Question 1

In the preparation of departmental income statements, the preparer completes the following steps in the following order:

Accepted Answer

A)  Identify direct expenses; allocate indirect expenses; allocate service department expenses. 
B)  Identify indirect expenses; allocate direct expenses; allocate service department expenses. 
C)  Identify service department expenses; allocate direct expenses; allocate indirect expenses. 
D)  Identify direct expenses; allocate service department expenses; allocate indirect expenses. 
E)  Allocate all expenses. 
A)  Identify direct expenses; allocate indirect expenses; allocate service department expenses. 
B)  Identify indirect expenses; allocate direct expenses; allocate service department expenses. 
C)  Identify service department expenses; allocate direct expenses; allocate indirect expenses. 
D)  Identify direct expenses; allocate service department expenses; allocate indirect expenses. 
E)  Allocate all expenses.

Question 2

Chancellor Company is divided into four departments. Departments A and B are service departments and Departments 1 and 2 are operating (production) departments. The services of the two service departments are used by the other departments as follows:
 $$\begin{array} { | l | c | c | c | c | } 
\hline & \text { Dept. A } & \text { Dept. B } & \text { Dept. 1 } & \text { Dept. 2 } \
\hline \text { Services of: } & & & & \
\hline \text { Department } A \ldots \ldots \ldots . & & 50 \% & 20 \% & 30 \% \
\hline \text { Department B......... } & & & 40 \% & 60 \% \
\hline \text { Direct costs incurred by each department } & \$ 60,000 & \$ 50,000 & \$ 70,000 & \$ 80,000 \
\hline
\end{array}$$ Complete the following table:

Accepted Answer

The answer of Chancellor Company is divided into four departments....

Question 3

Investment center managers are evaluated on their use of investment center assets to generate income.

Accepted Answer

A) True 
 B)False

Question 4

Using the information below, compute the cycle efficiency: $\begin{array}{lrl}
\text { Process time } & 6.0 & \text { hours } \
\text { Inspections time } & .5 & \text { hours } \
\text { Move time } & .6 & \text { hours } \
\text { Wait time } & .9 & \text { hours } \
\text { Warehouse storage time } & 72.0& \text { hours }
\end{array}$

Accepted Answer

A)  93.8%. 
B)  81.3%. 
C)  100.0%. 
D)  75.0%. 
E)  88.8%. 
A)  93.8%. 
B)  81.3%. 
C)  100.0%. 
D)  75.0%. 
E)  88.8%.

Question 5

Wren Pork Company uses the value basis of allocating joint costs in its production of pork products. Relevant information for the current period follows: $$\begin{array} { l r r } 
\text { Product } &  \text{ Pounds } & \text { Price/lb } \
\text { Loin chops } & { 3 , 0 0 0 } & \$ 5.00 \
\text { Ground } & 10,000 & 2.00 \
\text { Ribs } & 4,000 & 4.75 \
\text { Bacon } & 6,000 & 3.50
\end{array}$$ The total joint cost for the current period was $43,000. How much of this cost should Wren Pork allocate to Loin chops?

Accepted Answer

A)  $0. 
B)  $5,909. 
C)  $8,600. 
D)  $10,750. 
E)  $43,000. 
A)  $0. 
B)  $5,909. 
C)  $8,600. 
D)  $10,750. 
E)  $43,000.

Question 6

A granary allocates the cost of unprocessed wheat to the production of feed, flour, and starch. For the current period, unprocessed wheat was purchased for $120,000, and the following quantities of product and sales revenues were produced. $$\begin{array} { l c c } 
\text { Product } & \text { Pounds } & \text { Price per Pound } \
\text { Feed } & 100,000 & \$ 0.70 \
\text { Flour } & 50,000 & 2.20 \
\text { Starch } & 20,000 & 1.00
\end{array}$$ How much of the $120,000 cost should be allocated to flour if the value basis is used?

Accepted Answer

A)  $24,500. 
B)  $84,000. 
C)  $66,000. 
D)  $70,000. 
E)  $200,000. 
A)  $24,500. 
B)  $84,000. 
C)  $66,000. 
D)  $70,000. 
E)  $200,000.

Question 7

The salaries of employees who spend all their time working in one department are:

Accepted Answer

A)  Variable expenses. 
B)  Indirect expenses. 
C)  Direct expenses. 
D)  Responsibility expenses. 
E)  Unavoidable expenses. 
A)  Variable expenses. 
B)  Indirect expenses. 
C)  Direct expenses. 
D)  Responsibility expenses. 
E)  Unavoidable expenses.

