Lag Indicators Are an Effective Means of Addressing Below-Target Performance

question 16

True/False

Lag indicators are an effective means of addressing below-target performance because they measure what is happening as it occurs; whereas lead indicators provide an historical performance perspective.

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Definitions:

Actual Total Labour Cost

The real amount spent on wages and benefits for employees involved in the production process during a specific period.

Standard Labour Rate

The pre-established rate per hour that a company expects to pay for direct labor.

Actual Units

The real quantity of items produced, sold, or consumed, as opposed to planned or theoretical quantities.

Variable Overhead Spending Variance

This is the difference between the actual variable overheads incurred and what was expected or budgeted, based on the actual level of production activity.