Cramer Designs produces a wide range of women\'s apparel. Three years ago, the c
ID: 2780816 • Letter: C
Question
Cramer Designs produces a wide range of women's apparel. Three years ago, the company spent $1.2 million to launch its ine of designer handbags. Brittany Cramer, the company's CEO and founder, is conducting a post-audit on the handbag line to determine how the division's performance compared to the companys expectations. She has found that the revenue from the handbag division was much lower than expected; however, the company was able to produce the handbags for a much lower cost per unit than expected. Which of the following should be considered the main purpose(s) of the post-audit? Check all that apply. O It helps improve operations. D It encourages managers to generate reasonable forecasts. O It helps project the firm's tax liability. When a firm is forced to employ capital rationing, it generally means that the firm has positive NPV projects than it can finance. more lessExplanation / Answer
Option A & B
Post auditing imporves operations by identifying inefificnecies and cause of those ineefficiecensies.
Also it helps managers to generate reasonable forecasts by letting mangers compare actual vs expected
Option A..more
If a firm has more positive NPV projects, then only it would have to employ capital rationing because if it has less positive NPV projects, then it can undertake them all but in case of more projects, it has to choose which porjects to undertake by looking at projects which offer the most return