Question 1

A department can never be considered to be a profit center.

Accepted Answer

A) True 
 B)False

Question 2

Profit center

Accepted Answer

A) A department or unit that incurs costs without directly generating revenues. 
B) A center in which a manager is responsible for using the center's assets to generate income for the center. 
C) Costs that are incurred for the joint benefit of more than one department and cannot be readily traced to only one department. 
D) Costs readily traced to a specific department because they are incurred for the sole benefit of that department. 
E) Costs incurred to produce two or more products at the same time.
F)Costs that a manager can strongly influence or control.
G)A department that incurs costs and generates revenues.
H)Assigns managers the responsibility for costs and expenses under their control. 
A) A department or unit that incurs costs without directly generating revenues. 
B) A center in which a manager is responsible for using the center's assets to generate income for the center. 
C) Costs that are incurred for the joint benefit of more than one department and cannot be readily traced to only one department. 
D) Costs readily traced to a specific department because they are incurred for the sole benefit of that department. 
E) Costs incurred to produce two or more products at the same time.
F)Costs that a manager can strongly influence or control.
G)A department that incurs costs and generates revenues.
H)Assigns managers the responsibility for costs and expenses under their control.

Question 3

The most useful allocation basis for the departmental costs of an advertising campaign for a storewide sale is likely to be:

Accepted Answer

A) Floor space of each department. 
B) Relative number of items each department had on sale. 
C) Number of customers to enter each department. 
D) An equal amount of cost for each department. 
E) Total sales of each department. 
A) Floor space of each department. 
B) Relative number of items each department had on sale. 
C) Number of customers to enter each department. 
D) An equal amount of cost for each department. 
E) Total sales of each department.

Question 4

The most useful evaluation of a manager's cost performance is based on:

Accepted Answer

A) Controllable costs. 
B) Contribution percentages. 
C) Departmental contributions to overhead. 
D) Fixed expenses. 
E) Direct costs. 
A) Controllable costs. 
B) Contribution percentages. 
C) Departmental contributions to overhead. 
D) Fixed expenses. 
E) Direct costs.

Question 5

Define an investment center.How are investment centers evaluated?

Accepted Answer

An investment center is a department who

Question 6

Controllable costs

Accepted Answer

A) A department or unit that incurs costs without directly generating revenues. 
B) A center in which a manager is responsible for using the center's assets to generate income for the center. 
C) Costs that are incurred for the joint benefit of more than one department and cannot be readily traced to only one department. 
D) Costs readily traced to a specific department because they are incurred for the sole benefit of that department. 
E) Costs incurred to produce two or more products at the same time.
F)Costs that a manager can strongly influence or control.
G)A department that incurs costs and generates revenues.
H)Assigns managers the responsibility for costs and expenses under their control. 
A) A department or unit that incurs costs without directly generating revenues. 
B) A center in which a manager is responsible for using the center's assets to generate income for the center. 
C) Costs that are incurred for the joint benefit of more than one department and cannot be readily traced to only one department. 
D) Costs readily traced to a specific department because they are incurred for the sole benefit of that department. 
E) Costs incurred to produce two or more products at the same time.
F)Costs that a manager can strongly influence or control.
G)A department that incurs costs and generates revenues.
H)Assigns managers the responsibility for costs and expenses under their control.

Question 7

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

Accepted Answer

A) Performance center. 
B) Profit center. 
C) Cost center. 
D) Responsibility center. 
E) Expense center. 
A) Performance center. 
B) Profit center. 
C) Cost center. 
D) Responsibility center. 
E) Expense center.

