The correct answer is: B. Ratio analysis is a synonym for cost profit volume analysis.
Ratio analysis is a tool used to evaluate the financial performance of a company. It involves calculating ratios of different financial statement items and comparing them to industry averages or to the company's own historical performance. Ratio analysis can be used to identify areas where the company is performing well or poorly, and to track the company's progress over time.
Cost profit volume analysis (CPV analysis) is a tool used to estimate the impact of changes in sales volume, unit price, and variable costs on a company's profit. CPV analysis is based on the following equation:
Profit = (Unit price - Variable cost per unit) * Sales volume - Fixed costs
CPV analysis can be used to help managers make decisions about pricing, production, and marketing.
Here is a brief explanation of each option:
- A. Management audit signifies evaluation of the effectiveness of the management and Its functional performance. This is a correct statement. Management audit is a process of evaluating the effectiveness of management and its functional performance. It involves assessing the company's strategic planning, organizational structure, human resources, financial management, and operational performance.
- B. Ratio analysis is a synonym for cost profit volume analysis. This is an incorrect statement. Ratio analysis is a tool used to evaluate the financial performance of a company, while CPV analysis is a tool used to estimate the impact of changes in sales volume, unit price, and variable costs on a company's profit.
- C. Budgetary control helps in delegation. This is a correct statement. Budgetary control is a system that helps managers to delegate authority and responsibility to employees. It involves setting budgets for different departments and activities, and then monitoring actual performance against the budget.
- D. None of the above. This is an incorrect statement. Only option B is incorrect.
