Answer:
The most suitable answer here is D. Concurrent Control.
Explanation:
Concurrent control is also known as preventive controls and steering controls where the aim of the control procedure is to identify the possible flaws of a process and to prevent them before occurring.
Furthermore, in this scenario as you can see, Donald consults production manager and formulates measures as the process is ongoing. This makes it more of a "concurrent control" as well.
So Why did we not use any of the other options?
Option A, reactive controls is incorrect in this case, because reactive measures are completely spontaneous actions that respond to an accident.
Option B is incorrect too, because feedback controls are done after a process has been completed and through identification of falls happened.
Option C, feed forward controls are not correct in this scenario as well. Although it is a type of preventive control, in this scenario it is not entirely preventive. They are formulating measures even as the process is ongoing.
Answer: Not Sound as Company does not benefit as a Whole.
Explanation:
This question alludes to the presence of Divisions in a company tasked with producing different segments of a good.
One Division makes a segment of the good and transfers it for a price to the other division so that they may be able to show Revenue on their books.
The reasoning of the CEO of Lexington is flawed because if she chooses the highest feasible Transfer Fee for the goods it will be good for the Division doing the Transferring because they make more revenue.
However, it will increase the cost of those being transferred to by the same amount that it increase the revenue of the Division transferred from.
As a result, the increase in Cost and the Increase in Revenue in the two divisions will cancel each other out meaning that the company did not benefit.
Answer:
The correct option is B, higher than the net operating income under variable costing
Explanation:
In calculating the net operating profit under variable costing, the fixed manufacturing cost of $15,000 is deducted as a whole in arriving at net profit.
However, under absorption costing method, only the goods sold are charged with their own portion of fixed manufacturing cost totaling $15,000
Fixed under variable costing method=$15,000
fixed cost under absorption costing method=$15,000/5,000*4500=$13500
Since fixed cost is lower under absorption costing method, net profit tends to be higher.
