Exam 9: Performance Measurement and Responsibility Accounting

With respect to cycle time, companies strive to reduce non-value added time in order to improve ________.

Evaluation of the performance of an investment center involves only financial measures.

Departmental salary expenses are direct expenses of that department.

Pleasant Hills Properties is developing a golf course subdivision that includes 250 home lots; 100 lots are golf course lots and will sell for $95,000 each; 150 are street frontage lots and will sell for $65,000. The developer acquired the land for $1,800,000 and spent another $1,400,000 on street and utilities improvement. Compute the amount of joint cost to be allocated to the street frontage lots using value basis. (Round your intermediate percentages to 2 decimal places.)

Rent and maintenance expenses would most likely be allocated based on:

A unit of a business that generates revenues and incurs costs is called a:

Plans that identify costs and expenses under each manager's control prior to the reporting period, typically based on the flexible budget approach, are called:

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

Regardless of the system used in departmental cost analysis:

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

No standard rule identifies the best basis of allocating expenses across departments.

Profit center managers are evaluated on their ability to generate revenues in excess of costs.

The investment center return on investment is ________ divided by ________.

The type of department that generates revenues and incurs costs, and its manager is responsible for the investments made in operating assets is called a(n):

A firm produces and sells two products, Plus and Max. 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 Plus and Max, respectively is:

A profit center generates revenue, incurs costs, and has the authority to make significant investing decisions.

A ________ provides information for managers to use to evaluate the profitability or cost effectiveness of each department's activities.

Sturdivant Fasteners, Co. uses a traditional allocation of overhead based on direct labor hours system. The manager has accumulated the following information on engineering changes, which are indirect cost of their products, for two of the company's major products: Automotive Fasteners Computer Fasteners Total units produced 5,000 2,500 Cost per engineering change \ 400 \ 400 Number of engineering changes 5 25 Direct labor hours per unit 4 4 Compute the cost per unit using: The traditional two-stage allocation of the costs of engineering changes based on direct labor hours.

Profit margin for an investment center measures:

Direct expenses are incurred for the joint benefit of more than one department; they cannot be readily traced to only one department.