Question 8

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, that each has their own managers.There is also a maintenance department that provides services equally to the two operating departments.The following information is available:
 \(\begin{array}{c}
\quad\quad\quad\quad\quad\quad\quad\quad{\text { Budget }} \quad\quad\quad\quad\quad {\text { Actual }} \
\begin{array}{|l|r|r|r|r|r|r|}

\hline & {\mathrm{A}} & \mathrm{B} & {\text { Total }} & {\mathrm{A}} & {\mathrm{B}} & {\text { Total }} \
\hline \text { Employee wages } & \$ 3,500 & \$ 4,000 & \$ 7,500 & \$ 3,200 & \$ 4,700 & \$ 7,900 \
\hline \begin{array}{l}
\text { Department } \
\text { Manager's salary }
\end{array} & 800 & 800 & 1,600 & 800 & 800 & 1,600 \
\hline \text { Supplies } & 750 & 600 & 1,350 & 700 & 590 & 1,290 \
\hline \text { Building rent } & 1,500 & 1,500 & 3,000 & 1,400 & 1,400 & 2,800 \
\hline \text { Utilities } & 300 & 300 & 600 & 375 & 375 & 750 \
\hline \text { Maintenance } & \underline {3,300} & \underline {3,300 }& \underline {6,600 }& \underline {3,000} & \underline {3,000} &\underline {6,000} \
\hline \text { Totals } & \underline {\$ 10,150} & \underline {\$ 10,500} & \underline {\$ 20,650 }&\underline { \$ 9,475} & \underline {\$ 10,865} & \underline {\$ 20,340} \
\hline
\end{array}\end{array}\) Each department manager is responsible 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.
 $\begin{array}{|l|r|r|r|}
\hline &\begin{array}{c}
\text { Budgeted } \
\text { amount }
\end{array} & \begin{array}{c}
\text { Actual } \
\text { amount }
\end{array} & \begin{array}{c}
\text { Over (under) } \
\text { budget }
\end{array} \

\hline  \text { Manager, Marinette Plant }\
\hline \text { Controllable costs: } \
\hline  \
\hline \
\hline \
\hline  \
\hline  \
\hline \
\hline  \
\hline  \
\hline \text {Manager, Department A  } \
\hline \text { Controllable costs: } \
\hline\
\hline\
\hline  \
\hline \
\hline \text { Manager, Department B } \
\hline \text { Controllable costs: } \
\hline \
\hline  \
\hline  \
\hline
\end{array}$

Accepted Answer

None

Question 9

Responsibility performance reports usually compare actual costs to the budgeted costs amounts.

Accepted Answer

A) True 
 B)False

Question 10

Joint cost

Accepted Answer

A) A department or unit that incurs costs without directly generating revenues. 
B) A center in which a manager is responsible for using the center's assets to generate income for the center. 
C) Costs that are incurred for the joint benefit of more than one department and cannot be readily traced to only one department. 
D) Costs readily traced to a specific department because they are incurred for the sole benefit of that department. 
E) Costs incurred to produce two or more products at the same time.
F)Costs that a manager can strongly influence or control.
G)A department that incurs costs and generates revenues.
H)Assigns managers the responsibility for costs and expenses under their control. 
A) A department or unit that incurs costs without directly generating revenues. 
B) A center in which a manager is responsible for using the center's assets to generate income for the center. 
C) Costs that are incurred for the joint benefit of more than one department and cannot be readily traced to only one department. 
D) Costs readily traced to a specific department because they are incurred for the sole benefit of that department. 
E) Costs incurred to produce two or more products at the same time.
F)Costs that a manager can strongly influence or control.
G)A department that incurs costs and generates revenues.
H)Assigns managers the responsibility for costs and expenses under their control.

Question 11

In a responsibility accounting system:

Accepted Answer

A) Controllable costs are assigned to managers who are responsible for them. 
B) Each accounting report contains all items allocated to a responsibility center. 
C) Organized and clear lines of authority and responsibility are only incidental. 
D) All managers at a given level have equal authority and responsibility. 
E) Control over costs belongs only to the top level of management. 
A) Controllable costs are assigned to managers who are responsible for them. 
B) Each accounting report contains all items allocated to a responsibility center. 
C) Organized and clear lines of authority and responsibility are only incidental. 
D) All managers at a given level have equal authority and responsibility. 
E) Control over costs belongs only to the top level of management.

Question 12

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:
 $$\begin{array} { l r } 
\text { Department A } & \$ 356,250 \
\text { Department B } & 641,250 \
\text { Department C } & 427,500
\end{array}$$ How much advertising expense should be allocated to each department?

Accepted Answer

None

Question 13

Controllable costs are the same as direct expenses.

Accepted Answer

A) True 
 B)False

Question 14

How is residual income calculated and how do managers use it?

