Question 1

List the two factors that the financial evaluation of investment centers must measure.

Accepted Answer

@#LAT-DLM& 2.How efficiently t

Question 2

Vasquez 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. $$\begin{array}{l}
\text { Revenue Center Respansibility Repart }\
\begin{array} { |c | r | r | l | r | r | r | r |} 
\hline \begin{array} { c } 
\text { Product } \
\text { Type }
\end{array} & \begin{array} { c } 
\text { Actual } \
\text { Sales } \
\text { Revenue }
\end{array} & \begin{array} { c } 
\text { Flexible } \
\text { Budget } \
\text { Variance }
\end{array} & \text { U/F } & \begin{array} { c } 
\text { Flexible } \
\text { Budget }
\end{array} & \begin{array} { c } 
\text { Sales } \
\text { Volume } \
\text { Variance }
\end{array} & \text { U/F } & \begin{array} { c } 
\text { Static } \
\text { Budget }
\end{array} \
\hline 40 \text { inch } & \$ 31,500 & &&  \$ 30,500 & & & \$ 40,000 \
\hline 36 \text { inch long } & 40,200 & && 42,200 & & & 33,000 \
\hline 36 \text { inch short } & 36,100 & && 33,200 & & & 30,000 \
\hline 32 \text { inch } & 19,000 & && 20,000 & && 28,450\
\hline
\end{array}
\end{array}$$ What is the sales volume variance for the 36-inch long pipe?

Accepted Answer

A)  $2000 U 
B)  $9200 F 
C)  $9500 U 
D)  $1000 F 
A)  $2000 U 
B)  $9200 F 
C)  $9500 U 
D)  $1000 F

Question 3

Drive Safe,Inc.a leading manufacturer of car spare parts,divided its manufacturing process into two
Departments - Production and Packing.The estimated overhead costs for the Production and Packing
departments amounted to $14,000,000 and $20,000,000,respectively.The company produces two types of parts - Part 1 and Part 2.The total estimated labor hours for the year were 40,000,and estimated machine hours were 35,000.The Production department is mechanized,whereas the Packing department is labor oriented.Calculate the amount of manufacturing overhead costs allocated to Part 1.
 $$\begin{array} { | l | l | l | } 
\hline & \text { Production } & \text { Packing } \
\hline & \text { Machine hours } & \text { Labor hours } \
\hline \text { Part 1 } & 10,000 & 30,000 \
\hline \text { Part 2 } & 25,000 & 10,000 \
\hline & \underline { 35,000 } & 40,000 \
\hline
\end{array}$$

Accepted Answer

Calculation of departmental predetermine

Question 4

Treasurers,Inc.,a manufacturer of gift articles,uses a single plantwide rate to allocate indirect costs with machine hours as the allocation base.Estimated overhead costs for the year are $9,000,000.Estimated machine hours are 30,000.During the year,the actual machine hours used were 44,000.Calculate the predetermined overhead allocation rate.

Accepted Answer

A)  $205 
B)  $153 
C)  $300 
D)  $120 
A)  $205 
B)  $153 
C)  $300 
D)  $120

Question 5

Tungsten,Inc.manufactures both normal and premium tube lights.The company allocates manufacturing overhead using a single plantwide rate with machine hours as the allocation base.Estimated overhead costs for the year are $106,000.Additional estimated information is given below. $$\begin{array} { | l | l | l | } 
\hline & { \text { Normal } } & \text { Premium } \
\hline \text { Machine hours (MHr) } & 30,000 & 34,000 \
\hline \text { Direct materials } & \$ 52,000 & \$ 400,000 \
\hline
\end{array}$$ Calculate the predetermined overhead allocation rate.(Round your answer to the nearest cent.)

Accepted Answer

A)  $3.53 per direct labor hour 
B)  $1.66 per machine hour 
C)  $3.12 per machine hour 
D)  $0.23 per direct labor hour 
A)  $3.53 per direct labor hour 
B)  $1.66 per machine hour 
C)  $3.12 per machine hour 
D)  $0.23 per direct labor hour

Question 6

If managers are measured on short-term financial performance only,they may not introduce new products.

