Question 1

Performance reports are unique in that they do not incorporate budgets and variance analysis.

Accepted Answer

A) True 
 B)False

Question 2

A segment contribution margin would reflect the impact of:

Accepted Answer

A)  variable operating expenses. 
B)  fixed expenses controllable by the segment manager. 
C)  fixed expenses traceable to the segment but controllable by others. 
D)  common fixed expenses. 
E)  All answers except common fixed expenses are correct. 
A)  variable operating expenses. 
B)  fixed expenses controllable by the segment manager. 
C)  fixed expenses traceable to the segment but controllable by others. 
D)  common fixed expenses. 
E)  All answers except common fixed expenses are correct.

Question 3

Controllable costs, as used in a responsibility accounting system, consist of:

Accepted Answer

A)  only fixed costs. 
B)  only direct materials and direct labor. 
C)  those costs that a manager can influence in the time period under review. 
D)  those costs about which a manager has some knowledge. 
E)  those costs that are influenced by parties external to the organization. 
A)  only fixed costs. 
B)  only direct materials and direct labor. 
C)  those costs that a manager can influence in the time period under review. 
D)  those costs about which a manager has some knowledge. 
E)  those costs that are influenced by parties external to the organization.

Question 4

A cost pool is:

Accepted Answer

A)  a collection of homogeneous costs to be assigned. 
B)  almost always the combined result of decisions made by different responsibility center managers. 
C)  the primary function of a responsibility accounting system. 
D)  the amount of cost that has been allocated, say, 10%, to a user department. 
E)  the tool used to allocate cost dollars to user departments. 
A)  a collection of homogeneous costs to be assigned. 
B)  almost always the combined result of decisions made by different responsibility center managers. 
C)  the primary function of a responsibility accounting system. 
D)  the amount of cost that has been allocated, say, 10%, to a user department. 
E)  the tool used to allocate cost dollars to user departments.

Question 5

The typical balanced scorecard is best described as containing:

Accepted Answer

A)  financial performance measures. 
B)  nonfinancial performance measures. 
C)  neither financial nor nonfinancial performance measures. 
D)  both financial and nonfinancial performance measures. 
E)  either financial or nonfinancial performance measures but not both. 
A)  financial performance measures. 
B)  nonfinancial performance measures. 
C)  neither financial nor nonfinancial performance measures. 
D)  both financial and nonfinancial performance measures. 
E)  either financial or nonfinancial performance measures but not both.

Question 6

Lead indicators guide management to:

Accepted Answer

A)  take actions now that will have positive effects on organizational performance now. 
B)  take actions now that will have positive effects on organizational performance in the future. 
C)  take actions in the future that will have positive effects on organizational performance now. 
D)  take actions in the past that will have positive effects on organizational performance in the future. 
E)  pursue identical strategies as those implemented with lag indicators. 
A)  take actions now that will have positive effects on organizational performance now. 
B)  take actions now that will have positive effects on organizational performance in the future. 
C)  take actions in the future that will have positive effects on organizational performance now. 
D)  take actions in the past that will have positive effects on organizational performance in the future. 
E)  pursue identical strategies as those implemented with lag indicators.

Question 7

Responsibility accounting refers to the various concepts and tools used by managers to measure the performance of people and departments in order to foster goal congruence.

Accepted Answer

A) True 
 B)False

Question 8

A profit center manager:

Accepted Answer

A)  does not have the ability to produce revenue. 
B)  may be involved with the sale of new marketing programs to clients. 
C)  would normally be held accountable for producing an adequate return on invested capital. 
D)  often oversees divisional operations. 
E)  may be the manager who oversees the operations of a retail store. 
A)  does not have the ability to produce revenue. 
B)  may be involved with the sale of new marketing programs to clients. 
C)  would normally be held accountable for producing an adequate return on invested capital. 
D)  often oversees divisional operations. 
E)  may be the manager who oversees the operations of a retail store.

Question 9

An investment center manager:

Accepted Answer

A)  does not have the ability to produce revenue. 
B)  may be involved with the sale of new marketing programs to clients. 
C)  would normally be held accountable for producing an adequate return on invested capital. 
D)  often oversees divisional operations. 
E)  may be the manager who oversees the operations of a retail store. 
A)  does not have the ability to produce revenue. 
B)  may be involved with the sale of new marketing programs to clients. 
C)  would normally be held accountable for producing an adequate return on invested capital. 
D)  often oversees divisional operations. 
E)  may be the manager who oversees the operations of a retail store.

