In doing control and/or performance evaluation, which of the following is a not desirable?

	A.	Tying performance of evaluation to compensation
	B.	Investigation of all unfavorable variances
	C.	Applying the controllability principle
	D.	Minimizing incentives for undesirable behavior
	E.	Use of flexible budgets for computing variance

Which of the following is not true of cost variances?

	A.	Negative cost variance = Favorable
	B.	Total variance = Actual cost - Standard cost
	C.	Total material variance = Price variance + Efficiency variance
	D.	(Price variance) x (Efficiency variance) > 0
	E.	Positive revenue variance = Favorable

The material price variance will become favorable if:

	A.	the actual price of the material is smaller than the material cost based predetermined overhead rate.
	B.	the material used in production has higher quality than expected.
	C.	the actual price of the material is lower than the standard price.
	D.	the actual price of the material is lower than the average price for the last period.
	E.	the quantity of material purchased is less than the quantity of material used.

The difference between the flexible budget and the original (master) budget amounts is:

	A.	efficiency variance
	B.	activity (sales activity) variance
	C.	budget variance
	D.	volume (production volume) variance
	E.	spending (price) variance

Which of the following is false about the flexible budget about costs?

	A.	With a flexible budget, a manager can be judged on how well the manager is able to keep costs compared to costs allowed for the actual production level.
	B.	With a flexible budget a manager can determine what costs should have been attained at a given level of activity.
	C.	The flexible budget provides a manager with flexibility in budgeting production costs, so that the manager can make necessary adjustments in setting per-unit standards.
	D.	The flexible budget can be used to meaningfully compare the budgeted cost with actual cost at any level of activity.