Exam 9: Management Control Systems and Responsibility Accounting

Measures that drive the organization to achieve its goals

is the logical integration of management accounting tools to gather and report data and to evaluate performance.

The statistical plot of measures of various products dimensions or attributes

Financial indicators are not included in a balanced scorecard.

The Deep Discount Company owns a chain of department stores. For each of the following costs of the Toledo store, state whether the cost is a variable cost, fixed cost controllable by the store manager, fixed cost controllable by someone other than the store manager, or a cost that is normally unallocated. Property taxes on Toledo store Sales supervisor's salary Depreciation on store fixtures Corporate- level advertising costs Temporary sales staff wages Cost of merchandise sold Local advertising CEO salary

A measure of labor productivity may include sales revenue divided by number of employees.

Evaluations of the responsibility center manager's performance should ignore uncontrollable costs.

The following information is available for Learning R' Us and its two divisions-Books and Periodicals: Company as Books Periodicals a whole Division Division Net sales \1 00,000 \6 0,000 \4 0,000 Fixed costs: Controllable by division man ager 16,500 12,500 4,000 Controllable by others 8,000 5,000 3,000 Variable costs: Cost of merch andise sold 24,500 17,500 7,000 Operating expenses 16,400 10,000 6,400 Unalloc ated costs 1,000 _ is the contribution by segment for the Periodicals Division.

A profit center can exist in nonprofit organizations.

Employee turnover rate is a measure of:

A set of activities assigned to a manager or a group of managers or other employees

What are the management control principles that will always be important?

"We evaluate the performance of managers using accounting reports based on whatever rules are required for financial reporting." Is this a desirable policy? Explain.

The entire organization may be a responsibility center for the president.

The following information pertains to the Northwest Territory of McDonald Company: Net Sales \ 5,000 Variable costs: Cost of merchandis e sold 1,200 Operating exp enses 450 Fixed costs: Controll able by segment manager 600 Controllable by others 250 Unallocated costs 150 The contribution margin is:

Costs with no persuasive causes and effect or activity- based justification for allocation

The term cost center is used indiscriminately to describe centers that may or may not be assigned responsibility for the capital investment.

Both benefits and costs of management control systems are often difficult to measure.

Increased productivity can be shown by maintaining the number of inputs but increasing the number of outputs.

Eye Of The Beholder Company had the following results: Rolls of film processed 360,000 Sales revenue \ 1,170,000 Direct-labor hours worked 4,580 Direct labor cost \ 43,281 If productivity is computed using financial measures, productivity is: