Question 1

Contribution to overhead generated by a department is the same as gross profit generated by that department.

Accepted Answer

A) True 
 B)False

Question 2

The concepts of direct expenses and controllable costs are essentially the same.

Accepted Answer

A) True 
 B)False

Question 3

Joint costs are a group of several costs incurred in producing or purchasing a single product.

Accepted Answer

A) True 
 B)False

Question 4

The ________________________________ is a system of performance measures,including nonfinancial measures,used to assess company and division manager performance.

Accepted Answer

The answer of The ________________________________ is a system of performance...

Question 5

The ________________________________ is sales less direct expenses for a department.

Accepted Answer

department

Question 6

Midwest Rocks receives and produces an order.What is the company's cycle time assuming the following times were measured during production of this order?
Process time: .7 days Inspection time: .25 days Move time: 1.05 days Wait time: .5 days

Accepted Answer

A)  1.8 days 
B)  .7 days 
C)  .95 days 
D)  2 days 
E)  2.5 days 
A)  1.8 days 
B)  .7 days 
C)  .95 days 
D)  2 days 
E)  2.5 days

Question 7

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 $212,000. Administrative costs are allocated to operating departments based on the number of workers and maintenance costs are allocated to operating departments based on square footage occupied.
-Based on the above data,determine the maintenance cost allocated to each operating department of Bridgestreet,Inc.
A.$\begin{array}{llll}& \text { Cutting: } \$ 70,666 & \text { Assembling: } \$ 70,666 & \text { Finishing: } \$ 70,666 \\end{array}$
B.$\begin{array}{llll}& \text { Cutting: } \$ 15,000 & \text { Assembling: } \$ 12,000 & \text { Finishing: } \$ 23,000 \\end{array}$
C.$\begin{array}{llll}& \text { Cutting: } \$ 63,600 & \text { Assembling: } \$ 50,880 & \text { Finishing: } \$ 97,520 \\end{array}$
D.$\begin{array}{llll}& \text { Cutting: } \$ 127,333 & \text { Assembling: } \$ 127,333 & \text { Finishing: } \$ 127,333 \\end{array}$
E.$\begin{array}{llll} & \text { Cutting: } \$ 115,000 & \text { Assembling: } \$ 91,680 & \text { Finishing: } \$ 175,720
\end{array}$

Accepted Answer

A)   
B)   
C)   
D) $\text { Cutting: } \$ 127,333 \quad\text { Assembling: } \$ 127,333\quad \text { Finishing: } \$ 127,333$ 
E) $\text { Cutting: } \$ 115,000 \quad \text { Assembling: } \$ 91,680 \quad \text { Finishing: } \$ 175,720$ 
A)   
B)   
C)   
D) $\text { Cutting: } \$ 127,333 \quad\text { Assembling: } \$ 127,333\quad \text { Finishing: } \$ 127,333$ 
E) $\text { Cutting: } \$ 115,000 \quad \text { Assembling: } \$ 91,680 \quad \text { Finishing: } \$ 175,720$

Question 8

Reference: 22_07
Assume Rock Bottom Golf is divided into four departments that operate as profit centers and that the data below is from the most recent fiscal year.
 $\begin{array}{lrrrr}
&\text { Golf Clubs}&\text { Golf Bags}&\text {  Golf Balls }&\text { Golf Apparel }\
\text { Sales } & \$ 200,000 & \$ 400,000 & \$ 800,000 & \$ 1,600,000 \
\text { Cost of goods } & 90,000 & 220,000 & 400,000 & 960,000\
\text { Sold}\
\text { Direct expenses}\
\text { Salaries } & 18,000 & 54,000 & 90,000 & 226,000 \
\text { Insurance } & 2,000 & 3,000 & 6,000 & 120,000 \
\text { Utilities } & 1,000 & 2,000 & 3,000 & 10,000
\end{array}$
-Given the information above,which of Rock Bottom Golf's departments has the highest contribution margin as a percent of sales?

Accepted Answer

A)  Golf Clubs. 
B)  Golf Bags. 
C)  Golf Balls. 
D)  Golf Apparel. 
E)  None, this is not a calculation performed at the department level. 
A)  Golf Clubs. 
B)  Golf Bags. 
C)  Golf Balls. 
D)  Golf Apparel. 
E)  None, this is not a calculation performed at the department level.

Question 9

Describe the information found on a responsibility accounting performance report.

Accepted Answer

A responsibility accounting pe

Question 10

A report that specifies the expected and actual costs under the control of a manager is a:

Accepted Answer

A)  Segmental accounting report. 
B)  Managerial cost report. 
C)  Controllable expense report. 
D)  Departmental accounting report. 
E)  Responsibility accounting report. 
A)  Segmental accounting report. 
B)  Managerial cost report. 
C)  Controllable expense report. 
D)  Departmental accounting report. 
E)  Responsibility accounting report.

Question 11

Cycle efficiency is the ratio of value-added time to total cycle time.

Accepted Answer

A) True 
 B)False

Question 12

A department that incurs costs without directly generating revenues is a:

Accepted Answer

A)  Service center 
B)  Production center 
C)  Profit center 
D)  Cost center 
E)  Performance center 
A)  Service center 
B)  Production center 
C)  Profit center 
D)  Cost center 
E)  Performance center

Question 13

Match between columns
                        Premises:  A department whose manager is judged on the ability to generate revenues in excess of the department's costs.
 Costs that are incurred for the joint benefit of more than one department.
 A factor that causes the cost of an activity to go up and down.
 A center whose manager is responsible for using the center's assets to generate income for the center.
 Provides information that management can use to evaluate the performance of a department's managers.
 Compares actual and budgeted costs and expenses under the control of a manager.
 A department whose manager is judged on the ability to control costs by keeping them within a satisfactory range.
 Departmental sales in excess of its direct costs and expenses.

