When Variances Are Used as an Input to the Performance

Multiple Choice

When variances are used as an input to the performance evaluation system, which of the following scenarios may be encountered?

A) Purchasing managers may buy too much inventory to get a bulk purchase discount
B) Purchasing managers may buy lower quality materials to generate a favorable price variance
C) If standards are set at easily achievable levels, some people will only do enough to meet the target, but no more
D) When labor efficiency is measured on a team or production cell basis, the free rider may take advantage
E) All of the above