In Evaluating the Profit Center Manager, the Income from Operations

question 128

Multiple Choice

In evaluating the profit center manager, the income from operations should be compared

• A) across profit centers
• B) to historical performance or budget
• C) to the competitor's net income
• D) to the total company earnings per share

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Definitions:

Variable Overhead Efficiency Variance

A measure used in cost accounting to evaluate the efficiency of variable production costs, comparing the actual hours worked to the standard hours expected.

Materials Price Variance

The difference between the actual cost of materials and the expected (standard) cost.

Labor Rate Variance

A measure used in cost accounting to analyze the difference between the actual labor cost incurred and the standard labor cost for the actual labor hours worked.

Variable Overhead Efficiency Variance

Refers to the difference between the standard cost of variable overheads for the actual production level and the actual variable overheads incurred.