Question 1

Wait 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 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 value-added time.

Question 2

A department's direct expenses can be entirely avoided if the department manager carefully controls and monitors operations.

Accepted Answer

A) True 
 B)False

Question 3

Samm's Department Store operates three departments (A,B,and C).If total costs of $4,500 are to be allocated on the basis of square feet of space,(Dept.A = 1,500 sq.ft.; Dept.B = 900 sq.ft.; Dept.C = 600 sq.ft.)then Dept.A's share (in percent)of the $4,500 cost would be ________%; Dept.B would be ______%,and Dept.C would be __________%.The amount of cost allocated to Dept.C would be $__________.

Accepted Answer

Dept.A = 1,500 sq.ft./3,000 sq

Question 4

What is a profit center?

Accepted Answer

A profit center is a subunit o

Question 5

What is a transfer price and what methods are used to set its value?

Accepted Answer

A transfer price is the value

Question 6

A company has two departments,Aa and Bb,that incur delivery expenses.An analysis of the total delivery expense of $9,000 indicates that Dept.Aa had a direct expense of $1,000 for deliveries.None of the $9,000 is a direct expense to Dept.Bb.The analysis also indicates that 60% of regular delivery requests originate in Dept.Aa and 40% in Dept.Bb.The delivery expenses that should be charged to Dept.Aa and Dept.Bb,respectively,are:
$\begin{array} { c c c } 
&  \text { A a } &&& \text{ B b } \\end{array}$
A.$\begin{array} { c c c } & \$ 4,500 & \$ 4,500 \\end{array}$
B.$\begin{array} { c c c }  & \$ 5,800 & \$ 3,200 \\end{array}$
C.$\begin{array} { c c c }  & \$ 5,500 & \$ 3,500 \\end{array}$
D.$\begin{array} { c c c } & \$ 5,500 & \$ 4,500 \\end{array}$
E. $\begin{array} { c c c }  & \$ 5,400 & \$ 3,600
\end{array}$

Accepted Answer

The answer of A company has two departments,Aa and Bb,that...

Question 7

Allocating joint costs to products can be based on their relative:

Accepted Answer

A)  Market values 
B)  Direct costs 
C)  Gross margins 
D)  Total costs 
E)  Variable costs 
A)  Market values 
B)  Direct costs 
C)  Gross margins 
D)  Total costs 
E)  Variable costs

Question 8

Cycle time is the sum of _____________ plus ____________ plus __________ plus ______________.

Accepted Answer

process time; inspec

Question 9

A ______________________________ accumulates and reports costs and expenses that a manager is responsible for,including budgeted amounts.

Accepted Answer

responsibi

Question 10

Define an investment center.How are investment centers evaluated?

Accepted Answer

An investment center is a department who

Question 11

Responsibility accounting performance reports:

Accepted Answer

A)  Become more detailed at higher levels of management. 
B)  Become less detailed at higher levels of management. 
C)  Are equally detailed at all levels of management. 
D)  Are useful in any format. 
E)  Are irrelevant. 
A)  Become more detailed at higher levels of management. 
B)  Become less detailed at higher levels of management. 
C)  Are equally detailed at all levels of management. 
D)  Are useful in any format. 
E)  Are irrelevant.

Question 12

A sawmill paid $70,000 for logs that produced 200,000 board feet of lumber in three different grades and amounts as follows:
$\begin{array}{lll}
\text {Grade}&\text {Production}&\text {Market Price}\
\text { Structural } & 25,000 \text { board feet } & \$ 1,350 / 1,000 \mathrm{bd} . \mathrm{ft} \text {. } \
\text { No. } 1 \text { Common } & 75,000 \text { board feet } & \$ 750 / 1,000 \mathrm{bd} . \mathrm{ft} \text {. } \
\text { No. } 2 \text { Common } & 100,000 \text { board feet } & \$ 300 / 1,000 \mathrm{bd} . \mathrm{ft}
\end{array}$ 
How much of the $70,000 joint cost should be allocated to No.2 Common?

Accepted Answer

A)  $0 
B)  $17,500 
C)  $23,333 
D)  $35,000 
E)  $70,000 
A)  $0 
B)  $17,500 
C)  $23,333 
D)  $35,000 
E)  $70,000

Question 13

Departmental wage expenses are direct expenses of that department.

