Johnson Construction Materials Company has a sales office that sells concrete culvert pipes to property developers.The sales office is a revenue center and prepares a monthly responsibility report.The following information is provided. \[\begin{array}{l} \quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\text { Revenue Center Responsibility Report }\\ \begin{array} { |c | c | c | l | c | c | c | c| } \hline \begin{array} { c } \text { Product } \\ \text { Type } \end{array} & \begin{array} { c } \text { Actual } \\ \text { Sales } \\ \text { Revenue } \end{array} & \begin{array} { c } \text { Flexible } \\ \text { Budget } \\ \text { Variance } \end{array} & \text { U/F } & \begin{array} { c } \text { Flexible } \\ \text { Budget } \end{array} & \begin{array} { c } \text { Sales } \\ \text { Volume } \\ \text { Variance } \end{array} & \text { U/F } & \begin{array} { c } \text { Static } \\ \text { Budget } \end{array} \\ \hline 40 \text { inch } & \$ 31,700 & & & \$ 30,750 & & & \$ 40,800 \\ \hline 36 \text { inch long } & 40,150 & & & 42,000 & & & 33,200 \\ \hline 36 \text { inch short } & 36,000 & & & 33,200 & & & 31,100 \\ \hline \text { 32 inch } & 19,100 & & & 20,900 & & & 28,400 \\ \hline \end{array} \end{array}\] What is the flexible budget variance for the 40-inch pipe?

A) $950 U B) $10,050 F C) $10,050 U D) $950 F A) $950 U B) $10,050 F C) $10,050 U D) $950 F

Summarize the four steps in an activity-based costing system: \[\begin{array} { | l | l | } \hline \text { Step 1 } &\quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \\ \hline \text { Step 2 } & \\ \hline \text { Step 3 } & \\ \hline \text { Step 4 } & \\ \hline \end{array}\]

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

Huntswell Corporation has two major divisions: Agricultural Products and Industrial Products.It provides the following information for the year. \[\begin{array} { | l | r | r | } \hline & \text { Agriculture Division } & \text { Industrial Division } \\ \hline \text { Net sales } & \$ 140,000 & \$ 1,250,000 \\ \hline \text { Operating income } & \$ 17,600 & \$ 230,000 \\ \hline \text { Average assets } & \$ 330,000 & \$ 5,540,000 \\ \hline \end{array}\] Calculate the profit margin for the Industrial Division of the company.(Round your answer to two decimal places.)

A) 4.15% B) 5.33% C) 18.40% D) 12.57% A) 4.15% B) 5.33% C) 18.40% D) 12.57%

Lakefront Equipment Company has several divisions that are investment centers.Data for the Boat Division and the Trailer Division are shown here: \[\begin{array} { | l | r | r | } \hline & \text { Boat Division } & \text { Trailer Division } \\ \hline \text { Operating income } & \$ 85,000 & \$ 50,000 \\ \hline \text { Total assets at Jan. 1 } & \$ 670,000 & \$ 215,000 \\ \hline \text { Total assets at Dec .31 } & \$ 800,000 & \$ 220,000 \\ \hline \end{array}\] Which of the following statements would be the most meaningful interpretation of this data?

A) The Boat Division's performance is better than that of the Trailer Division because it has higher assets. B) The Boat Division uses its assets less efficiently than the Trailer Division does because it has a lower return on investment. C) The Boat Division shows a more efficient use of assets than the Trailer Division because it has a higher operating income. D) The Boat Division is financially more successful than the Trailer Division because it shows an increase in assets. A) The Boat Division's performance is better than that of the Trailer Division because it has higher assets. B) The Boat Division uses its assets less efficiently than the Trailer Division does because it has a lower return on investment. C) The Boat Division shows a more efficient use of assets than the Trailer Division because it has a higher operating income. D) The Boat Division is financially more successful than the Trailer Division because it shows an increase in assets.

Dellarte Corporation has two major divisions-Agricultural Products and Industrial Products.It provides the following information for the year. \[\begin{array} { | l | r | r | } \hline & \text { Agriculture Division } & \text { Industrial Division } \\ \hline \text { Net sales } & \$ 160,000 & \$ 1,250,000 \\ \hline \text { Operating income } & \$ 47,000 & \$ 225,000 \\ \hline \text { Average assets } & \$ 310,000 & \$ 5,580,000 \\ \hline \text { Target rate of return } & 10.0 \% & 12.0 \% \\ \hline \end{array}\] Calculate the residual income for the Agriculture Division.

A) $31,000 B) $16,000 C) $113,000 D) $47,000 A) $31,000 B) $16,000 C) $113,000 D) $47,000

For each of the following responsibility centers,state the typical focus of the responsibility report and briefly discuss the focus. \[\begin{array} { | l | l | l | } \hline \begin{array} { c } \text { Responsibility } \\ \text { Center } \end{array} & \begin{array} { c } \text { Focus of the } \\ \text { Responsibility Report } \end{array} & \text { Brief Discussion of the Focus } \\ \hline \text { Cost } & & \\ \hline \text { Revenue } & & \\ \hline \text { Profit } & & \\ \hline \end{array}\]

The answer of For each of the following responsibility centers,state...

Exam 24: Cost Allocation and Responsibility Accounting

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)________.

(Multiple Choice)

4.8/5

(40)

Question 141

In addition to considering both the division's operating income and its average total assets,residual income incorporates top management's target rate of return.

(True/False)

4.8/5

(38)

Question 142

When a manufacturer changes from using a single plantwide predetermined overhead rate to multiple predetermined overhead allocation rates,the product unit cost may be more accurate.

