Question 1

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

Accepted Answer

A)  financial 
B)  learning and growth 
C)  internal business 
D)  customer 
A)  financial 
B)  learning and growth 
C)  internal business 
D)  customer

Question 2

In the first step in developing an activity-based costing system,the management team must think about how each activity for a product or service might be improved or whether is it necessary at all.

Accepted Answer

A) True 
 B)False

Question 3

Companies calculate the predetermined overhead rate at the beginning of an accounting period using the actual overhead costs.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is NOT an advantage of decentralization?

Accepted Answer

A)  provides training 
B)  frees top management time 
C)  works to achieve goal congruence 
D)  supports the use of expert knowledge 
A)  provides training 
B)  frees top management time 
C)  works to achieve goal congruence 
D)  supports the use of expert knowledge

Question 5

The best measure for evaluating the effectiveness of a manger in an investment center would be ________.

Accepted Answer

A)  residual income measures 
B)  success in controlling costs 
C)  success in meeting budgeted revenues 
D)  current ratio measures 
A)  residual income measures 
B)  success in controlling costs 
C)  success in meeting budgeted revenues 
D)  current ratio measures

Question 6

In ABC systems,the best allocation base is the primary factor that causes the cost to increase or decrease.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following statements is TRUE?

Accepted Answer

A)  Indirect costs must be allocated based on a single plant wide rate. 
B)  Manufacturing overhead costs are accumulated in cost pools and then assigned to products. 
C)  Managers cannot wait until the end of the accounting period for product cost information. 
D)  Managers can choose to wait until the end of the accounting period to allocate manufacturing overhead costs. 
A)  Indirect costs must be allocated based on a single plant wide rate. 
B)  Manufacturing overhead costs are accumulated in cost pools and then assigned to products. 
C)  Managers cannot wait until the end of the accounting period for product cost information. 
D)  Managers can choose to wait until the end of the accounting period to allocate manufacturing overhead costs.

Question 8

Which of the following internal business perspective key performance indicators (KPIs)is commonly used to assess the innovation process?

Accepted Answer

A)  number of new products developed 
B)  number of warranty claims 
C)  employee turnover rate 
D)  rate of on-time deliveries 
A)  number of new products developed 
B)  number of warranty claims 
C)  employee turnover rate 
D)  rate of on-time deliveries

Question 9

Divine,Inc.sells cosmetic products in the United States.Which one of the following is most likely to be a cost center for Divine?

Accepted Answer

A)  a Divine retail store in Dallas 
B)  the Divine human resource department 
C)  a Divine kiosk at a mall for selling its products 
D)  the Divine product lines 
A)  a Divine retail store in Dallas 
B)  the Divine human resource department 
C)  a Divine kiosk at a mall for selling its products 
D)  the Divine product lines

Question 10

Noncontrollable costs are the costs that can be influenced by the decisions of a manager.

Accepted Answer

A) True 
 B)False

Question 11

Opportunity cost is the benefit ________.

Accepted Answer

A)  received by selling goods on behalf of another division 
B)  received by selling goods to one of the other divisions within the company 
C)  given up by purchasing goods at a price lower than its total manufacturing cost 
D)  given up by choosing an alternate course of action 
A)  received by selling goods on behalf of another division 
B)  received by selling goods to one of the other divisions within the company 
C)  given up by purchasing goods at a price lower than its total manufacturing cost 
D)  given up by choosing an alternate course of action

Question 12

The primary objective in setting transfer prices is to ________.

Accepted Answer

A)  maximize profits for the company as a whole 
B)  maximize profits for the selling division 
C)  minimize the cost to the purchasing division 
D)  maximize profits for the purchasing division 
A)  maximize profits for the company as a whole 
B)  maximize profits for the selling division 
C)  minimize the cost to the purchasing division 
D)  maximize profits for the purchasing division

Question 13

The manager of which of the following centers has the authority to open new stores or close existing ones?

Accepted Answer

A)  cost center 
B)  profit center 
C)  investment center 
D)  revenue center 
A)  cost center 
B)  profit center 
C)  investment center 
D)  revenue center

Question 14

Marsh,Inc.provides the following information: $$\begin{array} { | l | l | l | l | c | } 
\hline & \text { Actual Sales } & \text { Static Budget } & \text { Flexible Budget } & \text { Sales Volume Variance } \
\hline \text { Sales Revenue } & \$ 556,500 & \$ 526,000 & \$ 450,000 & ? \
\hline
\end{array}$$ Calculate the sales volume variance.

