1. Cahalane Natural Dying Corporation measures its activity in terms of skeins of yarn dyed. Last month, the budgeted level of activity was 11,600 skeins and the actual level of activity was 12,000 skeins. The company's owner budgets for dye costs, a variable cost, at $0.31 per skein. The actual dye cost last month was $3,540. In the company's flexible budget performance report for last month, what would have been the spending variance for dye costs?

a. $180 F

b. $124 U

c. $56 F

d. $118 U

2. The concept of responsibility accounting means that:

a. Budgetary data should be reviewed and approved by all levels of management.

b. An employee's performance should be evaluated only on those items under his or her control.

c. An employee's performance should be evaluated only by his or her immediate supervisor.

d. Budgetary data should be reviewed and approved by the budget committee.