Question 1

A responsibility accounting performance report displays:

Accepted Answer

A)  Only indirect costs. 
B)  Only direct costs. 
C)  Both actual costs and budgeted costs. 
D)  Only actual costs. 
E)  Only budgeted costs. 
A)  Only indirect costs. 
B)  Only direct costs. 
C)  Both actual costs and budgeted costs. 
D)  Only actual costs. 
E)  Only budgeted costs.

Question 2

The ________ is a report of the amount of sales less direct expenses for a department.

Accepted Answer

department

Question 3

A_____________ accumulates and reports costs and expenses that a manager is responsible for, including budgeted amounts.

Accepted Answer

responsibi

Question 4

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: $\begin{array}{ccccc}
\text{Dept.}&\text {Sales}&\text {Cost of Goods Sold}&\text {Direct Expenses}&\text {Indirect Expenses}\
1&\$ 1,000,000 &\$ 700,000 & \$ 100,000 &
\$80,000 \
2 & 400,000 & 150,000 &  40,000 & 100,000 \
 3 & 700,000 & 300,000 &  150,000 & 20,000 \
\end{array}$

Accepted Answer

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

Question 5

If a company reports profit margin of 31.6% and investment turnover of 1.30 for one of its investment centers, the return on investment must be:

Accepted Answer

A)  32.9%. 
B)  24.3%. 
C)  30.3%. 
D)  41.1%. 
E)  4.11%. 
A)  32.9%. 
B)  24.3%. 
C)  30.3%. 
D)  41.1%. 
E)  4.11%.

Question 6

________ are costs incurred to produce or purchase two or more products at the same time.

Accepted Answer

The answer of ________ are costs incurred to produce or...

Question 7

When the selling division in an internal transfer has unsatisfied demand from outside customers for the product that is being transferred, then the lowest acceptable transfer price as far as the selling division is concerned is:

Accepted Answer

A)  the full absorption cost of producing a unit of product. 
B)  the amount that the purchasing division would have to pay an outside seller to acquire a similar product for its use. 
C)  all the costs of producing a unit of product. 
D)  variable cost of producing a unit of product. 
E)  the market price charged to outside customers, less costs saved by transferring internally. 
A)  the full absorption cost of producing a unit of product. 
B)  the amount that the purchasing division would have to pay an outside seller to acquire a similar product for its use. 
C)  all the costs of producing a unit of product. 
D)  variable cost of producing a unit of product. 
E)  the market price charged to outside customers, less costs saved by transferring internally.

Question 8

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 $ 80,000
Maintenance $ 100,000
- 
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)  $ 77,000. 
B)  $110,000. 
C)  $ 55,000. 
D)  $ 48,000. 
E)  $103,000. 
A)  $ 77,000. 
B)  $110,000. 
C)  $ 55,000. 
D)  $ 48,000. 
E)  $103,000.

Question 9

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

Accepted Answer

A)  Uncontrollable costs. 
B)  Direct costs. 
C)  Joint costs. 
D)  Variable costs. 
E)  Indirect costs. 
A)  Uncontrollable costs. 
B)  Direct costs. 
C)  Joint costs. 
D)  Variable costs. 
E)  Indirect costs.

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

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: $\begin{array}{lll}
\text { Ottice Expenses } & \text { Total } & \text { Allocation Basis } \
\text { Salaries } & \$ 30,000 & \text { Number of employees } \
\text { Depreciation } & 20,000 & \text { Cost of goods sold } \
\text { Advertising } & 40,000 & \text { Net sales }
\end{array}$

$\begin{array}{lrrrr}
\text {Item}&\text {Drilling}&\text {Grinding}&\text {Total}\
\text { Number of emplovees } & 1,000 & 1,500 & 2,500 \
\text { Net sales } & \$ 325,000 & \$ 475,000 & \$ 800,000 \
\text { Cost of goods sold } & \$ 75,000 & \$ 125,000 & \$ 200,000
\end{array}$ 
-  The amount of depreciation that should be allocated to Grinding for the current period is:

Accepted Answer

A)  $25,000. 
B)  $40,000. 
C)  $7,500. 
D)  $12,500. 
E)  $20,000. 
A)  $25,000. 
B)  $40,000. 
C)  $7,500. 
D)  $12,500. 
E)  $20,000.

