The choices below depict five costs of Garfield Industries and a possible driver for each cost. Which of these choices likely contains an inappropriate cost driver?
A. Manufacturing overhead incurred in a heavily automated facility; direct labor hours.
B. Gasoline consumed; number of miles driven.
C. Sales commissions; gross sales revenue.
D. Human resources department cost; number of employees.
E. Building maintenance cost; building square footage.
Answer: A
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When assessing performance, one way to compensate for differences among divisions of a multinational organization would be for the parent company to
a. use different target rates of return to compute residual incomes. b. modify the return on investment calculation so that foreign currency fluctuations are removed from all financial statement figures. c. classify all domestic divisions as investment centers and all foreign divisions as profit centers. d. use financial performance measures for units whose records are kept in the domestic currency and non-financial measures for units whose records are kept in a foreign currency.
George is feeling stressed today because his annual performance evaluation takes place tomorrow. George intends to use the technique, aspire for a positive future to help deal with his stress. As a result, George
A) pictures himself taking a vacation on the lake. B) imagines himself being calm and relaxed during the evaluation. C) imagines receiving a poor evaluation, then having a few beers to feel better. D) thinks about becoming self-employed to avoid being evaluated in the future. C
John owns a small department store that issues its own credit cards. He has been considering
phasing out his own credit card and accepting Visa® or MasterCard® . If John chooses to do this he will be going from a position of risk ________ to one of risk ________. A) reduction; transfer B) avoidance; reduction C) assumption; avoidance D) assumption; transfer
A biotechnology company is constantly faced with important decisions that are likely to have severe consequences on the future of the company. The top managers should
A. decentralize decision-making authority. B. appoint lawyers to make business decisions. C. train first-line managers to make these decisions. D. exercise centralized decision-making authority. E. consult investors when making important daily decisions.