Exam 24: Performance Measurement and Responsibility Accounting

The type of department that generates revenues and incurs costs,and its manager is responsible for the investments made in operating assets is called a:

Holo Company reported the following financial numbers for one of its divisions for the year;average total assets of $5,800,000;sales of $5,375,000;cost of goods sold of $3,225,000;and operating expenses of $1,147,000.Assume a target income of 15% of average invested assets.Compute residual income for the division:

A system of performance measures,including nonfinancial measures,used to assess company and division manager performance is:

When the selling division in an internal transfer has unsatisfied demand from outside customers for the product that is being transferred,then the lowest acceptable transfer price as far as the selling division is concerned is:

The amount by which a department's sales exceed its direct expenses is:

A lumber mill paid $70,000 for logs that produced 200,000 board feet of lumber in 3 different grades and amounts as follows: Compute the portion of the $70,000 joint cost to be allocated to No.2 Common.

Allocating costs to service departments involves accumulating revenues and direct expenses,allocating indirect expenses,and preparing the department income statement.

Measures used to evaluate the manager of an investment center include investment turnover and profit margin.

Rent and maintenance expenses would most likely be allocated based on:

A profit center generates revenue,incurs costs,and has the authority to make significant investing decisions.

In a responsibility accounting system:

Wren Pork Company uses the relative market value method of allocating joint costs in its production of pork products.Relevant information for the current period follows: The total joint cost for the current period was $43,000.How much of this cost should Wren Pork allocate to Loin chops?

A ______________________________ accumulates and reports costs and expenses that a manager is responsible for,including budgeted amounts.

Data pertaining to a company's joint production for the current period follows: Compute the cost to be allocated to Product M for this period's $660 of joint costs if the value basis is used.

An accounting system that is set up to control costs and evaluate managers' performance by assigning costs to the managers responsible for controlling them is called a:

Williams Co.operates three separate departments (R,S,T).The data below is provided for the current year: Required: Prepare an income statement showing the departmental contributions to overhead for the current year.

Differential Chemical produced 10,000 gallons of Preon and 20,000 gallons of Paron.Joint costs incurred in producing the two products totaled $7,500.At the split-off point,Preon has a market value of $6.00 per gallon and Paron $2.00 per gallon.Compute the portion of the joint costs to be allocated to Preon if the value basis is used.

A useful measure used to evaluate the performance of an investment center is investment center residual income.

The difference between a profit center and an investment center is

Pepper Department store allocates its service department expenses to its various operating (sales)departments.The following data is available for its service departments: The following information is available for its three operating (sales)departments: What is the total advertising expense allocated to Department C?