Question 1

A unique factor of responsibility accounting performance reports is the focus on responsibility and controllability.

Accepted Answer

A) True 
 B)False

Question 2

One of the advantages of decentralization is that it allows top management to concentrate on long-term strategic planning.

Accepted Answer

A) True 
 B)False

Question 3

Communicating top management's expectations to segment managers improves goal congruence.

Accepted Answer

A) True 
 B)False

Question 4

Sun,Inc.has average total assets of $300,000.The annual operating income of the company is $125,000.The target rate of return for the company is 15%.Calculate the residual income.

Accepted Answer

A) $45,000 
B) $175,000 
C) $18,750 
D) $80,000 
A) $45,000 
B) $175,000 
C) $18,750 
D) $80,000

Question 5

Which of the following four perspectives of the balanced scorecard enables management to answer the question,"How can we continue to improve and create value?"

Accepted Answer

A) financial 
B) customer 
C) internal business 
D) learning and growth 
A) financial 
B) customer 
C) internal business 
D) learning and growth

Question 6

One part of the balanced scorecard helps management answer the question,"How do we look to investors and creditors?" Which of the four perspectives is being described with this statement?

Accepted Answer

A) financial 
B) customer 
C) internal business 
D) learning and growth 
A) financial 
B) customer 
C) internal business 
D) learning and growth

Question 7

The practice of comparing a company's achievements against the best practices in the industry is known as goal congruence.

Accepted Answer

A) True 
 B)False

Question 8

List the primary goals of performance evaluation systems.

Accepted Answer

The goals of the performance e

Question 9

Huang Consumer Products has a small car division that operates as a profit center.Below is a partially completed responsibility report for the first quarter.   Compute the percentage variance for the flexible budget variance for sales revenue.(Round your answer to two decimal places. )

Accepted Answer

A) 1.71% F 
B) 1.71% U 
C) 4.04% U 
D) 4.04% F 
A) 1.71% F 
B) 1.71% U 
C) 4.04% U 
D) 4.04% F

Question 10

Brad Turret,one of the managers of a multi-national company,is responsible for generating revenues and controlling costs in order to increase the operating income of his division.However,he is not concerned about investment-related decisions.Brad is most likely to be the manager of a(n)________.

Accepted Answer

A) cost center 
B) investment center 
C) profit center 
D) revenue center 
A) cost center 
B) investment center 
C) profit center 
D) revenue center

Question 11

Huston Company,a manufacturer of office supplies,provides the following financial information: $$\begin{array} { | l | r | r | } 
\hline & \text { Pen Division } & \text { Pencil Division } \
\hline \text { Operating income } & \$ 100,000 & \$ 40,000 \
\hline \text { Net sales } & \$ 500,000 & \$ 150,000 \
\hline \text { Total assets at Jan. 1 } & \$ 580,000 & \$ 350,000 \
\hline \text { Total assets at Dec. 31 } & \$ 610,000 & \$ 300,000 \
\hline
\end{array}$$ Calculate the return on investment for the Pen Division.(Round your answer to two decimal places. )

Accepted Answer

A) 16.81% 
B) 12.31% 
C) 17.24% 
D) 16.39% 
A) 16.81% 
B) 12.31% 
C) 17.24% 
D) 16.39%

Question 12

Atom,Inc.has a division that manufactures a component that sells for $150 and has a variable cost of $30.Another division of the company wants to purchase the component.Fixed cost per unit of the component is $20.What is the minimum transfer price if the division is operating at capacity?

Accepted Answer

A) $150 
B) $30 
C) $50 
D) $20 
A) $150 
B) $30 
C) $50 
D) $20

Question 13

Residual income compares the division's actual operating income with the minimum operating income expected by top management for the given size of the division's average total assets.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is a disadvantage of decentralization?

Accepted Answer

A) It results in increased customer response time. 
B) It allows only the top management to make decisions. 
C) It does not motivate employees because the decision-making powers are not delegated. 
D) It results in problems with achieving goal congruence. 
A) It results in increased customer response time. 
B) It allows only the top management to make decisions. 
C) It does not motivate employees because the decision-making powers are not delegated. 
D) It results in problems with achieving goal congruence.

Question 15

State the strategy for each of the perspectives of the balanced scorecard.

Accepted Answer

\[\begin{array} { | l | l | } 
\hline \b

Exam 24: Responsibility Accounting and Performance Evaluation

A unique factor of responsibility accounting performance reports is the focus on responsibility and controllability.

One of the advantages of decentralization is that it allows top management to concentrate on long-term strategic planning.

Communicating top management's expectations to segment managers improves goal congruence.

Sun,Inc.has average total assets of $300,000.The annual operating income of the company is $125,000.The target rate of return for the company is 15%.Calculate the residual income.

Which of the following four perspectives of the balanced scorecard enables management to answer the question,"How can we continue to improve and create value?"

One part of the balanced scorecard helps management answer the question,"How do we look to investors and creditors?" Which of the four perspectives is being described with this statement?

The practice of comparing a company's achievements against the best practices in the industry is known as goal congruence.

List the primary goals of performance evaluation systems.

Huang Consumer Products has a small car division that operates as a profit center.Below is a partially completed responsibility report for the first quarter. Compute the percentage variance for the flexible budget variance for sales revenue.(Round your answer to two decimal places. )

Brad Turret,one of the managers of a multi-national company,is responsible for generating revenues and controlling costs in order to increase the operating income of his division.However,he is not concerned about investment-related decisions.Brad is most likely to be the manager of a(n)________.

Atom,Inc.has a division that manufactures a component that sells for $150 and has a variable cost of $30.Another division of the company wants to purchase the component.Fixed cost per unit of the component is $20.What is the minimum transfer price if the division is operating at capacity?

Residual income compares the division's actual operating income with the minimum operating income expected by top management for the given size of the division's average total assets.

Which of the following is a disadvantage of decentralization?

State the strategy for each of the perspectives of the balanced scorecard.

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Internal Control and Cash

Receivables

Plant Assets, natural Resources, and Intangibles

Investments

Current Liabilities and Payroll

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost Management Systems: Activity-Based, just-In-Time, and Quality Management Systems

Cost-Volume-Profit Analysis

Variable Costing

Master Budgets

Flexible Budgets and Standard Cost Systems

Short-Term Business Decisions

Capital Investment Decisions

Accounting Information Systems

Filters