one create a meaningful performance report?
A) calculate actual costs as a percentage of sales
B) compare actual costs with the prior year's actual costs
C) compare actual costs with the expected costs found in the static budget
D) compare actual costs with the expected costs at the same level of activity

Question

Quizplus · Accepted Answer

To create a meaningful performance report, it is important to compare the actual costs with the expected costs at the same level of activity. This allows for a fair comparison and analysis of how well the company performed in relation to its own expectations. Comparing actual costs to the static budget (choice C) may not be meaningful if there were changes in the level of activity during the period. Choice A is too simplistic and does not take into account the specifics of each company. Choice B is a useful comparison but may not provide a clear indication of the company's performance if there were significant changes in the business or industry.

How Does One Create a Meaningful Performance Report