Accepted Answer

A) True 
 B)False

Question 7

If a market-based transfer price is used,the transfer price is based on the cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 8

Made Well Tool,Inc.,a manufacturer of cutting tools,divided its manufacturing process into two
Departments - Machining and Finishing.The estimated overhead costs for the Machining and Finishing
departments amounted to $400,000 and $1,000,000,respectively.The company produces two types of tools - Standard and Deluxe.The total estimated labor hours for the year were 4,000,and total estimated machine hours were 2,000.The Machining department is mechanized,whereas the Finishing department is labor oriented.Calculate departmental predetermined overhead allocation rates.
 $$\begin{array} { | l | r | l | } 
\hline &  { \text { Machining } } & \text { Finishing } \
\hline & \text { Machine hours } & \text { Labor hours } \
\hline \text { Standard } & 500 & 1,800 \
\hline \text { Deluxe } & \underline { 1,500 } & \underline { 2,200 } \
\hline & \underline { 2,000 } & \underline { 4,000 } \
\hline
\end{array}$$

Accepted Answer

\[\begin{array} { l l l } 
& \text { Mac

Question 9

How is the use of a balanced scorecard as a performance evaluation system helpful to companies?

Accepted Answer

The balanced scorecard represents a majo

Question 10

A cost-based transfer price considers the cost of producing the goods when determining the price.

Accepted Answer

A) True 
 B)False

Question 11

The responsibility report for a profit center would compare ________.

Accepted Answer

A)  actual costs to budgeted costs 
B)  actual revenues to budgeted revenues 
C)  actual revenues and costs to budgeted revenues and costs 
D)  actual profits to budgeted profits 
A)  actual costs to budgeted costs 
B)  actual revenues to budgeted revenues 
C)  actual revenues and costs to budgeted revenues and costs 
D)  actual profits to budgeted profits

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

The primary objective in setting transfer prices is to ________.

Accepted Answer

A)  establish a system that determines the best transfer prices for the company as a whole 
B)  evaluate the managers of the responsibility centers involved 
C)  achieve goal congruence by selecting a price that will maximize overall company profits 
D)  make it easy for managers to select prices that maximize division profits 
A)  establish a system that determines the best transfer prices for the company as a whole 
B)  evaluate the managers of the responsibility centers involved 
C)  achieve goal congruence by selecting a price that will maximize overall company profits 
D)  make it easy for managers to select prices that maximize division profits

Question 14

The return on investment of a company can be improved by either increasing average total assets or decreasing operating income.

Accepted Answer

A) True 
 B)False

Question 15

Scribe Company,a manufacturer of writing instruments,provides the following financial information: $$\begin{array} { | l | r | r | } 
\hline & \text { Pen Division } & \text { Pencil Division } \
\hline \text { Operating income } & \$ 100,000 & \$ 40,000 \
\hline \text { Net sales } & \$ 500,000 & \$ 175,000 \
\hline \text { Total assets at Jan. 1 } & \$ 580,000 & \$ 255,000 \
\hline \text { Total assets at Dec .31 } & \$ 700,000 & \$ 275,000 \
\hline
\end{array}$$ Calculate the return on investment for the Pencil Division.(Round your answer to two decimal places.)

Accepted Answer

A)  15.63% 
B)  15.09% 
C)  15.69% 
D)  14.55% 
A)  15.63% 
B)  15.09% 
C)  15.69% 
D)  14.55%

Question 16

Regarding controllable costs,which of the following statements is incorrect?

Accepted Answer

A)  The production manager cannot make the decision to replace older equipment. 
B)  All costs are ultimately controllable at the upper levels of management. 
C)  The production manager is not responsible for avoiding waste of direct materials. 
D)  The production manager cannot control all of the costs in his or her department. 
A)  The production manager cannot make the decision to replace older equipment. 
B)  All costs are ultimately controllable at the upper levels of management. 
C)  The production manager is not responsible for avoiding waste of direct materials. 
D)  The production manager cannot control all of the costs in his or her department.

