Question 1

Which of the following measures would reflect the fixed costs controllable by a segment manager?

Accepted Answer

The answer of Which of the following measures would reflect...

Question 2

Common costs are charged to a company's operating segments when preparing a segmented income statement.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following balanced-scorecard perspectives is influenced by a company's vision and strategy?

Accepted Answer

A)  Financial. 
B)  Customer. 
C)  Internal operations. 
D)  Learning and growth. 
E)  All of the answers are correct. 
A)  Financial. 
B)  Customer. 
C)  Internal operations. 
D)  Learning and growth. 
E)  All of the answers are correct.

Question 4

Flex, Inc., which is headquartered in Hoboken, New Jersey, operates a chain of 125 shoe stores throughout the United States. Consider the costs that appear in the following table, many of which pertain to the company's sole operation in Pottersville, New Jersey:
   
Specify store maintenance as a fixed costs. Adopt the following language. "Pottersville store maintenance costs as agreed upon in yearly maintenance contract negotiated by Pottersville manager."
Required:

Analyze each of the costs and determine whether the cost affects Pottersville segment contribution margin, controllable profit margin, and segment profit margin, and/or the net income of Flex, Inc. Place an "X" in the appropriate cell(s).

Accepted Answer

The answer of Flex, Inc., which is headquartered in Hoboken,...

Question 5

A company's balanced scorecard should focus on the performance measurements that are most important to its key competitor.

Accepted Answer

A) True 
 B)False

Question 6

For a company that uses responsibility accounting, which of the following costs is least likely to appear on a performance report of an assembly-line supervisor?

Accepted Answer

A)  Direct materials used. 
B)  Departmental supplies. 
C)  Assembly-line labor. 
D)  Repairs and maintenance. 
E)  Assembly-line facilities depreciation. 
A)  Direct materials used. 
B)  Departmental supplies. 
C)  Assembly-line labor. 
D)  Repairs and maintenance. 
E)  Assembly-line facilities depreciation.

Question 7

Pride Company is preparing a segmented income statement, subdivided into departments (billing, purchasing, and telemarketing). Which of the following choices correctly describes the accounting treatment of the firm's compensation cost for key executives (president and vice-presidents)?

Accepted Answer

A)  The cost is charged to the departments. 
B)  The cost is not charged to the departments because, although easily traceable to the departments, it is not controllable at the departmental level. 
C)  The cost is not charged to the departments because, although controllable at the departmental level, it is not easily traceable to the departments. 
D)  The cost is not charged to the departments because it is both easily traceable to the departments and controllable by the departments. 
E)  The cost is not charged to the departments because it is neither easily traceable to the departments nor controllable by the departments. 
A)  The cost is charged to the departments. 
B)  The cost is not charged to the departments because, although easily traceable to the departments, it is not controllable at the departmental level. 
C)  The cost is not charged to the departments because, although controllable at the departmental level, it is not easily traceable to the departments. 
D)  The cost is not charged to the departments because it is both easily traceable to the departments and controllable by the departments. 
E)  The cost is not charged to the departments because it is neither easily traceable to the departments nor controllable by the departments.

Question 8

Gator Country Cable, Inc. is organized in three segments: Metro, Suburban, and Outlying. Data for the company and for these segments follow.

Accepted Answer

A.
 @#IMG-DLM& B. The most appropriate performance

Question 9

Use the following information to answer the following Questions
Management of Wee Ones (WO), an operator of day-care facilities, wants the company's profit to be subdivided by center. The firm's accountant has provided the following data:
 
WO's advertising, which is handled by the home office, is not reflected in the preceding figures and amounted to $60,000.
-Assume that management used the allocation base that is most influenced by advertising effort and consistent with sound managerial accounting practices. How much advertising would be allocated to the Irvine center?

Accepted Answer

A)  $17,838. 
B)  $19,800. 
C)  $20,000. 
D)  $20,400. 
E)  $21,000. 
A)  $17,838. 
B)  $19,800. 
C)  $20,000. 
D)  $20,400. 
E)  $21,000.

Question 10

Thurmon Retail has three stores in West Virginia. Which of the following costs would likely be excluded when computing the profit margin controllable by store no. 3's manager?

