Exam 9: Performance Measurement and Responsibility Accounting

Carter 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 investment:

A department's direct expenses are usually considered uncontrollable costs.

Direct expenses require allocation across departments because they cannot be readily traced to one department.

Decentralization refers to companies that have multiple locations.

Joint costs can be allocated either using a physical basis or a value basis.

Joint costs are costs incurred in producing or purchasing a single product.

Marks Corporation has two operating departments, Drilling and Grinding, and an office. The three categories of office expenses are allocated to the two departments using different allocation bases. The following information is available for the current period: The amount of salaries that should be allocated to Grinding for the current period is:

The Mixed Nuts Division of Yummy Snacks, Inc. had the following operating results last year: Yummy expects identical operating results in the division this year. The Mixed Nuts Division has the ability to produce and sell 200,000 pounds of product annually. Assume that the Trail Mix Division of Yummy wants to purchase an additional 20,000 pounds of nuts from the Mixed Nuts Division. Mixed Nuts will be able to increase its profit by accepting any transfer price above:

Marks Corporation has two operating departments, Drilling and Grinding, and an office. The three categories of office expenses are allocated to the two departments using different allocation bases. The following information is available for the current period: Item Drilling Grinding Total Number of employees 1,000 1,500 2,500 Net sales \ 325,000 \ 475,000 \ 800,000 Cost of goods sold \ 75,000 \ 125,000 \ 200,000 The amount of depreciation that should be allocated to Grinding for the current period is:

Define joint costs and explain how joint costs can be allocated.

Costs that the manager has the power to determine or at least significantly affect are called:

Return on investment is a useful measure to evaluate the performance of a cost center manager.

Costs that the manager does not have the power to determine or at least significantly affect are:

Describe the information found on a responsibility accounting performance report.

Which of the following is not one of the perspectives used to analyze performance using the balanced scorecard?

What is the cycle time for a manufacturer? What does it reveal about the manufacturing process?

Marks Corporation has two operating departments, Drilling and Grinding, and an office. The three categories of office expenses are allocated to the two departments using different allocation bases. The following information is available for the current period: Office Expenses Total Allocation Basi5 Salaries \3 0,000 Number of employees Depreciation 20,000 Cost of goods sold Advertisirg 40,000 Net sales Item Drilling Grinding Tatal Number of employees 1,000 1,500 2,500 Net sales \3 25,000 \ 475,000 800,000 Cast of goods sald \7 5,000 \ 125,000 200,000 The amount of salaries that should be allocated to Drilling for the current period is:

Two investment centers at Marshman Corporation have the following current-year income and asset data: The return on investment (ROI) for Investment Center A is:

A college uses advisors who work with all students in all divisions of the college. The most useful allocation basis for the salaries of these employees would likely be:

The amount by which a department's sales exceed its direct expenses is: