12. CSO: 1A1d LOS: 1A1m
After performing a thorough study of Michigan Company’s operations, an independent
consultant determined that the firm’s labor standards were probably too tight. Which one
of the following facts would be inconsistent with the consultant’s conclusion?
a. A review of performance reports revealed the presence of many unfavorable
efficiency variances.
b. Michigan’s budgeting process was well-defined and based on a bottom-up
philosophy.
c. Management noted that minimal incentive bonuses have been paid in recent
periods.
d. Production supervisors found several significant fluctuations in manufacturing
volume, with short-term increases on output being followed by rapid, sustained
declines.
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