Accepted Answer

A) True 
 B)False

Question 14

The following data are available for the Cleaning Services Department of Amitol Co.
 $\begin{array}{lr}
\text { Revenues } & \$ 216,000 \
\text { Cost of sales } & 168,000\
\text { Expenses: }\
\text { Supplies-direct } & 12,000 \
\text { Salaries-indirect allocated } & 34,000 \
\text { Rent-direct } & 8,000 \
\text { Rent-indirect allocated } & 4,500
\end{array}$
 
Required: Calculate departmental contribution to overhead for the Cleaning Services Department,including the department's contribution as a percentage of revenues.

Accepted Answer

None

Question 15

Explain the difference between direct and indirect expenses in accounting for departments.

Accepted Answer

Direct expenses are readily traced to a

Question 16

The amount by which a department's revenues exceed its direct costs and expenses is the:

Accepted Answer

A)  Net sales. 
B)  Gross profit. 
C)  Departmental profit. 
D)  Contribution margin. 
E)  Departmental contribution to overhead. 
A)  Net sales. 
B)  Gross profit. 
C)  Departmental profit. 
D)  Contribution margin. 
E)  Departmental contribution to overhead.

Question 17

Evaluation of the performance of managers of profit centers assumes that the managers can control or influence both costs and revenue generation.

Accepted Answer

A) True 
 B)False

Question 18

How is residual income calculated and how do managers use it?

Accepted Answer

Residual income is computed as the diffe

Question 19

General Chemical produced 10,000 gallons of Greon and 20,000 gallons of Baron.Joint costs incurred in producing the two products totaled $7,500.At the split-off point,Greon has a market value of $6 per gallon and Baron $2 per gallon.What portion of the joint costs should be allocated to Greon if the basis is market value at point of separation?

Accepted Answer

A)  $2,500 
B)  $3,000 
C)  $4,500 
D)  $5,625 
E)  $1,500 
A)  $2,500 
B)  $3,000 
C)  $4,500 
D)  $5,625 
E)  $1,500

Question 20

Reference: 22_08
 $\begin{array}{lrr}
\text { Quarry Co.}&\text { Smith}&\text { Barney}\
\text { Revenue } & \$ 412,000 & \$ 450,000 \
\text { Costs } & 380,000 & 411,000 \
\text { Average assets } & 400,000 & 600,000
\end{array}$

-Fred Smith and Joe Barney are managers of two product lines for Quarry Company.One of them is a candidate for promotion based on performance.Using the data above,which of the following is a true statement?

Accepted Answer

A)  Smith is outperforming Barney as measured by return on investment center assets. 
B)  Barney is outperforming Smith as measured by return on investment center assets. 
C)  The return in investment center assets is the same for both 
D)  If target performance is a 7% return on assets, both investment centers are performing above the target level. 
E)  If target performance is a 7% return on assets, the residual income for both centers is positive. 
A)  Smith is outperforming Barney as measured by return on investment center assets. 
B)  Barney is outperforming Smith as measured by return on investment center assets. 
C)  The return in investment center assets is the same for both 
D)  If target performance is a 7% return on assets, both investment centers are performing above the target level. 
E)  If target performance is a 7% return on assets, the residual income for both centers is positive.

Exam 22: Decentralization and Performance Measurement

Wait time is the time:

A department's direct expenses can be entirely avoided if the department manager carefully controls and monitors operations.

What is a profit center?

What is a transfer price and what methods are used to set its value?

Allocating joint costs to products can be based on their relative:

Cycle time is the sum of _____________ plus ____________ plus __________ plus ______________.

A ______________________________ accumulates and reports costs and expenses that a manager is responsible for,including budgeted amounts.

Define an investment center.How are investment centers evaluated?

Responsibility accounting performance reports:

Departmental wage expenses are direct expenses of that department.

Explain the difference between direct and indirect expenses in accounting for departments.

The amount by which a department's revenues exceed its direct costs and expenses is the:

Evaluation of the performance of managers of profit centers assumes that the managers can control or influence both costs and revenue generation.

How is residual income calculated and how do managers use it?

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

Filters

Cycle time is the sum of _ plus plus plus ____.