10. The standard rate per hour for direct labor should not include an allowance

Question

10. The standard rate per hour for direct labor should not include an allowance for fringe benefits since these benefits represent an element of manufacturing overbead. True False 11. The general model for variance analysis holds price constant at the standard price for calculation of the quantity variance. False True er than short-run profitability True False 13. Land held for possible plant expansion would be included as an operating asset in the ROI calculation. True False 14. Residual income is used in the numerator to compute turnover in an ROI analysis. True False 15. In ROI the use of net book value as part of operating assets is consistent with the reporting of plant and equipment on the balance sheet. True False

Explanation / Answer

12. FALSE , ROI tends to emphasize short-run performance at the possible expense of long-run profitability .

13. FALSE , Land held for possible plant expansion would not be included as an operating asset when computing ROI.

14. FALSE , Average operating assets is used in the numerator to compute turnover in an ROI analysis.

15. TRUE , In ROI the use of net book value as part of operating assets is consistent with the reporting of plant and equipment on the balance sheet.

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