Question 1

Which of the following is not true regarding a responsibility accounting system?

Accepted Answer

A) It is designed to measure the performance of managers in terms of controllable costs. 
B) It assigns responsibility for costs to the appropriate managerial level that controls those costs. 
C) It should not hold a manager responsible for costs over which the manager has no influence. 
D) It can be applied at any level of an organization. 
E) It is only relevant in manufacturing companies. 
A) It is designed to measure the performance of managers in terms of controllable costs. 
B) It assigns responsibility for costs to the appropriate managerial level that controls those costs. 
C) It should not hold a manager responsible for costs over which the manager has no influence. 
D) It can be applied at any level of an organization. 
E) It is only relevant in manufacturing companies.

Question 2

Holliday,Inc.,operates a retail store with two departments,A and B.Its departmental income statement for the current year follows:
 Holliday allocates building depreciation,maintenance,and utilities on the basis of square footage.Office expenses are allocated on the basis of sales.
Management is considering an expansion to a three-department operation.The proposed Department C would generate $120,000 in additional sales and have a 17.5% contribution to overhead.The company owns its building.Opening Department C would redistribute the square footage to each department as follows: A,19,040; B,21,760 sq.ft.; C,13,600.Increases in indirect expenses would include: maintenance,$500; utilities,$3,800; and office expenses,$1,200.
Complete the following departmental income statements,showing projected results of operations for the three sales departments.(Round amounts to the nearest whole dollar.)

Accepted Answer

@#IMG-DLM&
@#IMG-DLM&
* $3,300 + $500 =

Question 3

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

Accepted Answer

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

Question 4

A department that incurs costs without directly generating revenues is a:

Accepted Answer

A) Service center. 
B) Production center. 
C) Profit center. 
D) Cost center. 
E) Performance center. 
A) Service center. 
B) Production center. 
C) Profit center. 
D) Cost center. 
E) Performance center.

Question 5

Canfield Technical School allocates administrative costs to its respective departments based on the number of students enrolled,while maintenance and utilities are allocated per square feet of the classrooms.Based on the information below,
 
-What is the total amount allocated to the Welding Department (rounded to the nearest dollar)if administrative costs for the school were $50,000,maintenance fees were $12,000,and utilities were $6,000?

Accepted Answer

A) $0. 
B) $17,000. 
C) $18,500. 
D) $22,667. 
E) $30,000. 
A) $0. 
B) $17,000. 
C) $18,500. 
D) $22,667. 
E) $30,000.

Question 6

Regardless of the system used in departmental cost analysis:

Accepted Answer

A) Direct costs are allocated,indirect costs are not. 
B) Indirect costs are allocated,direct costs are not. 
C) Both direct and indirect costs are allocated. 
D) Neither direct nor indirect costs are allocated. 
E) Total departmental costs will always be the same. 
A) Direct costs are allocated,indirect costs are not. 
B) Indirect costs are allocated,direct costs are not. 
C) Both direct and indirect costs are allocated. 
D) Neither direct nor indirect costs are allocated. 
E) Total departmental costs will always be the same.

Question 7

The following is a partially completed lower section of a departmental expense allocation spreadsheet for Brickland.It reports the total amounts of direct and indirect expenses for the four departments.Purchasing department expenses are allocated to the operating departments on the basis of purchase orders.Maintenance department expenses are allocated based on square footage.Compute the amount of Purchasing department expense to be allocated to Fabrication.

Accepted Answer

A) $6,400. 
B) $9,900. 
C) $8,100. 
D) $17,600. 
E) $25,600. 
A) $6,400. 
B) $9,900. 
C) $8,100. 
D) $17,600. 
E) $25,600.

Question 8

The Linens Department of the Krafton Department Store had sales of $282,000,cost of goods sold of $173,500,indirect expenses of $19,875,and direct expenses of $41,250 for the current period.What is the Linens Department's contribution to overhead as a percent of sales?

Accepted Answer

$282,000 - $173,500

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Decentralization refers to companies that have multiple locations.

