Question 1

A useful measure used to evaluate the manager of an investment center is return on total costs for the investment center.

Accepted Answer

A) True 
 B)False

Question 2

Reference: 22_01
Joint products A and B are produced in a single operation from Material M. Three hundred gallons of Material M, costing $450, produced 200 gallons of Product A, selling for $2 per gallon, and 100 gallons of Product B, selling for $6 per gallon.
-If the $450 cost of the 300 gallons of Material M were to be allocated to the joint products in proportion to the number of gallons of each product produced,Product A's share would be:

Accepted Answer

A)  $0 
B)  $180 
C)  $225 
D)  $300 
E)  $450 
A)  $0 
B)  $180 
C)  $225 
D)  $300 
E)  $450

Question 3

Alexander Bruce and Jonathon Wayne are managers of two product lines for Gotham Incorporated.One of them is a candidate for promotion based on performance.Using the following data:
a.Calculate the residual income (assume a target income of 10% return on assets)and the investment center return on assets.
b.Indicate which manager should be recommended for promotion and why.
 $\begin{array}{lrr}
&\text { Bruce }&\text { Wayne }\ 
\text { Revenue } & \$ 205,000 & \$ 270,000 \
\text { Costs } & 189,000 & 232,000 \
\text { Average assets } & 300,000 & 290,000
\end{array}$

Accepted Answer

a.ROA
 @#IMG-DLM&_TB6312_00_TB6312_00 RI
Bruce: RI

Question 4

Match the appropriate definition (a)through (h)with the following terms:
(a) A department whose manager is judged on the ability to generate revenues in excess of the department's costs.
(b) Costs that are incurred for the joint benefit of more than one department.
(c) A factor that causes the cost of an activity to go up and down.
(d) A center whose manager is responsible for using the center's assets to generate income for the center.
(e) Provides information that management can use to evaluate the performance of a department's managers.
(f) Compares actual and budgeted costs and expenses under the control of a manager.
(g) A department whose manager is judged on the ability to control costs by keeping them within a satisfactory range.
(h) Departmental sales in excess of its direct costs and expenses.
__________ (1) Investment center
__________ (2) Performance report
__________ (3) Cost center
__________ (4) Departmental contribution to overhead
__________ (5) Cost driver
__________ (6) Profit center
__________ (7) Indirect expenses
__________ (8) Responsibility accounting system

Accepted Answer

(1.) d (2.) f (3.) g

Question 5

An _______________________ is a department whose manager is responsible for using the center's assets to generate income for the center.

Accepted Answer

The answer of An _______________________ is a department whose manager...

Question 6

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,list Rock Bottom Golf's departments in order of highest departmental contribution to overhead to lowest departmental contribution to overhead.

Accepted Answer

A)  Golf Balls, Golf Apparel, Golf Bags, Golf Clubs. 
B)  Golf Apparel, Golf Balls, Golf Bags, Golf Clubs. 
C)  Golf Clubs, Golf Bags, Golf Balls, Golf Apparel. 
D)  Golf Clubs, Golf Bags, Golf Apparel, Golf Balls. 
E)  Golf Balls, Golf Apparel, Golf Clubs, Golf Bags. 
A)  Golf Balls, Golf Apparel, Golf Bags, Golf Clubs. 
B)  Golf Apparel, Golf Balls, Golf Bags, Golf Clubs. 
C)  Golf Clubs, Golf Bags, Golf Balls, Golf Apparel. 
D)  Golf Clubs, Golf Bags, Golf Apparel, Golf Balls. 
E)  Golf Balls, Golf Apparel, Golf Clubs, Golf Bags.

Question 7

The most useful evaluation of a manager's cost performance is based on:

Accepted Answer

A)  Controllable costs. 
B)  Contribution percentages. 
C)  Departmental contributions to overhead. 
D)  Fixed expenses. 
E)  Direct costs. 
A)  Controllable costs. 
B)  Contribution percentages. 
C)  Departmental contributions to overhead. 
D)  Fixed expenses. 
E)  Direct costs.

Question 8

A company rents a small building with 10,000 square feet of space for $100,000 per year.The rent is allocated to the company's three departments on the basis of the value of the space occupied by each.Department 1 occupies 1,500 square feet of ground-floor space,Department 2 occupies 3,500 square feet of ground-floor space,and Department 3 occupies 5,000 square feet of second-floor space.If rent for comparable floor space in the neighborhood averages $15.00 per sq.ft.for ground-floor space and $10 per sq.ft.for second-floor space,what annual rent expense should be charged to each department?

Accepted Answer

None

Question 9

Departmental contribution to overhead is the amount of revenues for that department less its direct expenses.

Accepted Answer

A) True 
 B)False

Question 10

The first three steps in preparing a departmental income statement are: (1)accumulate __________________ of the department,(2)allocate __________________ to the department,and (3)allocate _____________________ to the operating departments.

Accepted Answer

direct expenses; ind

Question 11

A __________________________ helps control costs and expenses and evaluates managers' performance by assigning costs and expenses to the managers responsible for controlling them.

Accepted Answer

responsibi

Question 12

A _______________________ incurs costs and generates revenues.

Accepted Answer

The answer of A _______________________ incurs costs and generates revenues....

Question 13

A ______________________ incurs costs without directly generating revenues.

Accepted Answer

The answer of A ______________________ incurs costs without directly generating...

Question 14

___________________ are costs incurred to produce or purchase two or more products at the same time.

Accepted Answer

The answer of ___________________ are costs incurred to produce or...

Question 15

What is the balanced scorecard and how is it used?

Accepted Answer

The balanced scorecard is a system of pe

Question 16

Midwest Rocks receives and produces an order.What is the company's value-added 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 17

Discuss some of the financial and nonfinancial performance measures that are important to United By Blue founder Brian Linton.

Accepted Answer

Brian's managers monitor direct,indirect

Question 18

Expenses that are easily traced and assigned to a specific department because they are incurred for the sole benefit of that department are called:

Accepted Answer

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

Question 19

A department can never be considered to be a profit center.

Accepted Answer

A) True 
 B)False

Question 20

Expense allocations cannot always avoid some arbitrariness.

Accepted Answer

A) True 
 B)False

Exam 22: Decentralization and Performance Measurement

A useful measure used to evaluate the manager of an investment center is return on total costs for the investment center.

An _______________________ is a department whose manager is responsible for using the center's assets to generate income for the center.

The most useful evaluation of a manager's cost performance is based on:

Departmental contribution to overhead is the amount of revenues for that department less its direct expenses.

The first three steps in preparing a departmental income statement are: (1)accumulate __________________ of the department,(2)allocate __________________ to the department,and (3)allocate _____________________ to the operating departments.

A __________________________ helps control costs and expenses and evaluates managers' performance by assigning costs and expenses to the managers responsible for controlling them.

A _______________________ incurs costs and generates revenues.

A ______________________ incurs costs without directly generating revenues.

___________________ are costs incurred to produce or purchase two or more products at the same time.

What is the balanced scorecard and how is it used?

Midwest Rocks receives and produces an order.What is the company's value-added 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

Discuss some of the financial and nonfinancial performance measures that are important to United By Blue founder Brian Linton.

Expenses that are easily traced and assigned to a specific department because they are incurred for the sole benefit of that department are called:

A department can never be considered to be a profit center.

Expense allocations cannot always avoid some arbitrariness.

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

The first three steps in preparing a departmental income statement are: (1)accumulate of the department,(2)allocate to the department,and (3)allocate _____ to the operating departments.