Question 1

Allocations of joint product costs can be based on the relative market values of the products:

Accepted Answer

A)  And never on the relative physical quantities of the products. 
B)  Plus an adjustment for future excess margins. 
C)  And not on any other basis. 
D)  At the time the products are separated. 
E)  Only if the products contain both direct and indirect costs. 
A)  And never on the relative physical quantities of the products. 
B)  Plus an adjustment for future excess margins. 
C)  And not on any other basis. 
D)  At the time the products are separated. 
E)  Only if the products contain both direct and indirect costs. D

Question 2

In the preparation of departmental income statements,the preparer completes the following steps in the following order:

Accepted Answer

A)  Identify direct expenses; allocate indirect expenses; allocate service department expenses. 
B)  Identify indirect expenses; allocate direct expenses; allocate service department expenses. 
C)  Identify service department expenses; allocate direct expenses; allocate indirect expenses. 
D)  Identify direct expenses, allocate service department expenses, allocate indirect expenses. 
E)  Allocate all expenses. 
A)  Identify direct expenses; allocate indirect expenses; allocate service department expenses. 
B)  Identify indirect expenses; allocate direct expenses; allocate service department expenses. 
C)  Identify service department expenses; allocate direct expenses; allocate indirect expenses. 
D)  Identify direct expenses, allocate service department expenses, allocate indirect expenses. 
E)  Allocate all expenses. A

Question 3

When a company has no excess capacity,the use of cost-based transfer pricing is preferred.

Accepted Answer

A) True 
 B)False  False

Question 4

A company's international division had sales of $20 billion,net income of $1.5 billion,and average invested assets of $2 billion.What is this division's profit margin?

Accepted Answer

A)  75% 
B)  10% 
C)  7.5% 
D)  133% 
E)  $18 billion 
A)  75% 
B)  10% 
C)  7.5% 
D)  133% 
E)  $18 billion

Question 5

Investment center managers are responsible only for revenues and the costs of investment.

Accepted Answer

A) True 
 B)False

Question 6

Eleanor Reed,the manager of the Marinette Plant of the Wisconsin Company is responsible for all of the plant's costs except her own salary.There are two operating departments within the plant,Departments A and B,that each has their own managers.There is also a maintenance department that provides services equally to the two operating departments.The following information is available:
   
Each department manager is responsible the wages and supplies in their department.They are not responsible for their own salary.Building rent,utilities,and maintenance are allocated to each department based on square footage.
Complete the responsibility accounting performance reports below that list costs controllable by the manager of Department A,the manager of Department B,and the manager of the Marinette plant.

Accepted Answer

@#IMG-DLM&_TB6312_00

Question 7

Which of the following is an example of a performance measure of the customer perspective that would be found in a balanced scorecard?

Accepted Answer

A)  Product defect rates. 
B)  Number of new customers. 
C)  Employee satisfaction. 
D)  Return on investment. 
E)  Sales growth. 
A)  Product defect rates. 
B)  Number of new customers. 
C)  Employee satisfaction. 
D)  Return on investment. 
E)  Sales growth.

Question 8

An accounting system that provides information that management can use to evaluate the profitability and/or cost effectiveness of a department's activities is a:

Accepted Answer

A)  Departmental accounting system. 
B)  Cost accounting system. 
C)  Service accounting system. 
D)  Revenue accounting system. 
E)  Standard accounting system. 
A)  Departmental accounting system. 
B)  Cost accounting system. 
C)  Service accounting system. 
D)  Revenue accounting system. 
E)  Standard accounting system.

Question 9

The most useful allocation basis for the departmental costs of an advertising campaign for a storewide sale is likely to be:

Accepted Answer

A)  Floor space of each department. 
B)  Relative number of items each department had on sale. 
C)  Number of customers to enter each department. 
D)  An equal amount of cost for each department. 
E)  Total sales of each department. 
A)  Floor space of each department. 
B)  Relative number of items each department had on sale. 
C)  Number of customers to enter each department. 
D)  An equal amount of cost for each department. 
E)  Total sales of each department.

Question 10

Uncontrollable costs would continue even if a department were eliminated.

Accepted Answer

A) True 
 B)False

Question 11

Match between columns
                        Premises:  Office expense
 Utilities expense
 Payroll processing costs
 Cleaning costs
 Rent
 Advertising
 Depreciation on departmental equipment
 Data processing costs

Accepted Answer

The Answer of Square footage of floor space and Number is...

Question 12

Departmental accounting and responsibility accounting are related.

Accepted Answer

A) True 
 B)False

Question 13

Process time is the time:

Accepted Answer

A)  Spent producing the product. 
B)  Spent inspecting raw materials received, goods in process while in production, and finished goods prior to shipment. 
C)  Spent moving raw materials from storage to production and goods in process from one factory location to another factory location. 
D)  That an order or job sits with no production applied to it. 
E)  That is considered non-value-added time. 
A)  Spent producing the product. 
B)  Spent inspecting raw materials received, goods in process while in production, and finished goods prior to shipment. 
C)  Spent moving raw materials from storage to production and goods in process from one factory location to another factory location. 
D)  That an order or job sits with no production applied to it. 
E)  That is considered non-value-added time.

