Exam 24: Performance Measurement and Responsibility Accounting

A company produces two joint products (called 101 and 202)in a single operation that uses one raw material called Casko.Four hundred gallons of Casko were purchased at a cost of $800 and were used to produce 150 gallons of Product 101,selling for $5 per gallon,and 75 gallons of Product 202,selling for $15 per gallon.How much of the $800 cost should be allocated to each product,assuming that the company allocates cost based on sales revenue?

A single basis for allocating service department costs to production departments should be used for all service departments.

Indirect expenses should be allocated to departments based upon the benefits received by each department.

Abbe Company reported the following financial numbers for one of its divisions for the year; average total assets of $4,100,000; sales of $4,525,000; cost of goods sold of $2,550,000; and operating expenses of $1,372,000.Compute the division's return on assets:

___________________ are costs incurred to produce or purchase two or more products at the same time.

A unit of a business that not only incurs costs,but also generates revenues,is called a:

Yoho 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.Compute the division's return on assets:

Within an organizational structure,the person most likely to be evaluated in terms of controllable costs would be:

Mach Co.operates three production departments as profit centers.The following information is available for its most recent year.Which department has the greatest departmental contribution to overhead and what is the amount contributed? Cost of Direct Indirect Dept.Sales Goods Sold Expenses Expenses 1 \ 1,000,000 \ 700,000 \ 100,000 \ 80,000 2 400,000 150,000 40,000 100,000 3 700,000 300,000 150,000 20,000

Expenses that are easily traced and assigned to a specific department because they are incurred for the sole benefit of that department are called:

Plans that identify costs and expenses under each manager's control prior to the reporting period are called:

Eleanor Reed,the manager of the Marinette Plant of the Wisconsin Company is responsible for all of the plant's costs except her own salary.There are two operating departments within the plant,Departments A and B.Each department has its own manager.There is also a maintenance department that provides services equally to the two operating departments.The following information is available. Department managers are responsible for the wages and supplies in their department.They are not responsible for their own salary.Building rent,utilities,and maintenance are allocated to each department based on square footage. Complete the responsibility accounting performance reports below that list costs controllable by the manager of Department A,the manager of Department B,and the manager of the Marinette plant.

A firm produces and sells two products,Mica and Plax.The following information is available relating to setup costs (a part of factory overhead): Using number of setups as the activity base,the amount of setup cost allocated to each unit of product for Mica and Plax,respectively is:

A _______________________ incurs costs and generates revenues.

Division X makes a part that it sells to customers outside of the company.Data concerning this part appear below: Division Y of the same company would like to use the part manufactured by Division X in one of its products.Division Y currently purchases a similar part made by an outside company for $70 per unit and would substitute the part made by Division X.Division Y requires 5,000 units of the part each period.Division X can already sell all of the units it can produce on the outside market.What should be the lowest acceptable transfer price from the perspective of Division X?

In a firm that manufactures clothing,the department that is responsible for actually assembling the garments could best be described as a:

A cost center is a unit of a business that incurs costs but does not directly generate revenues.All of the following are considered cost centers except:

The concepts of direct costs and controllable costs are essentially the same; also,indirect costs and uncontrollable costs are essentially the same.

A dairy allocates the cost of unprocessed milk to the production of milk,cream,butter and cheese.For the current period,unprocessed milk was purchased for $240,000,and the following quantities of product and sales revenues were produced. How much of the $240,000 cost should be allocated to milk?

Community Technical College allocates administrative costs to its teaching departments based on the number of students enrolled,while maintenance and utilities are allocated based on square feet of classrooms.Based on the information below,what is the total amount of expenses allocated to each department (rounded to the nearest dollar)if administrative costs for the college were $150,000,maintenance expenses were $70,000,and utilities were $85,000? Teaching Size of Department Students Classroom Electronics……………. 117 900 sq.ft. Automotive…………... 156 750 sq.ft. Computers………….... 429 1,200 sq.ft. Plumbing…………….. 78 150 sq.ft.