Question

True or False
30. All variance are controllable..........
32. Direct labor variances are normally the responsibility of production supervisors for controlling direct labor cost...........
34. A factory overhead cost variance report is a useful tool for management to use in controlling factory overhead costs.......
36. In a decentralized organization, all major planning and operating decisions are made by top level management......
37. One of the advantages of a decentralized organization is that decisions made by managers may affect the profits of the company..........
44. Cost-volume profit relationships can be used for analyzing the effects of sales mix on the break- even point and profits.....

Answer 1

30. The statement is False. It is because variances can be uncontrollable due to factors beyond the control of the management or concerned person or department of the organization.

32. The statement is True. It is because it is the production supervisor under whom the whole work of production is done and so he has the responsibility of controlling the costs as he handles them directly.

34. The statement is True. It is because factory overhead costs and cost per unit are included in the factory overhead cost variance report.

36. The statement is True. It is because all the other work is given to the lower level employees so that the top management can focus on major operating and planning activities.

37. The statement is True. It is because the decision taken by any manager can affect the profits of the company both positively and negatively.

44. The statement is True. It is because cost-volume profit relationships focuses on how selling prices, sales volume, variable costs, fixed costs and the mix of product sold affects profit. It is also used for the analysis on break-even point.