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:

Direct Labour Hours

The total number of hours worked by employees directly involved in the production of goods or services.

Labour Efficiency Variance

The difference between the actual labor hours used and the standard labor hours expected to produce a certain level of output.

Standard Labour Rate

The predetermined or expected cost per unit of labor, used in budgeting and cost control.

Variable Overhead Efficiency Variance

The difference between the actual level of activity (direct labor-hours, machine-hours, or some other base) and the standard activity allowed, multiplied by the variable part of the predetermined overhead rate.