Question 17

When using financial performance measures,which of the following statements is incorrect?

Accepted Answer

A)  Most companies use a weighted-average to determine the amount of average assets for ROI calculations. 
B)  Average total assets are used for both ROI and RI computations. 
C)  The limitations of financial performance measures reinforce the importance of the balanced scorecard. 
D)  In general, calculating ROI based on the net book value of assets gives managers an incentive to continue using old, outdated equipment because its low net book value results in a higher ROI. 
A)  Most companies use a weighted-average to determine the amount of average assets for ROI calculations. 
B)  Average total assets are used for both ROI and RI computations. 
C)  The limitations of financial performance measures reinforce the importance of the balanced scorecard. 
D)  In general, calculating ROI based on the net book value of assets gives managers an incentive to continue using old, outdated equipment because its low net book value results in a higher ROI.

Question 18

Stealth,Inc.produces two types of drones,rotary and fixed wing.Stealth estimated $850,000 of manufacturing overhead,and 62,500 machine hours for the year.The allocation base for overhead costs is machine hours.The rotary model actually consumed 28,000 machine hours,and the fixed wing type consumed 34,500 machine hours.How much overhead is allocated to the fixed wing model? (Round intermediary calculations to the nearest cent.)

Accepted Answer

A)  $380,800 
B)  $469,200 
C)  $280,000 
D)  $234,600 
A)  $380,800 
B)  $469,200 
C)  $280,000 
D)  $234,600

Question 19

A radial tire manufacturer produces products in two departments-Divisions A and B.The company uses separate predetermined overhead allocation rates for each department to allocate its overhead.Divisions A and B have estimated manufacturing overhead costs of $150,000 and $350,000,respectively.Division A uses machine hours as the allocation base,and Division B uses direct labor hours as the allocation base.The total estimated machine hours were 31,000,and direct labor hours were 20,000 for the year.Calculate the departmental predetermined overhead allocation rates.(Round your answer to the nearest cent.)

Accepted Answer

A)  Division A-$4.84, Division B-$17.50 
B)  Division A-$17.50, Division B-$4.84 
C)  Division A-$7.50, Division B-$11.29 
D)  Division A-$11.29, Division B-$7.50 
A)  Division A-$4.84, Division B-$17.50 
B)  Division A-$17.50, Division B-$4.84 
C)  Division A-$7.50, Division B-$11.29 
D)  Division A-$11.29, Division B-$7.50

Question 20

The manager of a revenue center is responsible for generating profits.

Accepted Answer

A) True 
 B)False

List the two factors that the financial evaluation of investment centers must measure.

If managers are measured on short-term financial performance only,they may not introduce new products.

If a market-based transfer price is used,the transfer price is based on the cost of goods sold.

How is the use of a balanced scorecard as a performance evaluation system helpful to companies?

A cost-based transfer price considers the cost of producing the goods when determining the price.

The responsibility report for a profit center would compare ________.

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

The primary objective in setting transfer prices is to ________.

The return on investment of a company can be improved by either increasing average total assets or decreasing operating income.

Regarding controllable costs,which of the following statements is incorrect?

When using financial performance measures,which of the following statements is incorrect?

The manager of a revenue center is responsible for generating profits.

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Plant Assets,natural Resources,and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

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

Exam 24: Cost Allocation and Responsibility Accounting

List the two factors that the financial evaluation of investment centers must measure.

If managers are measured on short-term financial performance only,they may not introduce new products.

If a market-based transfer price is used,the transfer price is based on the cost of goods sold.

How is the use of a balanced scorecard as a performance evaluation system helpful to companies?

A cost-based transfer price considers the cost of producing the goods when determining the price.

The responsibility report for a profit center would compare ________.

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

The primary objective in setting transfer prices is to ________.

The return on investment of a company can be improved by either increasing average total assets or decreasing operating income.

Regarding controllable costs,which of the following statements is incorrect?

When using financial performance measures,which of the following statements is incorrect?

The manager of a revenue center is responsible for generating profits.

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Plant Assets,natural Resources,and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

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