Question 10

Which of the following is not an example of a responsibility center?

Accepted Answer

A)  Cost center. 
B)  Revenue center. 
C)  Profit center. 
D)  Investment center. 
E)  Contribution center. 
A)  Cost center. 
B)  Revenue center. 
C)  Profit center. 
D)  Investment center. 
E)  Contribution center.

Question 11

The Telemarketing Department of a residential remodeling company would most likely be evaluated as a:

Accepted Answer

A)  cost center. 
B)  revenue center. 
C)  profit center. 
D)  investment center. 
E)  contribution center. 
A)  cost center. 
B)  revenue center. 
C)  profit center. 
D)  investment center. 
E)  contribution center.

Question 12

An allocation base for a cost pool should ideally be:

Accepted Answer

A)  machine hours. 
B)  a cost object. 
C)  a common cost. 
D)  a cost driver. 
E)  direct labor, either cost or hours. 
A)  machine hours. 
B)  a cost object. 
C)  a common cost. 
D)  a cost driver. 
E)  direct labor, either cost or hours.

Question 13

The following selected data relate to the Ohio Division of Midwest Industries (MWI):
   
Required: 
A. Compute the following for the Ohio Division:
1. Segment contribution margin.
2. Controllable profit margin.
3. Segment profit margin.
B. Which of the three preceding measures should be used when evaluating the Ohio Division as an investment of MWI's resources? Why?
C. Assume that management made the decision to prepare a segmented income statement that reflected Ohio's five operating departments. Would all $1,120,000 of the controllable fixed costs be easily traced to the departments? Briefly explain.
D. Which of the five-dollar amounts presented in the body of the problem would be used in computing the income before taxes of MWI?

Accepted Answer

A. 1. Segment contribution margin: $4,58

Question 14

When using a balanced scorecard, which of the following is typically classified as an internal-operations performance measure?

Accepted Answer

A)  Cash flow. 
B)  Number of customer complaints. 
C)  Employee training hours. 
D)  Number of employee suggestions. 
E)  Number of suppliers used. 
A)  Cash flow. 
B)  Number of customer complaints. 
C)  Employee training hours. 
D)  Number of employee suggestions. 
E)  Number of suppliers used.

Question 15

Which of the following would have a low likelihood of being organized as a profit center?

Accepted Answer

A)  A movie theater of a company that operates a chain of theaters. 
B)  A maintenance department that charges users for its services. 
C)  The billing department of an Internet Services Provider (ISP). 
D)  The mayor's office in a large city. 
E)  Both the billing department of an Internet Services Provider (ISP) and the mayor's office in a large city. 
A)  A movie theater of a company that operates a chain of theaters. 
B)  A maintenance department that charges users for its services. 
C)  The billing department of an Internet Services Provider (ISP). 
D)  The mayor's office in a large city. 
E)  Both the billing department of an Internet Services Provider (ISP) and the mayor's office in a large city.

Question 16

A manufacturer's raw-material purchasing department would likely be classified as a:

Accepted Answer

A)  cost center. 
B)  revenue center. 
C)  profit center. 
D)  investment center. 
E)  contribution center. 
A)  cost center. 
B)  revenue center. 
C)  profit center. 
D)  investment center. 
E)  contribution center.

Question 17

If the head of a hotel's food and beverage operation is held accountable for revenues and costs, the food and beverage operation would be considered a (n):

Accepted Answer

A)  cost center. 
B)  revenue center. 
C)  profit center. 
D)  investment center. 
E)  contribution center. 
A)  cost center. 
B)  revenue center. 
C)  profit center. 
D)  investment center. 
E)  contribution center.

Question 18

Sandy Shores Corporation operates two stores: J and K. The following information relates to J:
 
J's segment contribution margin is:

Accepted Answer

A)  $345,000. 
B)  $425,000. 
C)  $620,000. 
D)  $700,000. 
E)  $745,000. 
A)  $345,000. 
B)  $425,000. 
C)  $620,000. 
D)  $700,000. 
E)  $745,000.

Question 19

A company-owned restaurant in a fast-food chain is considered an investment center.

Accepted Answer

A) True 
 B)False

Question 20

Use the following information to answer the following Questions
The following information was taken from the segmented income statement of Restin, Inc., and the company's three divisions:
 
In addition, the company incurred common fixed costs of $18,000.
-Assume that the Los Angeles division increases its promotion expense, a controllable fixed cost, by $10,000. As a result, revenues increased by $50,000. If variable expenses are tied directly to revenues, the new Los Angeles segment contribution margin is:

Accepted Answer

A)  $12,500. 
B)  $22,500. 
C)  $32,500. 
D)  $50,000. 
E)  $60,000 
A)  $12,500. 
B)  $22,500. 
C)  $32,500. 
D)  $50,000. 
E)  $60,000

Performance reports are unique in that they do not incorporate budgets and variance analysis.