Question 14

Renton Co.has two operating (production)departments supported by a number of service departments.The following information was collected for a recent period:
   $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $$\quad $ $\quad $ $\quad $ $\quad $$\text { Direct Costs }$
$\begin{array}{lrrr}
&\text { Machining}&\text {  Assembly }&\text { Indirect }\
&\text { Department }&\text { Department }&\text { Cost}\
\text { Salaries } & \$ 122,400 & \$ 85,700 & \$ 36,700 \
\text { Insurance } & 20,200 & 11,000 & 5,500 \
\text { Utilities } & 23,900 & 13,900 & 2,000 \
\text { Depreciation } & 20,700 & 11,500 & 13,800 \
\text { Maintenance } & 7,000 & 4,700 & 29,400 \
\text { Office expenses } & -0- & -0- & 71,100 \
\text { Cost of goods sold } & 327,600 & 121,200 &
\end{array}$ 
Indirect costs are allocated as follows: salaries on the basis of sales,office expenses on the basis of the number of employees,and all other costs on the basis of square footage.Additional information about the production departments follows:
 $$\begin{array} { l c c } 
& \text { Square } & \text { Number of } \
& \text { Footage } & \text { Employees } \
\text { Machining } & 14,535 & 78 \
\text { Assembly } & 4,845 & 52
\end{array}$$ 
Sales for the Machining Department are $724,404 and sales for the Assembly Department are $356,796.Determine the departmental contribution to overhead and the departmental net income for each production department.

Accepted Answer

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Question 15

Which of the following would not be considered a cost center?

Accepted Answer

A)  Accounting department. 
B)  Purchasing department. 
C)  Research department. 
D)  Advertising department. 
E)  Pharmacy in a grocery store. 
A)  Accounting department. 
B)  Purchasing department. 
C)  Research department. 
D)  Advertising department. 
E)  Pharmacy in a grocery store.

Question 16

________________________________ measures how efficiently an investment center generates sales from its invested assets.

Accepted Answer

The answer of ________________________________ measures how efficiently an investment center...

Question 17

What is the purpose of a responsibility accounting system?

Accepted Answer

A responsibility accounting sy

Question 18

Data pertaining to a company's joint manufacturing process for the current period follows:
$\begin{array}{llr}
&\text { Product } & \text { Product } \
&\text { A } & \text { B } \
  \text { Quantities produced  } &200 \mathrm{lbs}&100 \mathrm{lbs}\
 \text {  Processing cost after} &\
 \text {products are separated   } &\$1,100&\$400\
 \text { Market value at point  } &\
 \text {of separation  } &\$8\mathrm{lb}&\$16\mathrm{lb}\
\end{array}$

What cost amount should be allocated to Product A for this period's $660 of joint costs on the basis of market value at the point of separation?

Accepted Answer

A)  $330.00 
B)  $440.00 
C)  $220.00 
D)  $194.12 
E)  $484.00 
A)  $330.00 
B)  $440.00 
C)  $220.00 
D)  $194.12 
E)  $484.00

Question 19

Expenses that are not easily associated with a specific department,and which are incurred for the benefit of more than one department,are:

Accepted Answer

A)  Fixed expenses 
B)  Indirect expenses 
C)  Direct expenses 
D)  Uncontrollable expenses 
E)  Variable expenses 
A)  Fixed expenses 
B)  Indirect expenses 
C)  Direct expenses 
D)  Uncontrollable expenses 
E)  Variable expenses

Question 20

Reference: 22_03
Bridgestreet, Inc. has three operating departments: Cutting, Assembling, and Finishing. Cutting has 5,000 employees and occupies 15,000 square feet. Assembling has 4,000 employees and occupies 12,000 square feet. Finishing has 1,000 employees and occupies 23,000 square feet. Indirect factory costs for the current period were Administrative $170,000 and Maintenance $212,000. Administrative costs are allocated to operating departments based on the number of workers and maintenance costs are allocated to operating departments based on square footage occupied.
-Based on the preceding data,determine the administrative cost allocated to each operating department of Bridgestreet,Inc.

Accepted Answer

A)   
B)   
C)    
D) $\text { Cuttine: } \$ 8 5 , 0 0 0 \quad \text { Assembling: } \$ 68,000 \quad  \text { Finishing: } \$ 17,000$ 
E) $\text { Cutting: } \$ 191,000 \text { Assembling: } \$ 152,800 \quad \text { Finishing: } \$ 38,200$ 
A)   
B)   
C)    
D) $\text { Cuttine: } \$ 8 5 , 0 0 0 \quad \text { Assembling: } \$ 68,000 \quad  \text { Finishing: } \$ 17,000$ 
E) $\text { Cutting: } \$ 191,000 \text { Assembling: } \$ 152,800 \quad \text { Finishing: } \$ 38,200$

Exam 22: Decentralization and Performance Measurement

Allocations of joint product costs can be based on the relative market values of the products:

In the preparation of departmental income statements,the preparer completes the following steps in the following order:

When a company has no excess capacity,the use of cost-based transfer pricing is preferred.

A company's international division had sales of $20 billion,net income of $1.5 billion,and average invested assets of $2 billion.What is this division's profit margin?

Investment center managers are responsible only for revenues and the costs of investment.

Which of the following is an example of a performance measure of the customer perspective that would be found in a balanced scorecard?

An accounting system that provides information that management can use to evaluate the profitability and/or cost effectiveness of a department's activities is a:

The most useful allocation basis for the departmental costs of an advertising campaign for a storewide sale is likely to be:

Uncontrollable costs would continue even if a department were eliminated.

Departmental accounting and responsibility accounting are related.

Process time is the time:

Which of the following would not be considered a cost center?

________________________________ measures how efficiently an investment center generates sales from its invested assets.

What is the purpose of a responsibility accounting system?

Expenses that are not easily associated with a specific department,and which are incurred for the benefit of more than one department,are:

Introducing Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash and Internal Controls

Accounts and Notes Receivable

Long-Term Assets

Current Liabilities

Long-Term Liabilities

Corporate Reporting and Analysis

Reporting Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing

Activity-Based Costing and Analysis

Cost-Volume-Profit Analysis

Variable Costing and Performance Reporting

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Accounting With Special Journals

Time Value of Money

Investments and International Operations

Accounting for Partnerships

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