Question 8

Allocating costs to service departments involves accumulating revenues and direct expenses, allocating indirect expenses, and preparing the department income statement.

Accepted Answer

A) True 
 B)False

Question 9

Marian Corporation has two separate divisions that operate as profit centers. The following information is available for the most recent year:   The Black Division occupies 20,000 square feet in the plant. The Navy Division occupies 30,000 square feet. Rent is an indirect expense and is allocated based on square footage. Rent expense for the year was $50,000. Compute departmental income for the Black and Navy Divisions, respectively.

Accepted Answer

A)  $52,000; $163,000. 
B)  $172,000; $352,000. 
C)  $72,000; $163,000. 
D)  $72,000; $193,000. 
E)  $100,000; $241,000. 
A)  $52,000; $163,000. 
B)  $172,000; $352,000. 
C)  $72,000; $163,000. 
D)  $72,000; $193,000. 
E)  $100,000; $241,000.

Question 10

A retail store has three departments, A, B, and C, each of which has four full-time employees. The store does general advertising that benefits all departments. Advertising expense totaled $90,000 for the current year, and departmental sales were:
Department A……………… $308,000
Department B……………… 644,000
Department C……………… 448,000
Total sales…………………. $1,400,000
Calculate the amount of advertising expense that should be allocated to each department?

Accepted Answer

Percentage of total sales:
Dep

Question 11

What is an investment center and how is its performance evaluated?

Accepted Answer

An investment center generates revenues

Question 12

A company pays $15,000 per period to rent a small building that has 10,000 square feet of space. This cost is allocated to the company's three departments on the basis of the amount of the space occupied by each. Department One occupies 2,000 square feet of floor space, Department Two occupies 3,000 square feet of floor space, and Department Three occupies 5,000 square feet of floor space. If the rent is allocated based on the total square footage of the space, Department One should be charged rent expense for the period of:

Accepted Answer

A)  $4,400. 
B)  $3,000. 
C)  $4,000. 
D)  $2,200. 
E)  $2,000. 
A)  $4,400. 
B)  $3,000. 
C)  $4,000. 
D)  $2,200. 
E)  $2,000.

Question 13

Investment center managers are usually evaluated using performance measures

Accepted Answer

A)  that combine income and assets. 
B)  that combine income and capital. 
C)  based on assets only. 
D)  based on income only. 
E)  that combine assets and capital. 
A)  that combine income and assets. 
B)  that combine income and capital. 
C)  based on assets only. 
D)  based on income only. 
E)  that combine assets and capital.

Question 14

The difference between a profit center and an investment center is

Accepted Answer

A)  An investment center incurs costs, but does not directly generate revenues. 
B)  An investment center incurs no costs but does generate revenues. 
C)  An investment center is responsible for investments made in operating assets. 
D)  An investment center provides services to profit centers. 
E)  There is no difference; investment center and profit center are synonymous. 
A)  An investment center incurs costs, but does not directly generate revenues. 
B)  An investment center incurs no costs but does generate revenues. 
C)  An investment center is responsible for investments made in operating assets. 
D)  An investment center provides services to profit centers. 
E)  There is no difference; investment center and profit center are synonymous.

Question 15

Cycle time is calculated by process time plus inspection time plus move time plus ________.

Accepted Answer

The answer of Cycle time is calculated by process time...

Question 16

Jarrett Department Store operates three departments (A, B and
C). If total costs of $4,500 are to be allocated on the basis of square feet of space (Dept. A = 1,500 Sq. Ft.; Dept. B = 900 Sq. Ft.; Dept. C = 600 Sq. Ft.) then Dept. A's share (in percent) of the $4,500 cost would be ________%; Dept. B would be ________%, and Dept. C would be ________%. The amount of cost allocated to Dept. C would be $________.

Accepted Answer

1,500 sq. ft./3,000 sq. ft. =

Question 17

An accounting system that accumulates and reports costs incurred by each service department for management to evaluate the performance of a department is a:

Accepted Answer

A)  Departmental accounting system. 
B)  Cost accounting system. 
C)  Service accounting system. 
D)  Revenue accounting system. 
E)  Standard accounting system. 
A)  Departmental accounting system. 
B)  Cost accounting system. 
C)  Service accounting system. 
D)  Revenue accounting system. 
E)  Standard accounting system.

