Question

Carlson, Inc. prepared a 2014 budget for 125,000 units of product. Actual production in 2014 was 130,000 units. To be most useful, what amounts should a performance report for this company compare?A) The actual results for 130,000 units with last year's actual results for 134,000 unitsB) The actual results for 130,000 units with a new budget for 130,000 units.C) The actual results for 130,000 units with the original budget for 125,000 unitsD) It doesn't matter. All of these choices are equally useful.

Answer 1

Answer and Explanation:

The actual results for 130,000 units with a new budget for 130,000 units. Company should change figures for its budget from 125,000 units to 130,000 units and prepare the new budget and then compare to get the most accurate results in respect of different departments.

This is because if company uses figures for 125,000 units then it will show good performance in respect of most department in many cases as cost would be less for 125,000 units.

Thus company should modify its budget to 130,000 units.