Accepted Answer

A) True 
 B)False

Question 11

A lumber mill bought a shipment of logs for $40,000.When cut,the logs produced a million board feet of lumber in the following grades.Compute the cost to be allocated to Type 1 and Type 2 lumber,respectively,if the value basis is used. 
Type 1-400,000 bd.ft.priced to sell at $0.12 per bd.ft.
Type 2- 400,000 bd.ft.priced to sell at $0.06 per bd.ft.
Type 3- 200,000 bd.ft.priced to sell at $0.04 per bd.ft.

Accepted Answer

A) $16,000; $16,000. 
B) $13,333; $4,444. 
C) $40,000; $24,000. 
D) $24,000; $12,000. 
E) $24,000; $8,000. 
A) $16,000; $16,000. 
B) $13,333; $4,444. 
C) $40,000; $24,000. 
D) $24,000; $12,000. 
E) $24,000; $8,000.

Question 12

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 total amount of indirect factory expenses that should be allocated to the Painting Department for the current period is:

Accepted Answer

A) $48,000. 
B) $55,000. 
C) $77,000. 
D) $103,000. 
E) $110,000. 
A) $48,000. 
B) $55,000. 
C) $77,000. 
D) $103,000. 
E) $110,000.

Question 13

Ultimo Co.operates three production departments as profit centers.The following information is available for its most recent year.Department 2's contribution to overhead in dollars is:

Accepted Answer

A) $210,000. 
B) $350,000. 
C) $10,000. 
D) $260,000. 
E) $150,000. 
A) $210,000. 
B) $350,000. 
C) $10,000. 
D) $260,000. 
E) $150,000.

Question 14

A ________ generates revenues and incurs costs.

Accepted Answer

The answer of A ________ generates revenues and incurs costs....

Question 15

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

Accepted Answer

An investment center generates revenues

Question 16

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 17

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

Accepted Answer

A) $75 
B) $66 
C) $16 
D) $50 
E) $25 
A) $75 
B) $66 
C) $16 
D) $50 
E) $25

Question 18

An expense that is readily traced to a department because it is incurred for that department's sole benefit is a(n):

Accepted Answer

A) Common expense. 
B) Indirect expense. 
C) Direct expense. 
D) Administrative expense. 
E) Recurring expense. 
A) Common expense. 
B) Indirect expense. 
C) Direct expense. 
D) Administrative expense. 
E) Recurring expense.

Question 19

Riemer,Inc.has four departments.Information about these departments is listed below.Maintenance is a service department.If allocated maintenance cost is based on floor space occupied by each of the other departments,compute the amount of maintenance cost allocated to the Cutting Department.

Accepted Answer

A) $500. 
B) $4,500. 
C) $3,724. 
D) $6,000. 
E) $4,153. 
A) $500. 
B) $4,500. 
C) $3,724. 
D) $6,000. 
E) $4,153.

Question 20

What is the cash conversion cycle and what does it indicate about the company?

Accepted Answer

It is a measure of how effectively worki

Exam 22: Performance Measurement and Responsibility Accounting

Which of the following is not true regarding a responsibility accounting system?

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

A department that incurs costs without directly generating revenues is a:

Regardless of the system used in departmental cost analysis:

The Linens Department of the Krafton Department Store had sales of $282,000,cost of goods sold of $173,500,indirect expenses of $19,875,and direct expenses of $41,250 for the current period.What is the Linens Department's contribution to overhead as a percent of sales?

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

Decentralization refers to companies that have multiple locations.

Ultimo Co.operates three production departments as profit centers.The following information is available for its most recent year.Department 2's contribution to overhead in dollars is:

A ________ generates revenues and incurs costs.

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

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

An expense that is readily traced to a department because it is incurred for that department's sole benefit is a(n):

Riemer,Inc.has four departments.Information about these departments is listed below.Maintenance is a service department.If allocated maintenance cost is based on floor space occupied by each of the other departments,compute the amount of maintenance cost allocated to the Cutting Department.

What is the cash conversion cycle and what does it indicate about the company?

Accounting in Business

Accounting for Business Transactions

Adjusting Accounts for Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash,fraud,and Internal Controls

Accounting for Receivables

Accounting for Long-Term Assets

Accounting for Current Liabilities

Accounting for Long-Term Liabilities

Corporate Reporting and Analysis

Reporting Cash Flows

Analysis of Financial Statements

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 Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Time Value of Money

Investments

Lean Principles and Accounting

Filters