Accepted Answer

A)  Hourly labor costs incurred by personnel at store no. 3. 
B)  Property taxes attributable to store no. 3. 
C)  The salary of Thurmon's president. 
D)  The salary of store no. 3's manager. 
E)  All answers except hourly labor costs incurred by personnel at store no. 3 are correct. 
A)  Hourly labor costs incurred by personnel at store no. 3. 
B)  Property taxes attributable to store no. 3. 
C)  The salary of Thurmon's president. 
D)  The salary of store no. 3's manager. 
E)  All answers except hourly labor costs incurred by personnel at store no. 3 are correct.

Question 11

Which of the following is an appropriate base to distribute the cost of building depreciation to responsibility centers?

Accepted Answer

A)  Number of employees in the responsibility centers. 
B)  Budgeted sales dollars of the responsibility centers. 
C)  Square feet occupied by the responsibility centers. 
D)  Budgeted net income of the responsibility centers. 
E)  Total budgeted direct operating costs of the responsibility centers. 
A)  Number of employees in the responsibility centers. 
B)  Budgeted sales dollars of the responsibility centers. 
C)  Square feet occupied by the responsibility centers. 
D)  Budgeted net income of the responsibility centers. 
E)  Total budgeted direct operating costs of the responsibility centers.

Question 12

Midtown Retail operates a retail store in Kansas City, MO., and St. Louis, MO. The following information relates to the Kansas City facility:
· The store sold 65,000 units at $18.00 each, after having purchased the units from various suppliers for $12.50. Kansas City salespeople are paid a 5% commission based on gross sales dollars.
· Kansas City's sales manager oversees the placement of local advertising contracts, which totaled $54,000 for the year. Local property taxes amounted to $14,500.
· The sales manager's $65,000 salary is set by Kansas City's store manager. In contrast, the store manager's $134,000 salary is determined by Midtown's vice president.
· Kansas City incurred $6,800 of other noncontrollable costs.
· Nontraceable (common) corporate overhead totaled $68,000.
Midtown's corporate headquarters is located in St. Louis, and the company uses responsibility accounting to evaluate performance.
Required: 
Prepare a segmented income statement for the Kansas City store, being sure to disclose the segment contribution margin, the segment controllable profit margin, and segment profit margin.

Accepted Answer

The answer of Midtown Retail operates a retail store in...

Question 13

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.
-Which of the following amounts should be used to evaluate whether Restin, Inc., should continue to invest company resources in the Los Angeles division?

Accepted Answer

A)  $4,000. 
B)  $8,000. 
C)  $10,000. 
D)  $25,000. 
E)  $90,000. 
A)  $4,000. 
B)  $8,000. 
C)  $10,000. 
D)  $25,000. 
E)  $90,000.

Question 14

Which of the following measures would reflect the variable costs incurred by a business segment?

Accepted Answer

The answer of Which of the following measures would reflect...

Question 15

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.
-Assuming use of a responsibility accounting system, which of the following amounts should be used to evaluate the performance of the Los Angeles division manager?

Accepted Answer

A)  $4,000. 
B)  $8,000. 
C)  $10,000. 
D)  $25,000. 
E)  $90,000. 
A)  $4,000. 
B)  $8,000. 
C)  $10,000. 
D)  $25,000. 
E)  $90,000.

Question 16

A collection of costs to be assigned is called a cost pool.

Accepted Answer

A) True 
 B)False

Question 17

Costs that are traceable to a segment and are completely beyond the influence of the segment manager can be advantageously divided in segment reports into two distinct responsibilities - those for segments and those for segment managers.

Accepted Answer

A) True 
 B)False

Question 18

Responsibility accounting systems strive to:

Accepted Answer

A)  place blame on guilty individuals. 
B)  provide information to managers. 
C)  hold managers accountable for both controllable and noncontrollable costs. 
D)  identify unfavorable variances. 
E)  provide information so that managers can make decisions that are in the best interest of their individual centers rather than in the best interests of the firm as a whole. 
A)  place blame on guilty individuals. 
B)  provide information to managers. 
C)  hold managers accountable for both controllable and noncontrollable costs. 
D)  identify unfavorable variances. 
E)  provide information so that managers can make decisions that are in the best interest of their individual centers rather than in the best interests of the firm as a whole.