(True/False)

4.8/5

(43)

Question 143

Percentage of market share and rate of on-time deliveries are indicators of the ________ perspective.

(Multiple Choice)

5.0/5

(39)

Question 144

Which of the following can increase a company's return on investment?

(Multiple Choice)

4.8/5

(36)

Question 145

Both the sales volume variance and the flexible budget variance help revenue center managers understand why they have exceeded or fallen short of budgeted revenue.

(True/False)

4.8/5

(36)

Question 146

The level of employee satisfaction is a key performance indicator of the ________ perspective of a balanced scorecard.

(Multiple Choice)

4.7/5

(30)

Question 147

A furniture manufacturer has decided that its use of a single plantwide predetermined overhead allocation rate is no longer accurate.In making the transition to using multiple predetermined overhead allocation rates,which of the following statements is incorrect?

(Multiple Choice)

4.8/5

(41)

Question 148

Johnson Construction Materials Company has a sales office that sells concrete culvert pipes to property developers.The sales office is a revenue center and prepares a monthly responsibility report.The following information is provided. Revenue Center Responsibility Report Product Type Actual Sales Revenue Flexible Budget Variance U/F Flexible Budget Sales Volume Variance U/F Static Budget 40 inch \ 31,700 \ 30,750 \ 40,800 36 inch long 40,150 42,000 33,200 36 inch short 36,000 33,200 31,100 32 inch 19,100 20,900 28,400 What is the flexible budget variance for the 40-inch pipe?

(Multiple Choice)

4.9/5

(45)

Question 149

A modification of the overhead allocation method which uses a single plantwide rate,is to use multiple predetermined overhead allocation rates that have a single allocation base.

(True/False)

4.8/5

(43)

Question 150

Summarize the four steps in an activity-based costing system: Step 1 Step 2 Step 3 Step 4

(Essay)

5.0/5

(33)

Question 151

Huntswell Corporation has two major divisions: Agricultural Products and Industrial Products.It provides the following information for the year. Agriculture Division Industrial Division Net sales \ 140,000 \ 1,250,000 Operating income \ 17,600 \ 230,000 Average assets \ 330,000 \ 5,540,000 Calculate the profit margin for the Industrial Division of the company.(Round your answer to two decimal places.)

(Multiple Choice)

4.9/5

(29)

Question 152

Residual income indicates how ________.

(Multiple Choice)

4.9/5

(43)

Question 153

Lakefront Equipment Company has several divisions that are investment centers.Data for the Boat Division and the Trailer Division are shown here: Boat Division Trailer Division Operating income \ 85,000 \ 50,000 Total assets at Jan. 1 \ 670,000 \ 215,000 Total assets at Dec .31 \ 800,000 \ 220,000 Which of the following statements would be the most meaningful interpretation of this data?

(Multiple Choice)

4.7/5

(35)

Question 154

The manager of a cost center is responsible for controlling costs and generating revenues for the company.

(True/False)

4.9/5

(36)

Question 155

Which of the following would most likely be evaluated using residual income?

(Multiple Choice)

4.8/5

(41)

Question 156

Opportunity cost is the benefit ________.

(Multiple Choice)

4.8/5

(31)

Question 157

Dellarte Corporation has two major divisions-Agricultural Products and Industrial Products.It provides the following information for the year. Agriculture Division Industrial Division Net sales \ 160,000 \ 1,250,000 Operating income \ 47,000 \ 225,000 Average assets \ 310,000 \ 5,580,000 Target rate of return 10.0\% 12.0\% Calculate the residual income for the Agriculture Division.

(Multiple Choice)

4.9/5

(36)

Question 158

Which of the following is an advantage of decentralization?

(Multiple Choice)

4.8/5

(33)

Question 159

For each of the following responsibility centers,state the typical focus of the responsibility report and briefly discuss the focus. Responsibility Center Focus of the Responsibility Report Brief Discussion of the Focus Cost Revenue Profit

(Essay)

4.8/5

(38)

Question 160

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)________.

In addition to considering both the division's operating income and its average total assets,residual income incorporates top management's target rate of return.

When a manufacturer changes from using a single plantwide predetermined overhead rate to multiple predetermined overhead allocation rates,the product unit cost may be more accurate.

Percentage of market share and rate of on-time deliveries are indicators of the ________ perspective.

Which of the following can increase a company's return on investment?

Both the sales volume variance and the flexible budget variance help revenue center managers understand why they have exceeded or fallen short of budgeted revenue.

The level of employee satisfaction is a key performance indicator of the ________ perspective of a balanced scorecard.

A furniture manufacturer has decided that its use of a single plantwide predetermined overhead allocation rate is no longer accurate.In making the transition to using multiple predetermined overhead allocation rates,which of the following statements is incorrect?

A modification of the overhead allocation method which uses a single plantwide rate,is to use multiple predetermined overhead allocation rates that have a single allocation base.

Summarize the four steps in an activity-based costing system: Step 1 Step 2 Step 3 Step 4

Residual income indicates how ________.

The manager of a cost center is responsible for controlling costs and generating revenues for the company.

Which of the following would most likely be evaluated using residual income?

Opportunity cost is the benefit ________.

Which of the following is an advantage of decentralization?

For each of the following responsibility centers,state the typical focus of the responsibility report and briefly discuss the focus. Responsibility Center Focus of the Responsibility Report Brief Discussion of the Focus Cost Revenue Profit

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

Filters