1. If the actual quantity of materials used in production is greater than the standard of quantity of materials allowed for the actual level of production:

a. The materials Spending Variance will be favorable

b. The materials efficiency variance will be favorable

c. The materials price variance will be unfavorable

d. The materials Quantity variance will be unfavorable

2. All other things equal, which of the following would increase a division's residual income?

a. Decrease in net operating income

b. Increase in expenses

c. Decrease in average operating assets

d. Increase in the minimum required rate of return