Accepted Answer

A)  30,500 F 
B)  30,500 U 
C)  $76,000 U 
D)  $106,500 F 
A)  30,500 F 
B)  30,500 U 
C)  $76,000 U 
D)  $106,500 F

Question 15

Rosales Enterprises has a forklift division that operates as a profit center.Below is a partially completed responsibility report for the first quarter.Complete the responsibility report.(Round percentages to one decimal place.)
Rosales Enterprises
Responsibility Report
 $$\begin{array} { | l | r | r | r | r | } 
\hline { \begin{array} { c } 
\text { Product } \
\text { Type }
\end{array} } & \begin{array} { c } 
\text { Actual } \
\text { Results }
\end{array} & \begin{array} { c } 
\text { Flexible } \
\text { Budget }
\end{array} & \begin{array} { c } 
\text { Flexible Budget } \
\text { Variance } \
\text { (F or U) }
\end{array} & \begin{array} { c } 
\text { Percentage } \
\text { Variance }
\end{array} \
\hline \text { Sales Revenue } & \$ 688,200 & \$ 700,000 & & \
\hline \text { Variable Expense } & \underline { 309,000 } & \underline { 320,000 } & & \
\hline \text { Contribution Margin } & & & & \
\hline \text { Traceable Fixed Expense } & \underline { 371,000 } & \underline { 369,000 } & & \
\hline \text { Divisional Segment Margin } & & & & \
 \hline
\end{array}$$

Accepted Answer

Rosales Enterprises
Responsibility Repor

Question 16

Revenue center responsibility reports show all costs incurred by the department and are useful when management needs to know the full cost of operating the department.

Accepted Answer

A) True 
 B)False

Question 17

To adequately evaluate an investment center's financial performance,summary performance measures should include both the division's operating income and its assets.

Accepted Answer

A) True 
 B)False

Question 18

Dantone,Inc.provides the following information: $$\begin{array} { | l | l | } 
\hline \text { Profit margin ratio } & 7 \% \
\hline \text { Asset turnover ratio } & 2 \text { times } \
\hline \text { Net sales } & \$ 500,000 \
\hline \text { Target rate of return } & 3 \% \
\hline
\end{array}$$ Calculate the return on investment.

Accepted Answer

A)  14% 
B)  56% 
C)  1% 
D)  15% 
A)  14% 
B)  56% 
C)  1% 
D)  15%

Question 19

Because profit centers are only responsible for controlling costs,their performance reports include only information on actual costs versus budgeted costs.

Accepted Answer

A) True 
 B)False

Question 20

Ryota Products has an industrial mower 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 traceable fixed expenses.(Round your answer to two decimal places.)

Accepted Answer

A)  0.81% F 
B)  0.81% U 
C)  1.10% U 
D)  1.10% F 
A)  0.81% F 
B)  0.81% U 
C)  1.10% U 
D)  1.10% F

Exam 24: Cost Allocation and Responsibility Accounting

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

In the first step in developing an activity-based costing system,the management team must think about how each activity for a product or service might be improved or whether is it necessary at all.

Companies calculate the predetermined overhead rate at the beginning of an accounting period using the actual overhead costs.

Which of the following is NOT an advantage of decentralization?

The best measure for evaluating the effectiveness of a manger in an investment center would be ________.

In ABC systems,the best allocation base is the primary factor that causes the cost to increase or decrease.

Which of the following statements is TRUE?

Which of the following internal business perspective key performance indicators (KPIs)is commonly used to assess the innovation process?

Divine,Inc.sells cosmetic products in the United States.Which one of the following is most likely to be a cost center for Divine?

Noncontrollable costs are the costs that can be influenced by the decisions of a manager.

Opportunity cost is the benefit ________.

The primary objective in setting transfer prices is to ________.

The manager of which of the following centers has the authority to open new stores or close existing ones?

Marsh,Inc.provides the following information: Actual Sales Static Budget Flexible Budget Sales Volume Variance Sales Revenue \ 556,500 \ 526,000 \ 450,000 ? Calculate the sales volume variance.

Revenue center responsibility reports show all costs incurred by the department and are useful when management needs to know the full cost of operating the department.

To adequately evaluate an investment center's financial performance,summary performance measures should include both the division's operating income and its assets.

Dantone,Inc.provides the following information: Profit margin ratio 7\% Asset turnover ratio 2 times Net sales \ 500,000 Target rate of return 3\% Calculate the return on investment.

Because profit centers are only responsible for controlling costs,their performance reports include only information on actual costs versus budgeted costs.

Ryota Products has an industrial mower 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 traceable fixed expenses.(Round your answer to two decimal places.)

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