Question 18

In the process of preparing department income statements, a company uses there are three steps before the statements can be completed. Describe those steps.

Accepted Answer

Step 1-revenues and expenses a

Question 19

Ready Company has two operating (production) departments: Assembly and Painting. Assembly has 150 employees and occupies 44,000 square feet; Painting has 100 employees and occupies 36,000 square feet. Indirect factory expenses for the current period are as follows:   Administration is allocated based on workers in each department; maintenance is allocated based on square footage. The amount of maintenance expenses that should be allocated to the Painting Department for the current period is:

Accepted Answer

A)  $ 48,000. 
B)  $ 55,000. 
C)  $103,000. 
D)  $45,000. 
E)  $110,000. 
A)  $ 48,000. 
B)  $ 55,000. 
C)  $103,000. 
D)  $45,000. 
E)  $110,000.

Question 20

Flamingos, Inc. has four departments. The Administrative Department costs are allocated to the other three departments based on the number of employees in each and the Maintenance Department costs are allocated to the Assembly and Packaging Departments based on their occupied space. Data for these departments follows: $$\begin{array} { | l | r | r | r | r | } 
\hline &\underline{ \text { Admin.} } & \underline{\text { Maintenance } }& \underline{\text { Assembly } }&\underline{ \text { Packaging } }\
\hline \text { Operating costs } & & & \$ 70,000 & \$ 45,000 \
\text { No. of employees } & & \$ 15,000 & 6 & 4 \
\text { Sq. ft. of space } & \$ 30,000 & 2 & 2,000 & 3,000 \
\hline
\end{array}$$ The total amount of the Administrative Department's cost that would eventually be allocated to the Packaging Department is:

Accepted Answer

A)  $4,800. 
B)  $12,000. 
C)  $10,000. 
D)  $18,000. 
E)  $13,000. 
A)  $4,800. 
B)  $12,000. 
C)  $10,000. 
D)  $18,000. 
E)  $13,000.

In the preparation of departmental income statements, the preparer completes the following steps in the following order:

Investment center managers are evaluated on their use of investment center assets to generate income.

Using the information below, compute the cycle efficiency: Process time 6.0 hours Inspections time .5 hours Move time .6 hours Wait time .9 hours Warehouse storage time 72.0 hours

The salaries of employees who spend all their time working in one department are:

Allocating costs to service departments involves accumulating revenues and direct expenses, allocating indirect expenses, and preparing the department income statement.

What is an investment center and how is its performance evaluated?

Investment center managers are usually evaluated using performance measures

The difference between a profit center and an investment center is

Cycle time is calculated by process time plus inspection time plus move time plus ________.

An accounting system that accumulates and reports costs incurred by each service department for management to evaluate the performance of a department is a:

In the process of preparing department income statements, a company uses there are three steps before the statements can be completed. Describe those steps.

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity Based Costing and Analysis

Cost Behavior Cost-Volume-Profit Analysis

Variable Costing and Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Reporting Cash Flows

Analysis of Financial Statements

Time Value of Money

Analyzing for Business Transactions

Partnership Accounting

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Exam 9: Performance Measurement and Responsibility Accounting

In the preparation of departmental income statements, the preparer completes the following steps in the following order:

Investment center managers are evaluated on their use of investment center assets to generate income.

Using the information below, compute the cycle efficiency: Process time 6.0 hours Inspections time .5 hours Move time .6 hours Wait time .9 hours Warehouse storage time 72.0 hours

The salaries of employees who spend all their time working in one department are:

Allocating costs to service departments involves accumulating revenues and direct expenses, allocating indirect expenses, and preparing the department income statement.

What is an investment center and how is its performance evaluated?

Investment center managers are usually evaluated using performance measures

The difference between a profit center and an investment center is

Cycle time is calculated by process time plus inspection time plus move time plus ________.

An accounting system that accumulates and reports costs incurred by each service department for management to evaluate the performance of a department is a:

In the process of preparing department income statements, a company uses there are three steps before the statements can be completed. Describe those steps.

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity Based Costing and Analysis

Cost Behavior Cost-Volume-Profit Analysis

Variable Costing and Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Reporting Cash Flows

Analysis of Financial Statements

Time Value of Money

Analyzing for Business Transactions

Partnership Accounting

Filters