Alexander Consumer Products has a small car division that operates as a profit center.Below is a partially completed responsibility report for the first quarter. $\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\text { Responsibility Report }$ $\begin{array}{|c|c|c|c|c|c|} \hline&& & \text { Flexible } & & & \\ && \text { Flexible } & \text { Budget } & & \text { Percentage } & \\ &\text { Actual } & \text { Budget } & \text { Variance } & \text { U/F } & \text { Variance } & \text { U/F } \\ \hline\text { Sales } & & \\ \text { Revenue } & \$ 688,200 & \$ 703,000 \\ \hline \begin{array}{c} \text { Variable } \\ \text { Expenses } \end{array} & \underline{309,400} & \underline{320,000} \\ \hline \begin{array}{c} \text { Contribution } \\ \text { Margin } \end{array} & 378,700 & 383,000 \\ \hline \begin{array}{c} \text { Traceable } \\ \text { Fixed } \end{array} & & \\ \begin{array}{c} \text { Expenses } \end{array} & \underline{371,000} & \underline{369,000} \\ \hline \begin{array}{c} \text { Division } \\ \text { Margin } \end{array} & \$ 7,800 & \$ 14,000 \\ \hline \end{array}$ Compute the percentage variance for the flexible budget variance for traceable fixed expenses.(Round your answer to two decimal places.)

A) 0.54% F B) 0.54% U C) 1.10% U D) 1.10% F A) 0.54% F B) 0.54% U C) 1.10% U D) 1.10% F

Milliken,Inc.provides the following information: \[\begin{array} { | l | c | c | c | c | } \hline & \text { Actual Sales } & \text { Static Budget } & \text { Flexible Budget } & \text { Sales Volume Variance } \\ \hline \text { Sales Revenue } & \$ 556,500 & \$ 526,000 & \$ 450,000 & ? \\ \hline \end{array}\] Calculate the sales volume variance.

A) 30,500 F B) 30,500 U C) $76,000 U D) $106,500 F A) 30,500 F B) 30,500 U C) $76,000 U D) $106,500 F

Huston Company,a manufacturer of office supplies,provides the following financial information: \[\begin{array} { | l | r | r | } \hline & \text { Pen Division } & \text { Pencil Division } \\ \hline \text { Operating income } & \$ 90,000 & \$ 30,000 \\ \hline \text { Net sales } & \$ 450,000 & \$ 150,000 \\ \hline \text { Total assets at Jan. 1 } & \$ 580,000 & \$ 255,000 \\ \hline \text { Total assets at Dec. 31 } & \$ 600,000 & \$ 235,000 \\ \hline \end{array}\] Calculate the return on investment for the Pen Division.(Round your answer to two decimal places.)

A) 15.25% B) 12.24% C) 15.52% D) 15.00% A) 15.25% B) 12.24% C) 15.52% D) 15.00%

Grady Corporation provides the following financial information: \[\begin{array} { | l | r | } \hline \text { Minimum acceptable operating income } & \$ 520,000 \\ \hline \text { Average total assets } & \$ 2,600,000 \\ \hline \text { Operating income } & \$ 700,000 \\ \hline \text { Return on investment } & 26.92 \% \\ \hline \text { Net sales } & \$ 850,000 \\ \hline \end{array}\] Calculate the target rate of return.(Round your answer to two decimal places.)

A) 20.00% B) 82.35% C) 26.92% D) 61.18% A) 20.00% B) 82.35% C) 26.92% D) 61.18%

Exam 24: Cost Allocation and Responsibility Accounting

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.

(True/False)

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Question 101

Which of the following is not an advantage of activity-based costing?

(Multiple Choice)

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Question 102

Which of the following statements is true of performance reporting?

(Multiple Choice)

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Question 103

For a centralized company,the major planning and controlling decisions are made by top management.

(True/False)

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Question 104

Management by exception directs the management's attention to important differences between the actual and the budgeted amounts.

(True/False)

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Question 105

A company uses a balanced scorecard and has established a key performance indicator for product quality.If the actual warranty claims are higher than expected,there is an indication that the quality standards have been met.

(True/False)

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Question 106

Companies evaluate investment centers using the same measures as the profit centers.