Accepted Answer

The Answer of Investment center and Performance report and Cost is...

Question 14

Within an organizational structure,the person most likely to be evaluated in terms of controllable costs would be:

Accepted Answer

A)  A payroll clerk. 
B)  A cost center manager. 
C)  A production line worker. 
D)  A maintenance worker. 
E)  A graphic designer. 
A)  A payroll clerk. 
B)  A cost center manager. 
C)  A production line worker. 
D)  A maintenance worker. 
E)  A graphic designer.

Question 15

A _____________________________ provides information for managers to use to evaluate the profitability or cost effectiveness of each department's activities.

Accepted Answer

department

Question 16

An accounting system that provides information that management can use to evaluate the performance of a department's manager is called a:

Accepted Answer

A)  Cost accounting system. 
B)  Managerial accounting system. 
C)  Responsibility accounting system. 
D)  Financial accounting system. 
E)  Activity-based accounting system. 
A)  Cost accounting system. 
B)  Managerial accounting system. 
C)  Responsibility accounting system. 
D)  Financial accounting system. 
E)  Activity-based accounting system.

Question 17

Indirect expenses should be allocated to departments based on the benefits received by each department.

Accepted Answer

A) True 
 B)False

Question 18

Midwest Rocks receives and produces an order.What is the company's cycle efficiency assuming the following times were measured during production of this order?
Process time: .7 days Inspection time: .25 days Move time: 1.05 days Wait time: .5 days

Accepted Answer

A)  10% 
B)  28% 
C)  42% 
D)  20% 
E)  50% 
A)  10% 
B)  28% 
C)  42% 
D)  20% 
E)  50%

Question 19

Reference: 22_02
Jamesway Corporation has two separate divisions that operate as profit centers. The following information is available for the most recent year:
 $$\begin{array} { l c c c } 
& \text { White } & & \text { Grey } \
& \text { Division } & & \text { Division } \
 \text { Sales (nat) } & \$ 200,000 & & \$ 400,000 \
\text { Salary expense } & 28,000 & & 48,000 \
\text { Cost of goods sold } & 100,000 & & 159,000
\end{array}$$ The White Division occupies 20,000 square feet in the plant. The Grey Division occupies 30,000 square feet. Rent is an indirect expense and is allocated based on square footage. Rent expense for the year was $50,000.
-Gross profit for the White and Grey Divisions is:
$\begin{array}{lll} &&\text {White}&&
\text {Grey}\end{array}$
A.$\begin{array}{lll}& \$ 72,000 & \$ 193,000 \\end{array}$
B.$\begin{array}{lll} & \$ 172,000 & \$ 352,000 \\end{array}$
C.$\begin{array}{lll}& \$ 100,000 & \$ 241,000 \\end{array}$
D.$\begin{array}{lll} & \$ 52,000 & \$ 163,000 \\end{array}$
E.$\begin{array}{lll} & \$ 72,000 & \$ 163,000
\end{array}$

Accepted Answer

The answer of Reference: 22_02
Jamesway Corporation has two separate divisions...

Question 20

Bevo Beef Company uses the relative market value method of allocating joint costs in their production of beef products.Relevant information for the current period follows:
$\begin{array}{lcc}
& \text { Production in } & \text { Market } \
\text { Product } & \text { Pounds } & \text { Price/Pound }\
\text { Sirloin } & 3,000 & \$ 5.00 \
\text { Hamburger } & 10,000 & 2.00 \
\text { Rib eye } & 4,000 & 4.75 \
\text { Roast } & 6,000 & 3.50
\end{array}$

The total joint cost for the current period was $43,000.How much of this cost should Bevo Beef allocate to sirloin?

Accepted Answer

A)  $0 
B)  $5,909 
C)  $8,600 
D)  $10,750 
E)  $43,000 
A)  $0 
B)  $5,909 
C)  $8,600 
D)  $10,750 
E)  $43,000

Exam 22: Decentralization and Performance Measurement

Contribution to overhead generated by a department is the same as gross profit generated by that department.

The concepts of direct expenses and controllable costs are essentially the same.

Joint costs are a group of several costs incurred in producing or purchasing a single product.

The ________________________________ is a system of performance measures,including nonfinancial measures,used to assess company and division manager performance.

The ________________________________ is sales less direct expenses for a department.

Midwest Rocks receives and produces an order.What is the company's cycle time assuming the following times were measured during production of this order? Process time: .7 days Inspection time: .25 days Move time: 1.05 days Wait time: .5 days

Describe the information found on a responsibility accounting performance report.

A report that specifies the expected and actual costs under the control of a manager is a:

Cycle efficiency is the ratio of value-added time to total cycle time.

A department that incurs costs without directly generating revenues is a:

Within an organizational structure,the person most likely to be evaluated in terms of controllable costs would be:

A _____________________________ provides information for managers to use to evaluate the profitability or cost effectiveness of each department's activities.

An accounting system that provides information that management can use to evaluate the performance of a department's manager is called a:

Indirect expenses should be allocated to departments based on the benefits received by each department.

Midwest Rocks receives and produces an order.What is the company's cycle efficiency assuming the following times were measured during production of this order? Process time: .7 days Inspection time: .25 days Move time: 1.05 days Wait time: .5 days

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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