Using practical capacity is best for evaluating the marketing manager’s performance for a

particular year.

Answer: False Difficulty: 3 Objective: 8

Using master-budget capacity is best for evaluating the marketing manager’s performance.

41. The production-volume variance is affected by the choice of capacity concept used to
determine the denominator level.

Answer: True Difficulty: 2 Objective: 9

42. The higher the denominator level the higher the budgeted fixed manufacturing cost rate per
unit.

Answer: False Difficulty: 2 Objective: 9

The higher the denominator level the lower the budgeted fixed manufacturing cost rate per
unit.

43. Master-budget capacity utilization can be more reliably estimated than normal capacity
utilization.

Answer: True Difficulty: 2 Objective: 9

44. Unused capacity is considered wasted resources and the result of poor planning.

Answer: False Difficulty: 1 Objective: 9

Unused capacity is not considered wasted resources because capacity has to be purchased
in “large chunks” to accommodate future needs, not just the needs of the current period.