Exam 24: Cost Allocation and Responsibility Accounting

Flannery Company,a manufacturer of small appliances,had the following activities,allocated costs,and allocation bases: Activities Allocated Costs Allocation Base Account inquiry (hours) \ 67,000 2500 hours Account billing (lines) \ 34,000 18,000 lines Account verification (accounts) \ 14,000 25,000 accounts Correspondence (letters) \ 11,000 1000 letters The above activities are carried out at two of its regional offices. Activities Northeast Office Midwest Office Account inquiry (hours) 160 hours 300 hours Account billing (lines) 14,000 lines 3000 lines Account verification (accounts) 1200 accounts 700 accounts Correspondence (letters) 30 letters 130 letters What is the cost per letter for the correspondence activity? (Round your answer to the nearest cent.)

The transaction amount for one unit of goods when the transaction occurs between divisions within the same company is the ________.

Bella,Inc.manufactures two kinds of bags-totes and satchels.The company allocates manufacturing overhead using a single plantwide rate with direct labor cost as the allocation base.Estimated overhead costs for the year are $25,250.Additional estimated information is given below. Totes Satchels Direct materials cost per unit \ 33 \ 45 Direct labor cost per unit \ 50 \ 65 Number of units \ 00 \ 90 Calculate the predetermined overhead allocation rate.(Round your answer to two decimal places.)

Goldberg Company,a manufacturer of small appliances,had the following activities,allocated costs,and allocation bases: Activities Allocated Costs Allocation Base Account inquiry (hours) \ 60,000 2200 hours Account billing (lines) \ 42,000 18,000 lines Account verification (accounts) \ 10,000 24,000 accounts Correspondence (letters) \ 13,000 1200 letters The above activities are carried out at two of its regional offices. Activities Northeast Office Midwest Office Account inquiry (hours) 120 hours 300 hours Account billing (lines) 16,000 lines 3000 lines Account verification (accounts) 1700 accounts 650 accounts Correspondence (letters) 30 letters 120 letters What is the cost per account for the account verification activity? (Round your answer to the nearest cent.)

Managerial accountants can design performance evaluation systems that encourage goal congruence.

Explain the difference between a controllable and a noncontrollable cost.

An effective performance evaluation system will ________.

Companies with diverse products can obtain better costing information by using a single plantwide rate for allocating manufacturing costs.

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

Bean Brewers,Inc.,a manufacturer of coffee makers,had the following activities,allocated costs,and allocation bases: Activities Allocated Costs Allocation Base Account inquiry (hours) \ 62,000 2700 hours Account billing (lines) \ 43,000 19,000 lines Account verification (accounts) \ 17,000 30,000 accounts Correspondence (letters) \ 13,000 1400 letters The above activities are carried out at two of its regional offices. Activities Northeast Office Midwest Office Account inquiry (hours) 140 hours 250 hours Account billing (lines) 12,000 lines 7000 lines Account verification (accounts) 1000 accounts 650 accounts Correspondence (letters) 90 letters 130 letters How much of the correspondence cost will be assigned to the Northeast Office? (Round any intermediate calculations to the nearest cent and your final answer to the nearest dollar.)

Use of a single plantwide overhead rate assumes that there is a direct relationship between the allocation base and overhead costs in all plant activities.

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

Which of the following is the last step in developing an activity-based costing system?

List the four types of responsibility centers.For each center,state the responsibility of the manager. Type of responsibility center Responsibility of the manager

The limitations of financial performance measures reinforce the importance of the balanced scorecard.

Cost center responsibility reports typically focus on the flexible budget variance.

Flagship Logistics provides the following information: Operating income \ 1,550,000 Net sales \ 15,000,000 Average total assets \ 1,950,000 Management's target rate of return 25\% What is the company's asset turnover ratio? (Round your answer to two decimal places.)

Barrera Corporation provides the following financial information: Minimum acceptable operating income \ 556,600 Average total assets \ 2,600,000 Operating income \ 708,000 Return on investment 27,23\% Net sales \ 900,000 Calculate the target rate of return.(Round your answer to two decimal places.)

Investment center managers are responsible for generating profits and making the best use of the investment center's assets.

Which of the following is a disadvantage of decentralization?