False

2.

M.C 1. What type of variance will occur when the actual labor hours worked exceeds the standard labor hours allowed?

a. Favorable labor efficiency variance.

b. Unfavorable labor efficiency variance.

c. Favorable labor rate variance.

d. Unfavorable labor rate variance.

T/F

1. An integrated set of performance measures that should be designed to support management's strategy throughout the organization is a balanced scorecard.

True

False

2. The Accounting Department of a company is not considered a responsibility center because it does not generate revenue.

True

False

3.

Management by exception means that a manager's attention is directed toward those parts of the organization where things are not proceeding according to plans.

True

False

"I know headquarters wants us to add that new product line," said Brian Stettler, manager of Sparks Products' Central Division. "ButI want to see the numbers before I make a move. Our division's return on investment (ROl) has led the company for three years, and I don't want any letdown." Sparks Products is a decentralized wholesaler with four autonomous divisions. The divisions are evaluated on the basis of ROI, with year-end bonuses given to divisional managers who have the highest ROI. Operating results for the company's Central Division for last year are given below: Sales Variable expenses $ 23,800,000 15,145,455 Contribution margin Fixed expenses 8,654,545 6,534,000 Net operating income $2,120,545 Divisional operating assets $ 5,950,000 The company had an overall ROI of 18% last year (considering all divisions). The company's Central Division has an opportunity to add a new product line that would require an investment of $3,790,000. The cost and revenue characteristics of the new product line per year woul d be as follows Sales Variable expenses Fixed expenses $11,190,000 65% of sales $3,050,910