Exam 24: Cost Allocation and Responsibility Accounting

Sea Cruise 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 \ 70,000 \ 42,000 Total assets at Jan. 1 \ 692,000 \ 233,000 Total assets at Dec. 31 \ 700,000 \ 281,000 With regard to the efficient use of assets,the Boat Division has a higher return on investment (ROI)because it has the highest operating income.

Which of the following is a key performance indicator of the financial perspective in a balanced scorecard?

In the first step in developing an activity-based costing system for a manufacturing company,the management team must determine the activities that incur the majority of the manufacturing overhead costs.

The responsibility report for a revenue center would compare ________.

Bag Ladies,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 $24,500.Additional estimated information is given below. Totes Satchels Direct materials cost per unit \ 31 \ 41 Direct labor cost per unit \ 53 \ 63 Number of units \ 00 \ 60 Calculate the amount of overhead to be allocated to Totes.(Round any percentages to two decimal places and your final answer to the nearest dollar.)

Performance evaluation systems provide top management with a framework for maintaining control over the entire organization.

Empowering segment managers to make decisions increases managers' motivation and retention.

A furniture corporation manufactures two models of furniture-Standard and Deluxe.The total estimated manufacturing overhead costs are $64,250.The following estimates are available: Standard Deluxe Direct materials cost per unit \ 250 \ 280 Direct labor cost per unit \ 115 \ 140 Number of units 250 \ 00 The company uses direct labor costs as the base to allocate manufacturing overhead.Calculate the predetermined overhead rate.(Round your answer to two decimal places.)

Why is activity-based-costing used? What is an activity? Give an example of an activity.

In a decentralized company,all the planning and controlling decisions are made by top management.

The costs most easily traced to each product manufactured are ________.

Restoration,Inc.,a leading manufacturer of antique car 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 departmental predetermined overhead allocation rates. Production Packing Machine hours Labor hours Part 1 10,000 30,000 Part 2

In an investment center,the manager is primarily responsible for ________.

A profit center responsibility report ________.

Activity-based costing refines the cost allocation process even more than traditional allocation costing systems.

Which of the following is a key performance indicator of the internal business perspective in a balanced scorecard?

The production line of a manufacturing company is most likely to be considered to be a(n)________.

Which of the following is the correct formula for calculating residual income?

Which of the following statements is TRUE of performance reporting?

The practice of comparing the company's achievements against the best practices in the industry is known as ________.