Exam 24: Cost Allocation and Responsibility Accounting

Allen Manufacturing has three departments that differ significantly in their manufacturing processes.A single plantwide rate will give the company the best estimate of overhead costs.

The activity-based costing system improves the allocation of ________.

Step Up Ladders Company provides the following financial information: Income from operations \ 250,000 Interest expense 49,000 Gains/(losses) on sale of equipment 2800 Net income 198,200 Total assets at Jan. 1 2,700,000 Total assets at Dec .31 3,500,000 Calculate return on investment based on the information given above.(Round your answer to two decimal places.)

Katsu,Inc.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.)

Decentralized companies rarely struggle to achieve goal congruence.

Operational performance measures are nonfinancial measures that evaluate a firm's performance on the basis of effectiveness and efficiency to ensure all segments of the business are working together to achieve the company's goals.

The transfer price should be an amount between the market price and the variable cost.

Which of the following is the correct formula for the asset turnover ratio?

Mazuka,Inc.has a division that manufactures a component that sells for $165 and has a variable cost of $35.Another division of the company wants to purchase the component.Fixed cost per unit of the component is $22.What is the transfer price if the division is operating at full capacity?

Activity-based costing uses a common allocation base for all activities.

Residual income is used as a key performance indicator for evaluating an investment center's financial performance.

A lag indicator is a performance measure that forecasts future performance.

In many cases,the amount of the transfer price does not affect overall company profits.

Which of the following is an expanded form of calculating return on investment?

An investment center manager is responsible for generating profits and managing invested capital.

The return on investment formula focuses on the amount of operating income earned before considering other revenue and expense items,such as interest expense.

The performance evaluation system should provide incentives to segment managers for coordinating the activities of the subunits and directing them toward the overall company goals.Which of the following performance measurement goals has been described by this statement?

Goal congruence can be achieved when ________.

A cost center responsibility report ________.

Aviatrix Avionics makes three types of radios for small aircraft-Model A,Model B,and Model C.The manufacturing operations are mechanized,and there is no direct labor.Manufacturing overhead costs are significant,and Aviatrix has adopted an activity-based costing system.Direct materials costs per unit for each model are as follows: Model A \ 28 Model B \ 30 Model C \ 38 Aviatrix has three activities-assembly,materials management,and testing.The cost driver for assembly is machine hours.The cost driver for materials management is the number of parts,and the cost driver for testing is the number of units of product.Total costs and production volumes for the year were estimated as follows: Total cost Allocation Base Cost Driver Assembly \ 792,000 120,000 Machine hours Materials management \ 136,000 80,000 Parts Testing \ 35,000 5600 Units The Model A radio requires 12 parts to construct and 18 machine hours of processing.What is the manufacturing cost to make one unit of Model A? (Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar.)