1. Use of residual income to evaluate the performance of divisions may lead to a reduction in suboptimizing behavior by managers, compared to the use of return on investment to evaluate performance. true or false

2. Investment centers are often evaluated on the basis of return on investment. true or false

3. Performance evaluation of the segments of an organization should be done in a manner that promotes management by exception. true or false

4. Management by exception means that only unfavorable cost variances are investigated. true or false

5. A standard is the amount a price, cost, or quantity should be. true or false

6. A variance that is favorable may indicate the existence of unfavorable conditions. true or false