Question 19

The difference between the profit margin controllable by a segment manager and the segment profit margin is caused by:

Accepted Answer

A)  variable operating expenses. 
B)  allocated common expenses. 
C)  fixed expenses controllable by the segment manager. 
D)  fixed expenses traceable to the segment but controllable by others. 
E)  sales revenue. 
A)  variable operating expenses. 
B)  allocated common expenses. 
C)  fixed expenses controllable by the segment manager. 
D)  fixed expenses traceable to the segment but controllable by others. 
E)  sales revenue.

Question 20

Brilliant Stone Corporation (BSC) manufactures decorative, sculpted accessories that are sold by interior decorators and home furnishing stores. The following situation concerns two BSC employees: Mika George, head of the company's Billing Department, and Frank Merser, the firm's general manager.
George's Billing Department makes heavy use of hourly employees and is evaluated as a cost center. Understanding the need for prompt collection of receivables, George strives to run a first-class operation. George also understands the need to contribute in a big way to BSC's financial performance so she continually strives to minimize Billing Department expenses.
Unfortunately, George experienced a heated discussion with Merser several weeks ago, the subject being the shoddy operation that she is running. Merser complained loudly about the lack of timely billings to customers and the general lack of attention to detail, as many complaints have surfaced about erroneous invoices and customer statements.
Required: 
A. What is meant by the term "responsibility accounting?"
B. What measure(s) of performance would companies normally use to evaluate a cost-center manager?
C. Does Merser have a valid reason to be upset with George? Given the nature of the Billing Department, did George err in her quest to minimize expenses? Explain.
D. Is it likely that the Billing Department could be evaluated as a profit center? Why?

Accepted Answer

A. Responsibility accounting refers to t

Which of the following measures would reflect the fixed costs controllable by a segment manager?

Common costs are charged to a company's operating segments when preparing a segmented income statement.

Which of the following balanced-scorecard perspectives is influenced by a company's vision and strategy?

A company's balanced scorecard should focus on the performance measurements that are most important to its key competitor.

For a company that uses responsibility accounting, which of the following costs is least likely to appear on a performance report of an assembly-line supervisor?

Pride Company is preparing a segmented income statement, subdivided into departments (billing, purchasing, and telemarketing). Which of the following choices correctly describes the accounting treatment of the firm's compensation cost for key executives (president and vice-presidents)?

Gator Country Cable, Inc. is organized in three segments: Metro, Suburban, and Outlying. Data for the company and for these segments follow.

Thurmon Retail has three stores in West Virginia. Which of the following costs would likely be excluded when computing the profit margin controllable by store no. 3's manager?

Which of the following is an appropriate base to distribute the cost of building depreciation to responsibility centers?

Which of the following measures would reflect the variable costs incurred by a business segment?

A collection of costs to be assigned is called a cost pool.

Costs that are traceable to a segment and are completely beyond the influence of the segment manager can be advantageously divided in segment reports into two distinct responsibilities - those for segments and those for segment managers.

Responsibility accounting systems strive to:

The difference between the profit margin controllable by a segment manager and the segment profit margin is caused by:

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

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

Which of the following measures would reflect the fixed costs controllable by a segment manager?

Common costs are charged to a company's operating segments when preparing a segmented income statement.

Which of the following balanced-scorecard perspectives is influenced by a company's vision and strategy?

A company's balanced scorecard should focus on the performance measurements that are most important to its key competitor.

For a company that uses responsibility accounting, which of the following costs is least likely to appear on a performance report of an assembly-line supervisor?

Pride Company is preparing a segmented income statement, subdivided into departments (billing, purchasing, and telemarketing). Which of the following choices correctly describes the accounting treatment of the firm's compensation cost for key executives (president and vice-presidents)?

Gator Country Cable, Inc. is organized in three segments: Metro, Suburban, and Outlying. Data for the company and for these segments follow.

Thurmon Retail has three stores in West Virginia. Which of the following costs would likely be excluded when computing the profit margin controllable by store no. 3's manager?

Which of the following is an appropriate base to distribute the cost of building depreciation to responsibility centers?

Which of the following measures would reflect the variable costs incurred by a business segment?

A collection of costs to be assigned is called a cost pool.

Costs that are traceable to a segment and are completely beyond the influence of the segment manager can be advantageously divided in segment reports into two distinct responsibilities - those for segments and those for segment managers.

Responsibility accounting systems strive to:

The difference between the profit margin controllable by a segment manager and the segment profit margin is caused by:

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