Question 12

Pepper Department store allocates its service department expenses to its various operating (sales) departments. The following data is available for its service departments: $\begin{array}{l}
\begin{array} { l l l } 
\text { Expense } & \text { Basis for allocation } & \text { Amount } \
\text { Rent } & \text { Square feet of floor space } & \$ 24,000 \
\text { Advertising } & \text { Amount of dollar sales } & \$ 30,000 \
\text { Administrative } & \text { Number of employees } & \$ 45,000
\end{array}\\
\text { The following information is available for its three operating (sales) departments: }\\
\begin{array} { l c c r c } 
\text { Department } & \begin{array} { c } 
\text { Square } \
\text { Feet }
\end{array} & \text { Dollar Sales } & \begin{array} { c } 
\text { Number of } \
\text { employees }
\end{array} \
\text { A } & 3,000 & \$280,000 & 6 \
\text { B } & 3,400 & \$300,000 & 8 \
\text { C } & 3,600 & \$420,000 & 10 \
\text { Totals } & \underline { 10,000 } &\$1,000,000 &24 \
\hline
\end{array}
\end{array}$
-
 What is the total expense allocated to Department B?

Accepted Answer

A)  $30,462. 
B)  $30,775. 
C)  $30,500. 
D)  $29,375. 
E)  $32,160. 
A)  $30,462. 
B)  $30,775. 
C)  $30,500. 
D)  $29,375. 
E)  $32,160.

Question 13

Advertising expense can be reasonably allocated to departments on the basis of each department's proportion of sales.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

Departmental information is usually distributed to the public as part of the company's annual report and footnotes.

Accepted Answer

A) True 
 B)False

Question 16

Profit margin for an investment center measures:

Accepted Answer

A)  Investment center income generated from its invested assets. 
B)  Departmental contribution to overhead. 
C)  How efficiently an investment center generates sales from its invested assets. 
D)  Investment center income compared to target investment center income. 
E)  Investment center income earned per dollar of sales. 
A)  Investment center income generated from its invested assets. 
B)  Departmental contribution to overhead. 
C)  How efficiently an investment center generates sales from its invested assets. 
D)  Investment center income compared to target investment center income. 
E)  Investment center income earned per dollar of sales.

Question 17

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:

Accepted Answer

A)  10.4%. 
B)  14.7%. 
C)  30.3%. 
D)  13.3%. 
E)  23.6%. 
A)  10.4%. 
B)  14.7%. 
C)  30.3%. 
D)  13.3%. 
E)  23.6%.

Question 18

Marian Corporation has two separate divisions that operate as profit centers. The following information is available for the most recent year: $$\begin{array} { l r r } 
& \text { Black Division } & \text { Navy Division } \
\text { Sales (net) } & \$ 200,000 & \$ 400,000 \
\text { Salary expents } & 28,000 & 48,000 \
\text { Cost af goods sold } & 100,000 & 159,000
\end{array}$$ 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)  $100,000; $241,000. 
B)  $72,000; $163,000. 
C)  $72,000; $193,000. 
D)  $52,000; $163,000. 
E)  $172,000; $352,000. 
A)  $100,000; $241,000. 
B)  $72,000; $163,000. 
C)  $72,000; $193,000. 
D)  $52,000; $163,000. 
E)  $172,000; $352,000.

Question 19

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

Accepted Answer

Cycle time is defined as process time +

Question 20

Data pertaining to a company's joint production for the current period follows: $\begin{array}{llr}
&  \text { L } & \text { M }\
 \text { Quantities produced } &200 Ibs&150Ibs\
 \text {  Market value at split-off point } &\$8/Ib&\$16/Ib
\end{array}$
 Compute the cost to be allocated to Product L for this period's $660 of joint costs if the value basis is used. (Do not round your intermediate calculations.)

Accepted Answer

A)  $796. 
B)  $1,364. 
C)  $264. 
D)  $396. 
E)  $330. 
A)  $796. 
B)  $1,364. 
C)  $264. 
D)  $396. 
E)  $330.

Exam 24: Performance Measurement and Responsibility Accounting

A responsibility accounting performance report displays:

The ________ is a report of the amount of sales less direct expenses for a department.

A_____________ accumulates and reports costs and expenses that a manager is responsible for, including budgeted amounts.

If a company reports profit margin of 31.6% and investment turnover of 1.30 for one of its investment centers, the return on investment must be:

________ are costs incurred to produce or purchase two or more products at the same time.

When the selling division in an internal transfer has unsatisfied demand from outside customers for the product that is being transferred, then the lowest acceptable transfer price as far as the selling division is concerned is:

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

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

Advertising expense can be reasonably allocated to departments on the basis of each department's proportion of sales.

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

Departmental information is usually distributed to the public as part of the company's annual report and footnotes.

Profit margin for an investment center measures:

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:

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

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets Natural Resoures and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Capital Budgeting and Managerial Decisions

Present and Future Values in Accounting

Activity-Based Costing

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