The company’s president is uneasy about the cost reports, what can be the reason?
1) Cost reports are ineffective since budgeted costs at one level of activity are compared to actual costs at another level of activity.
2) Cost reports show whether fixed costs are controlled and do not show whether variable costs are controlled.
3) Cost reports are effective since budgeted costs at one level of activity are compared to actual costs at another level of activity.
4) Cost reports show whether fixed costs and variable costs are controlled.