1. Briefly explain the nature of the fixed-overhead volume variance. Be sure to address the issue of capacity utilization in your response.

(5 marks)

2. Standard costs are said to be useful in performance evaluation. Assume that the standard direct materials cost per unit of finished product is $6 (three pounds at $2 per pound). Required: A. Explain how such a standard can be used to evaluate performance. B. Why is the degree of controllability important when utilizing standard costs to evaluate performance? (5 marks)

3. Information is said to be useful in decision making if it possesses three characteristics. Required: A. List the three characteristics of useful information. B. Frequently, there is a conflict between two of the characteristics requested in part "A." Briefly explain what this conflict is. C. What distinguishes relevant from irrelevant information?

(7.5 marks)