Accepted Answer

Residual income is computed as the diffe

Question 15

Match between columns
                        Premises: Employee turnover
Labor hours per order
Number of patents
Net income
Cash flow
Product costs
Cycle time
Customer satisfaction rating

Accepted Answer

The Answer of Customer and Internal process and Innovation/learning and is...

Question 16

Midwest Rocks receives and produces an order.What is the company's value-added time assuming the following times were measured during production of this order? 
Process time: .7 days Inspection time: .25 days Move time: 1.05 days Wait time: .5 days

Accepted Answer

A) 1.8 days 
B) .7 days 
C) .95 days 
D) 2 days 
E) 2.5 days 
A) 1.8 days 
B) .7 days 
C) .95 days 
D) 2 days 
E) 2.5 days

Question 17

General Chemical produced 10,000 gallons of Greon and 20,000 gallons of Baron.Joint costs incurred in producing the two products totaled $7,500.At the split-off point, Greon has a market value of $6 per gallon and Baron $2 per gallon.What portion of the joint costs should be allocated to Greon if the basis is market value at point of separation?

Accepted Answer

A) $2,500 
B) $3,000 
C) $4,500 
D) $5,625 
E) $1,500 
A) $2,500 
B) $3,000 
C) $4,500 
D) $5,625 
E) $1,500

Question 18

Laurel and Hardy are managers of two product lines for Keaton Company.One of them is a candidate for promotion based on performance.Using the data below, determine who had the better performance.Detail your calculations and support your answer.
 $\begin{array}{lrr}
& \underline { \text { Laurel }} & \underline { \text { Hardy } } \
\text { Revenue } & \$ 412,000 & \$ 450,000 \
\text { Costs } & 380,000 & 411,000 \
\text { Average assets } & 400,000 & 600,000
\end{array}$

Accepted Answer

Hardy has a higher net income

Question 19

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 20

Advertising expense can be reasonably allocated to departments on the basis of sales.

Accepted Answer

A) True 
 B)False

A department can never be considered to be a profit center.

Profit center

The most useful allocation basis for the departmental costs of an advertising campaign for a storewide sale is likely to be:

The most useful evaluation of a manager's cost performance is based on:

Define an investment center.How are investment centers evaluated?

Controllable costs

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

Responsibility performance reports usually compare actual costs to the budgeted costs amounts.

Joint cost

In a responsibility accounting system:

Controllable costs are the same as direct expenses.

How is residual income calculated and how do managers use it?

Midwest Rocks receives and produces an order.What is the company's value-added time assuming the following times were measured during production of this order? Process time: .7 days Inspection time: .25 days Move time: 1.05 days Wait time: .5 days

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

Advertising expense can be reasonably allocated to departments on the basis of sales.

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity-Based Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing and Performance Reporting

Master Budgets and Performance Planning

Flexible Budgets and Standard Costing

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Reporting and Analyzing Cash Flows

Analyzing Financial Statements

Time Value of Money

Basic Accounting for Transactions

Accounting for Partnerships

Filters

Exam 9: Performance Measurement and Responsibility Accounting

A department can never be considered to be a profit center.

Profit center

The most useful allocation basis for the departmental costs of an advertising campaign for a storewide sale is likely to be:

The most useful evaluation of a manager's cost performance is based on:

Define an investment center.How are investment centers evaluated?

Controllable costs

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

Responsibility performance reports usually compare actual costs to the budgeted costs amounts.

Joint cost

In a responsibility accounting system:

Controllable costs are the same as direct expenses.

How is residual income calculated and how do managers use it?

Midwest Rocks receives and produces an order.What is the company's value-added time assuming the following times were measured during production of this order? Process time: .7 days Inspection time: .25 days Move time: 1.05 days Wait time: .5 days

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

Advertising expense can be reasonably allocated to departments on the basis of sales.

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity-Based Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing and Performance Reporting

Master Budgets and Performance Planning

Flexible Budgets and Standard Costing

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Reporting and Analyzing Cash Flows

Analyzing Financial Statements

Time Value of Money

Basic Accounting for Transactions

Accounting for Partnerships

Filters