A segment contribution margin would reflect the impact of:

Controllable costs, as used in a responsibility accounting system, consist of:

A cost pool is:

The typical balanced scorecard is best described as containing:

Lead indicators guide management to:

Responsibility accounting refers to the various concepts and tools used by managers to measure the performance of people and departments in order to foster goal congruence.

A profit center manager:

An investment center manager:

Which of the following is not an example of a responsibility center?

The Telemarketing Department of a residential remodeling company would most likely be evaluated as a:

An allocation base for a cost pool should ideally be:

When using a balanced scorecard, which of the following is typically classified as an internal-operations performance measure?

Which of the following would have a low likelihood of being organized as a profit center?

A manufacturer's raw-material purchasing department would likely be classified as a:

If the head of a hotel's food and beverage operation is held accountable for revenues and costs, the food and beverage operation would be considered a (n):

Sandy Shores Corporation operates two stores: J and K. The following information relates to J: J's segment contribution margin is:

A company-owned restaurant in a fast-food chain is considered an investment center.

The Changing Role of Managerial Accounting in a Dynamic Business Environment

Basic Cost Management Concepts

Product Costing and Cost Accumulation in a Batch Production Environment

Process Costing and Hybrid Product-Costing Systems

Activity-Based Costing and Management

Activity Analysis, Cost Behavior, and Cost Estimation

Cost-Volume-Profit Analysis

Variable Costing and the Costs of Quality and Sustainability

Financial Planning and Analysis: the Master Budget

Standard Costing and Analysis of Direct Costs

Flexible Budgeting and Analysis of Overhead Costs

Investment Centers and Transfer Pricing

Decision Making: Relevant Costs and Benefits

Target Costing and Cost Analysis for Pricing Decisions

Capital Expenditure Decisions

Allocation of Support Activity Costs and Joint Costs

The Sarbanes-Oxley Act, Internal Controls, and Management Accounting

Compound Interest and the Concept of Present Value

Inventory Management

Filters

Exam 12: Responsibility Accounting, Operational Performance Measures, and the Balanced Scorecard

Performance reports are unique in that they do not incorporate budgets and variance analysis.

A segment contribution margin would reflect the impact of:

Controllable costs, as used in a responsibility accounting system, consist of:

A cost pool is:

The typical balanced scorecard is best described as containing:

Lead indicators guide management to:

Responsibility accounting refers to the various concepts and tools used by managers to measure the performance of people and departments in order to foster goal congruence.

A profit center manager:

An investment center manager:

Which of the following is not an example of a responsibility center?

The Telemarketing Department of a residential remodeling company would most likely be evaluated as a:

An allocation base for a cost pool should ideally be:

When using a balanced scorecard, which of the following is typically classified as an internal-operations performance measure?

Which of the following would have a low likelihood of being organized as a profit center?

A manufacturer's raw-material purchasing department would likely be classified as a:

If the head of a hotel's food and beverage operation is held accountable for revenues and costs, the food and beverage operation would be considered a (n):

Sandy Shores Corporation operates two stores: J and K. The following information relates to J: J's segment contribution margin is:

A company-owned restaurant in a fast-food chain is considered an investment center.

The Changing Role of Managerial Accounting in a Dynamic Business Environment

Basic Cost Management Concepts

Product Costing and Cost Accumulation in a Batch Production Environment

Process Costing and Hybrid Product-Costing Systems

Activity-Based Costing and Management

Activity Analysis, Cost Behavior, and Cost Estimation

Cost-Volume-Profit Analysis

Variable Costing and the Costs of Quality and Sustainability

Financial Planning and Analysis: the Master Budget

Standard Costing and Analysis of Direct Costs

Flexible Budgeting and Analysis of Overhead Costs

Investment Centers and Transfer Pricing

Decision Making: Relevant Costs and Benefits

Target Costing and Cost Analysis for Pricing Decisions

Capital Expenditure Decisions

Allocation of Support Activity Costs and Joint Costs

The Sarbanes-Oxley Act, Internal Controls, and Management Accounting

Compound Interest and the Concept of Present Value

Inventory Management

Filters