Exam 12: Fundamentals of Management Control Systems

If a budgeted activity base is used as the base in cost allocation, each department's cost allocation will be predictable, and not influenced by the:

The Copy Department in the College of Business at State University provides photocopying services for both the Marketing and Economics Departments. The following budget has been prepared for the year. Available capacity 6,000,000 pages Budgeted usage: Marketing 3,600,000 pages Economics 1,800,000 pages Cost equation \ 120,000+\ 0.02 per page - If the Copy Department uses a dual-rate for allocating its costs, how much cost will be allocated to the Marketing Department, assuming the Marketing Department actually made 3,800,000 copies during the year?

Which of the following subunits is most likely to be considered an investment center?

How does the separation of duties help prevent financial fraud?

The design and use of management control systems affects how an individual makes and implements decisions.

Which of the following subunits would most likely be considered a cost center?

Which of the following is not one of the objectives of cost allocation?

Waterford Company maintains a cafeteria for its employees. For June, variable food costs were budgeted at $45 per employee based on a budgeted level of 200 employees in other departments. During the month, an average of 190 employees worked in other departments and actual food costs totaled $9,250. How much food cost should be charged to the other departments at the end of the month for performance evaluation purposes?

Controllable revenue is included in a performance report of a: Profit Center Investment Center A) Yes No B) Yes Yes C) No No D) No Yes

Which of the following is not an internal control?

Mesa Telcom has three divisions, commercial, retail, and consumer, that share the common costs of the company's computer server network. The annual common costs are $2,400,000. You have been provided with the following information for the upcoming year: Connections Time on Network (hours) Commercial 60,000 120,000 Retail 80,000 150,000 Consumer 100,000 330,000 - What is the allocation rate for the upcoming year, assuming Mesa Telcom uses the single-rate method and allocates common costs based on the time on the network?

The Document Creation Center (DCC) for Arlington Corp. provides photocopying and document services for three departments in the Minneapolis office. The following budget has been prepared for the year. Available capacity 8,000,000 pages Budgeted usage: Software Development 1,600,00 pages Training 3,000,00 pages Management 2,400,000 pages Cost equation \ 280,000+\ 0.03 per page - If DCC uses a dual-ate for allocating its costs based on usage, how much cost will be allocated to the Management Department?

The dual-rate method is a cost allocation approach that separates a common cost into fixed and variable components and:

The controllability concept states that managers should be held responsible for:

Banglor Manufacturing Corporation uses a responsibility accounting system in its operations. Which one of the following items is least likely to appear in a performance report for a manager of one of Banglor's assembly lines? (CMA adapted)

Revenue center and profit center managers are both responsible for meeting:

Barrington Box Enterprises has two divisions, large and small, that share the common costs of the company's communications network. The annual common costs are $4,500,000. You have been provided with the following information for the upcoming year: Calls Time on Network (hours) Large 100,000 120,000 Small 80,000 320,000 - The cost accountant determined $2,700,000 of the communication network's costs were fixed and should be allocated based on the number of calls. The remaining costs should be allocated based on the time on the network. What is the total communication network costs allocated to the Large Box Division, assuming the company uses dual-rates to allocate common costs?

Barrington Box Enterprises has two divisions, large and small, that share the common costs of the company's communications network. The annual common costs are $4,500,000. You have been provided with the following information for the upcoming year: Calls Time on Network (hours) Large 100,000 120,000 Small 80,000 320,000 - What is the allocation rate for the upcoming year, assuming Barrington Box uses the single-rate method and allocates common costs based on the number of calls?

In general, organizations are more centralized in the early stages of their existence and more decentralized as they grow.

In general, profit centers are found at higher levels in an organization than investment centers.