(True/False)

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Question 107

The predetermined overhead allocation rate is an estimated overhead cost per unit of the allocation base and is calculated at the beginning of the accounting period.

(True/False)

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Question 108

Centralized companies split their operations into segments and top management delegates decision making to the segment managers.

(True/False)

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Question 109

Alexander Consumer Products has a small car division that operates as a profit center.Below is a partially completed responsibility report for the first quarter. $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\text { Responsibility Report }$ Flexible Flexible Budget Percentage Actual Budget Variance U/F Variance U/F Sales Revenue \ 688,200 \ 703,000 Variable Expenses Contribution Margin 378,700 383,000 Traceable Fixed Expenses Division Margin \ 7,800 \ 14,000 Compute the percentage variance for the flexible budget variance for traceable fixed expenses.(Round your answer to two decimal places.)

(Multiple Choice)

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Question 110

Milliken,Inc.provides the following information: Actual Sales Static Budget Flexible Budget Sales Volume Variance Sales Revenue \ 556,500 \ 526,000 \ 450,000 ? Calculate the sales volume variance.

(Multiple Choice)

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Question 111

The primary objective in setting transfer prices is to ________.

(Multiple Choice)

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Question 112

A high rate of employee turnover indicates that ________.

(Multiple Choice)

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Question 113

Qvoware,Inc.sells cosmetic products in the United States.Which one of the following is most likely to be a cost center for Qvoware?

(Multiple Choice)

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Question 114

Return on investment measures the profitability of an investment center but not the efficiency in using its assets.

(True/False)

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Question 115

The balanced scorecard focuses only on lead indicators,because lag indicators are not important for performance evaluation.

(True/False)

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Question 116

Huston Company,a manufacturer of office supplies,provides the following financial information: Pen Division Pencil Division Operating income \ 90,000 \ 30,000 Net sales \ 450,000 \ 150,000 Total assets at Jan. 1 \ 580,000 \ 255,000 Total assets at Dec. 31 \ 600,000 \ 235,000 Calculate the return on investment for the Pen Division.(Round your answer to two decimal places.)

(Multiple Choice)

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Question 117

The balanced scorecard system requires management to consider ________.

(Multiple Choice)

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Question 118

The manager of a profit center is responsible for generating revenues and managing the center's invested capital.

(True/False)

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Question 119

Grady Corporation provides the following financial information: Minimum acceptable operating income \ 520,000 Average total assets \ 2,600,000 Operating income \ 700,000 Return on investment 26.92\% Net sales \ 850,000 Calculate the target rate of return.(Round your answer to two decimal places.)

(Multiple Choice)

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Question 120

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 not an advantage of activity-based costing?

Which of the following statements is true of performance reporting?

For a centralized company,the major planning and controlling decisions are made by top management.

Management by exception directs the management's attention to important differences between the actual and the budgeted amounts.

A company uses a balanced scorecard and has established a key performance indicator for product quality.If the actual warranty claims are higher than expected,there is an indication that the quality standards have been met.

Companies evaluate investment centers using the same measures as the profit centers.

The predetermined overhead allocation rate is an estimated overhead cost per unit of the allocation base and is calculated at the beginning of the accounting period.

Centralized companies split their operations into segments and top management delegates decision making to the segment managers.

Milliken,Inc.provides the following information: Actual Sales Static Budget Flexible Budget Sales Volume Variance Sales Revenue \ 556,500 \ 526,000 \ 450,000 ? Calculate the sales volume variance.

The primary objective in setting transfer prices is to ________.

A high rate of employee turnover indicates that ________.

Qvoware,Inc.sells cosmetic products in the United States.Which one of the following is most likely to be a cost center for Qvoware?

Return on investment measures the profitability of an investment center but not the efficiency in using its assets.

The balanced scorecard focuses only on lead indicators,because lag indicators are not important for performance evaluation.

The balanced scorecard system requires management to consider ________.

The manager of a profit center is responsible for generating revenues and managing the center's invested capital.

Grady Corporation provides the following financial information: Minimum acceptable operating income \ 520,000 Average total assets \ 2,600,000 Operating income \ 700,000 Return on investment 26.92\% Net sales \ 850,000 Calculate the target rate of return.(Round your answer to two decimal places.)

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Short-Term Business Decisions

Capital Investment Decisions

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