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chapter 22
Tools for Enterprise
Performance Evaluation
goals discussion goals achievement fill in the blanks multiple choice problems check list and key terms
Select the appropriate response.
A responsibility accounting system is based on the organizational structure of the firm.
Under which type of responsibility unit are operations or departments not directly involved in revenue generating activities?
investment center or cost center
Both profit centers and investment centers hold managers accountable for the revenues and expenses of the responsibility unit.
When evaluating performance under a responsibility accounting system, management should be held accountable for revenues, expenses, and investments that are both controllable and uncontrollable.
As production levels fluctuate, which of the following budgets tend to become meaningless.
With a flexible budget, which cost component is the same no matter the presumed level of activity?
variable production cost or fixed factory overhead
Standard costs are used in the construction of both static and flexible budgets.
Which standard takes into account normal inefficiencies related to scrap, waste, spoilage, and worker inefficiencies?
ideal standard or acheivable standard
With an ideal standard, workers can be expected to perform better because of the continued motivation to try and achieve the unachievable.
The materials quantity variance is computed by comparing the actual quantity of materials used to the standard quantity of materials which should have been used for the production achieved. Which prices should be used in this comparison?
standard prices or actual prices
The net of the labor rate variance and labor efficiency variance will produce the total labor variance.
If overhead is applied on the basis of direct labor hours, then the variable overhead efficiency variance calculations incorporate the same number of actual and standard hours as used in the computation of the direct labor variances.
All unfavorable variances should be investigated.
The use of highly skilled employees beyond that anticipated may result in unfavorable labor rate variances, and what type of labor efficiency variances?
A balanced scorecard approach to performance evaluation might consider financial, customer, and/or process outcomes.