1. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-1 15 The Flexible Budget and Standard Costing: Direct Materials and Direct Labor

2. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-2 15 Evaluating Operating Results Performance is evaluated by comparing actual results with the budget. Budget Actual

3. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-3 15 Effectiveness and Efficiency An operation is effective if it has attained or exceeded its goals. An operation is efficient if it has not wasted resources. An operation may be effective but inefficient, and it may be efficient but ineffective.

4. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-4 15 Master budgets are prepared for a single activity level. Comparing actual results with the master budget reveals operating income variances. Assessing Effectiveness Hmm! Comparing actual results with the master budget will help me determine my effectiveness. Consider the following example from the Cheese Company...

5. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-5 15 Assessing Effectiveness

6. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-6 15 U = Unfavorable variances – Cheese Company was ineffective in achieving its budgeted level of sales. Assessing Effectiveness

7. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-7 15 Assessing Effectiveness

8. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-8 15 Assessing Effectiveness U = Unfavorable operating income variance – Cheese Company was ineffective in achieving its budgeted operating income.

9. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-9 15 F = Favorable variance – actual costs are less than budgeted costs. Assessing Effectiveness

10. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-10 15 Since cost variances are favorable, has Cheese Company done a good job of controlling costs at the lower level of sales? Assessing Effectiveness

11. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-11 15 I don’t think I can answer the question comparing actual results with the master budget. I do know that actual sales are below budgeted sales, which is unfavorable. But shouldn’t variable costs be lower if actual sales are below budgeted sales? Assessing Effectiveness

12. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-12 15 The relevant question is... “How much of the favorable cost variance is due to lower activity, and how much is due to good cost control?” To answer the question, we must the budget to the actual activity. A will help me evaluate efficiency. The Flexible Budget

13. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-13 15 Improve performance evaluation. May be prepared for any activity level in the relevant range. Show revenues and expenses that should have occurred at the actual activity. Reveal variances due to good cost control or lack of cost control. The Flexible Budget

14. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-14 15 Central Concept If you can tell me what your activity was for the period, I will tell you what your costs and revenue should have been. The Flexible Budget

15. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-15 15 To a budget for different activity levels, we must know how costs behave with changes in activity levels.  Total variable costs change in direct proportion to changes in activity.  Total fixed costs remain unchanged within the relevant range. Fixed Variable The Flexible Budget

16. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-16 15 Let’s prepare a budget for the Cheese Company at 8,000 units. The Flexible Budget

17. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-17 15 The Flexible Budget A flexible budget is prepared for the same activity level (8,000 units) as actually achieved.

18. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-18 15 Variable costs are expressed as a constant amount per unit. In the original static budget, variable manufacturing costs were $30,000 for 10,000 units resulting in $3.00 per unit. The Flexible Budget Fixed costs are expressed as a total amounts that do not change within the relevant range of activity.

19. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-19 15 8,000 units × $3.00 per unit = $24,000 The Flexible Budget

20. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-20 15 Note: There is no flex in the fixed costs. The Flexible Budget

21. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-21 15 The Flexible Budget

22. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-22 15 Original actual results for Cheese Company that we saw earlier. The Flexible Budget

23. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-23 15 Variable costs have unfavorable variances because actual costs are more than the flexible budget costs. The Flexible Budget

24. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-24 15 Now we can answer our original question: “What part of the variances is due to activity and what part is due to cost control?” Assessing Efficiency

25. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-25 15 Recall the original variances resulting from the comparison of actual results with the master budget. Assessing Efficiency

26. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-26 15 Now let’s insert our new tool, the budget for 8,000 units, into the analysis. Assessing Efficiency

27. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-27 15 Assessing Efficiency

28. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-28 15 Variances due to activity change Assessing Efficiency

29. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-29 15 Variances due to cost control Assessing Efficiency

30. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-30 15 In the Cheese Company example, the budgeted and actual selling price was $10 per unit. Now assume that the selling price changes to $11 per unit, with all other information unchanged. Selling Price Variance Continue A selling price variance is the difference between the total sales revenue received and the total sales revenue of the flexible budget.

31. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-31 15 8,000 units × $11 per unit 8,000 units × $10 per unit Selling Price Variance

32. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-32 15 8,000 units × ($11 per unit – $10 per unit) Selling Price Variance

33. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-33 15 Flexible budget variances are variances are unchanged. Selling Price Variance

34. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-34 15 Standard Costs Cost Benchmarks for measuring performance. The expected level of performance. Based on carefully predetermined amounts. Used for planning labor, material and overhead requirements. Standard Costs are

35. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-35 15 Product Cost Standard A standard cost variance is the amount by which an actual cost differs from the standard cost. Standard Costs

36. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-36 15 Standard Cost Variances Product Cost Standard A standard cost variance is the amount by which an actual cost differs from the standard cost. This variance is unfavorable because the actual cost exceeds the standard cost.

37. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-37 15 Direct Material Managers focus on quantities and costs that exceed standards, a practice known as management by exception. Type of Product Cost Amount Direct Labor Standard Standard Cost Variances

38. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-38 15 Variance Analysis Cycle Prepare standard cost performance report Conduct next period’s operations Analyze variances Identify questions Receive explanations Take corrective actions Begin

39. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-39 15 Accountants, engineers, personnel administrators, and production managers combine efforts to set standards based on experience and expectations. Types of Standards

40. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-40 15 Should we have standards that are difficult to achieve or standards that can be achieved with minimal effort? Standards should be set at levels that are currently attainable with reasonable and efficient effort. Types of Standards

41. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-41 15 I agree. Unattainable standards are discouraging while standards that are too easy to achieve provide little motivation. Types of Standards

42. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-42 15 Activity analysis Activity analysis Historical data Historical data Benchmarking Benchmarking Market expectation Market expectation Strategic decisions Strategic decisions Activity analysis Activity analysis Historical data Historical data Benchmarking Benchmarking Market expectation Market expectation Strategic decisions Strategic decisions Selection of a Standard

43. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-43 15 Friendly service On-time delivery Quality Cleanliness Value Friendly service On-time delivery Quality Cleanliness Value Nonfinancial Measures

44. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-44 15 Direct Materials Standards Usage Standards Price Standards Use product design specifications. Use competitive bids for the quality and quantity desired.

45. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-45 15 The standard material cost for one unit of product is: standard quantity standard price for of material one unit of material required for one unit of product × Direct Materials Standards

46. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-46 15 Efficiency Standards Rate Standards Use time and motion studies for each labor operation. Use wage surveys and labor contracts. Direct Labor Standards

47. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-47 15 The standard labor cost for one unit of product is: standard number standard wage rate of labor hours for one hour for one unit of product × Direct Labor Standards

48. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-48 15 A General Model for Variance Analysis Actual Quantity Actual Quantity Standard Quantity × × × Actual Price Standard Price Standard Price Price or Rate Variance Usage or Efficiency Variance The total variance is the flexible budget variance.

49. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-49 15 A General Model for Variance Analysis Actual Quantity Actual Quantity Standard Quantity × × × Actual Price Standard Price Standard Price Standard price is the amount that should have been paid for the resources acquired. Price or Rate Variance Usage or Efficiency Variance

50. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-50 15 Price or Rate Variance Usage or Efficiency Variance A General Model for Variance Analysis Actual Quantity Actual Quantity Standard Quantity × × × Actual Price Standard Price Standard Price Standard quantity is the quantity allowed for the actual good output.

51. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-51 15 A General Model for Variance Analysis Actual Quantity Actual Quantity Standard Quantity × × × Actual Price Standard Price Standard Price Materials price variance Materials quantity variance Labor rate variance Labor efficiency variance Variable overhead Variable overhead spending variance efficiency variance AQ(AP - SP) SP(AQ - SQ) AQ = Actual Quantity SP = Standard Price AP = Actual Price SQ = Standard Quantity Price or Rate Variance Usage or Efficiency Variance

52. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-52 15 Standard Cost Variances Efficiency VariancePrice Variance The difference between the actual price and the standard price The difference between the actual quantity and the standard quantity

53. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-53 15 Standard Costs Let’s use the concepts of the general model to calculate standard cost variances, starting with direct material.

54. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-54 15 Hanson Inc. has the following direct material standard to manufacture one Jerf: 1.5 pounds per Jerf at $4.00 per pound Last month 1,700 pounds of material were purchased and used to make 1,000 Jerfs. The material cost a total of $6,630. Material Variances Example Jerf

55. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-55 15 What is the actual price per pound paid for the material? a.$4.00 per pound. b.$4.10 per pound. c.$3.90 per pound. d.$6.63 per pound. What is the actual price per pound paid for the material? a.$4.00 per pound. b.$4.10 per pound. c.$3.90 per pound. d.$6.63 per pound. Material Variances Question 1 Jerf

56. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-56 15 What is the actual price per pound paid for the material? a.$4.00 per pound. b.$4.10 per pound. c.$3.90 per pound. d.$6.63 per pound. What is the actual price per pound paid for the material? a.$4.00 per pound. b.$4.10 per pound. c.$3.90 per pound. d.$6.63 per pound. AP = $6,630 ÷ 1,700 lbs. AP = $3.90 per lb. Material Variances Question 1 Jerf

57. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-57 15 Material Variances Question 2 Hanson’s material price variance (MPV) for the month was: a.$170 unfavorable. b.$170 favorable. c.$800 unfavorable. d.$800 favorable. Hanson’s material price variance (MPV) for the month was: a.$170 unfavorable. b.$170 favorable. c.$800 unfavorable. d.$800 favorable. Jerf

58. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-58 15 Hanson’s material price variance (MPV) for the month was: a.$170 unfavorable. b.$170 favorable. c.$800 unfavorable. d.$800 favorable. Hanson’s material price variance (MPV) for the month was: a.$170 unfavorable. b.$170 favorable. c.$800 unfavorable. d.$800 favorable. MPV = AQ(AP - SP) MPV = 1,700 lbs. × ($3.90 - 4.00) MPV = $170 Favorable Material Variances Question 2 Jerf

59. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-59 15 Material Variances Question 3 The standard quantity of material that should have been used to produce 1,000 Jerfs is: a.1,700 pounds. b.1,500 pounds. c.2,550 pounds. d.2,000 pounds. The standard quantity of material that should have been used to produce 1,000 Jerfs is: a.1,700 pounds. b.1,500 pounds. c.2,550 pounds. d.2,000 pounds. Jerf

60. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-60 15 The standard quantity of material that should have been used to produce 1,000 Jerfs is: a.1,700 pounds. b.1,500 pounds. c.2,550 pounds. d.2,000 pounds. The standard quantity of material that should have been used to produce 1,000 Jerfs is: a.1,700 pounds. b.1,500 pounds. c.2,550 pounds. d.2,000 pounds. Material Variances Question 3 SQ = 1,000 units × 1.5 lbs per unit SQ = 1,500 lbs Jerf

61. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-61 15 Material Variances Question 4 Hanson’s material usage variance (MUV) for the month was: a.$170 unfavorable. b.$170 favorable. c.$800 unfavorable. d.$800 favorable. Hanson’s material usage variance (MUV) for the month was: a.$170 unfavorable. b.$170 favorable. c.$800 unfavorable. d.$800 favorable. Jerf

62. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-62 15 Hanson’s material usage variance (MUV) for the month was: a.$170 unfavorable. b.$170 favorable. c.$800 unfavorable. d.$800 favorable. Hanson’s material usage variance (MUV) for the month was: a.$170 unfavorable. b.$170 favorable. c.$800 unfavorable. d.$800 favorable. MUV = SP(AQ - SQ) MUV = $4.00(1,700 lbs - 1,500 lbs) MUV = $800 unfavorable Material Variances Question 4 Jerf

63. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-63 15 Actual Quantity Actual Quantity Standard Quantity × × × Actual Price Standard Price Standard Price 1,700 lbs. 1,700 lbs. 1,500 lbs. × × × $3.90 per lb. $4.00 per lb. $4.00 per lb. $6,630 $ 6,800 $6,000 Price variance $170 favorable Usage variance $800 unfavorable Material Variances Summary Jerf

64. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-64 15 Okay. I’ll start computing the price variance when material is purchased and the usage variance as soon as material is used. I need the variances as soon as possible so that I can better identify problems and control costs. You accountants just don’t understand the problems we production managers have. Reporting Material Variances

65. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-65 15 Responsibility for Material Variances I am not responsible for this unfavorable material usage variance. You purchased cheap material, so my people had to use more of it. Your poorly trained workers and poorly maintained equipment caused the problems. Also, your poor scheduling requires rush orders of material at higher prices, causing unfavorable price variances.

66. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-66 15 Standard Costs Now let’s calculate standard cost variances for direct labor.

67. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-67 15 Hanson Inc. has the following direct labor standard to manufacture one Jerf: 1.5 standard hours per Jerf at $12.00 per direct labor hour Last month 1,550 direct labor hours were worked at a total labor cost of $18,910 to make 1,000 Jerfs. Labor Variances Example Jerf

68. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-68 15 Labor Variances Question 1 What was Hanson’s actual rate (AR) for labor for the month? a.$12.20 per hour. b.$12.00 per hour. c.$11.80 per hour. d.$11.60 per hour. What was Hanson’s actual rate (AR) for labor for the month? a.$12.20 per hour. b.$12.00 per hour. c.$11.80 per hour. d.$11.60 per hour. Jerf

69. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-69 15 What was Hanson’s actual rate (AR) for labor for the month? a.$12.20 per hour. b.$12.00 per hour. c.$11.80 per hour. d.$11.60 per hour. What was Hanson’s actual rate (AR) for labor for the month? a.$12.20 per hour. b.$12.00 per hour. c.$11.80 per hour. d.$11.60 per hour. AR = $18,910 ÷ 1,550 hours AR = $12.20 per hour Labor Variances Question 1 Jerf

70. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-70 15 Hanson’s labor rate variance (LRV) for the month was: a.$310 unfavorable. b.$310 favorable. c.$300 unfavorable. d.$300 favorable. Hanson’s labor rate variance (LRV) for the month was: a.$310 unfavorable. b.$310 favorable. c.$300 unfavorable. d.$300 favorable. Labor Variances Question 2 Jerf

71. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-71 15 Hanson’s labor rate variance (LRV) for the month was: a.$310 unfavorable. b.$310 favorable. c.$300 unfavorable. d.$300 favorable. Hanson’s labor rate variance (LRV) for the month was: a.$310 unfavorable. b.$310 favorable. c.$300 unfavorable. d.$300 favorable. LRV = AH(AR - SR) LRV = 1,550 hrs($12.20 - $12.00) LRV = $310 unfavorable Labor Variances Question 2 Jerf

72. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-72 15 The standard hours (SH) of labor that should have been worked to produce 1,000 Jerfs is: a.1,450 hours. b.1,500 hours. c.1,700 hours. d.1,800 hours. The standard hours (SH) of labor that should have been worked to produce 1,000 Jerfs is: a.1,450 hours. b.1,500 hours. c.1,700 hours. d.1,800 hours. Labor Variances Question 3 Jerf

73. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-73 15 The standard hours (SH) of labor that should have been worked to produce 1,000 Jerfs is: a.1,450 hours. b.1,500 hours. c.1,700 hours. d.1,800 hours. The standard hours (SH) of labor that should have been worked to produce 1,000 Jerfs is: a.1,450 hours. b.1,500 hours. c.1,700 hours. d.1,800 hours. SH = 1,000 units × 1.5 hours per unit SH = 1,500 hours Labor Variances Question 3 Jerf

74. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-74 15 Hanson’s labor efficiency variance (LEV) for the month was: a.$590 unfavorable. b.$590 favorable. c.$600 unfavorable. d.$600 favorable. Hanson’s labor efficiency variance (LEV) for the month was: a.$590 unfavorable. b.$590 favorable. c.$600 unfavorable. d.$600 favorable. Labor Variances Question 4 Jerf

75. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-75 15 Hanson’s labor efficiency variance (LEV) for the month was: a.$590 unfavorable. b.$590 favorable. c.$600 unfavorable. d.$600 favorable. Hanson’s labor efficiency variance (LEV) for the month was: a.$590 unfavorable. b.$590 favorable. c.$600 unfavorable. d.$600 favorable. LEV = SR(AH - SH) LEV = $12.00(1,550 hrs - 1,500 hrs) LEV = $600 unfavorable Labor Variances Question 4 Jerf

76. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-76 15 Actual Hours Actual Hours Standard Hours × × × Actual Rate Standard Rate Standard Rate Labor Variances Summary Rate variance $310 unfavorable Efficiency variance $600 unfavorable 1,550 hours 1,550 hours 1,500 hours × × × $12.20 per hour $12.00 per hour $12.00 per hour $18,910 $18,600 $18,000 Jerf

77. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-77 15 Labor Rate Variance – A Closer Look Production managers who make work assignments are generally responsible for price variances. High skill, high rate Low skill, low rate Using highly paid skilled workers to perform unskilled tasks results in an unfavorable price variance.

78. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-78 15 Labor Efficiency Variance – A Closer Look Unfavorable Efficiency Variance Poorly trained workers Poor quality materials Poorly maintained equipment Poor supervision of workers

79. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-79 15 Responsibility for Labor Variances You used too much time because of poorly trained workers and poor supervision. I am not responsible for the unfavorable labor efficiency variance! You purchased cheap material, so my people used more time to process it.

80. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-80 15 Responsibility for Labor Variances Maybe I can attribute the labor and material variances to personnel for hiring the wrong people and training them poorly.

81. © The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 15-81 15 End of Chapter 15 Let’s set the standard a little higher.