Question 1

The limitations of financial performance measures ________.

Accepted Answer

A) lead management to use a time horizon of more than five years 
B) make it difficult for companies to create goal congruence 
C) lead management to use the gross book value of assets 
D) can be overcome by taking a broader view of performance 
A) lead management to use a time horizon of more than five years 
B) make it difficult for companies to create goal congruence 
C) lead management to use the gross book value of assets 
D) can be overcome by taking a broader view of performance D

Question 2

Oscar,Inc. ,a manufacturer of gift articles,uses a single plantwide rate to allocate indirect costs with machine hours as the allocation base.Estimated overhead costs for the year are $7,000,000.Estimated machine hours are 25,000.During the year,the actual machine hours used were 43,000.Calculate the predetermined overhead allocation rate.(Round your answer to the nearest dollar. )

Accepted Answer

A) $163 
B) $109 
C) $280 
D) $82 
A) $163 
B) $109 
C) $280 
D) $82 C

Question 3

Residual income indicates how ________.

Accepted Answer

A) efficiently a division uses its average assets to generate sales and thereby profits 
B) much operating income the division earns on every dollar of sales 
C) much return a division generates on average assets 
D) much extra operating income a division generates above the minimum acceptable level 
A) efficiently a division uses its average assets to generate sales and thereby profits 
B) much operating income the division earns on every dollar of sales 
C) much return a division generates on average assets 
D) much extra operating income a division generates above the minimum acceptable level D

Question 4

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 5

The limitations of financial performance measures reinforce the importance of the balanced scorecard.

Accepted Answer

A) True 
 B)False

Question 6

Huntswell Corporation has two major divisions: Agricultural Products and Industrial Products.It provides the following information for the year.
 
Calculate the profit margin for the Industrial Division of the company.(Round your answer to two decimal places. )

Accepted Answer

A) 4.15% 
B) 5.33% 
C) 18.40% 
D) 12.57% 
A) 4.15% 
B) 5.33% 
C) 18.40% 
D) 12.57%

Question 7

The manager of a profit center is responsible for generating revenues and managing the center's invested capital.

Accepted Answer

A) True 
 B)False

Question 8

Management by exception directs the management's attention to important differences between the actual and the budgeted amounts.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following managers is likely to have the most diverse responsibilities?

Accepted Answer

A) the manager of a cost center 
B) the manager of a profit center 
C) the manager of an investment center 
D) the manager of a revenue center 
A) the manager of a cost center 
B) the manager of a profit center 
C) the manager of an investment center 
D) the manager of a revenue center

Question 10

Discuss the difference between a centralized company and a decentralized company.

Accepted Answer

In a small company,the owner or top mana

Question 11

An investment center manager is responsible for generating profits and managing invested capital.

Accepted Answer

A) True 
 B)False

Question 12

Howard Consumer Products has a small car 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. )
Howard Consumer Products
Responsibility Report

Accepted Answer

Howard Consumer Products
Respo

Question 13

Summarize the four steps in an activity-based costing system:

Accepted Answer

The answer of Summarize the four steps in an activity-based...

Question 14

Cardec,Inc. ,a leading manufacturer of car spare parts,divided its manufacturing process into two Departments - Production and Packing.The estimated overhead costs for the Production and Packing departments amounted to $14,000,000 and $20,000,000,respectively.The company produces two types of parts - Part 1 and Part 2.The total estimated labor hours for the year were 40,000,and estimated machine hours were 35,000.The Production department is mechanized,whereas the Packing department is labor oriented.Calculate departmental predetermined overhead allocation rates.

Accepted Answer

The answer of Cardec,Inc. ,a leading manufacturer of car spare...

Question 15

Which of the following best describes the manager of a profit center?

Accepted Answer

A) The manager is only responsible for controlling costs. 
B) The manager is responsible for generating profits and efficiently managing the center's invested capital. 
C) The manager is only responsible for generating revenues. 
D) The manager is responsible for generating revenues and controlling costs. 
A) The manager is only responsible for controlling costs. 
B) The manager is responsible for generating profits and efficiently managing the center's invested capital. 
C) The manager is only responsible for generating revenues. 
D) The manager is responsible for generating revenues and controlling costs.

Question 16

Lakefront Equipment Company has several divisions that are investment centers.Data for the Boat Division and the Trailer Division are shown here:
 
Which of the following statements would be the most meaningful interpretation of this data?

Accepted Answer

A) The Boat Division's performance is better than that of the Trailer Division because it has higher assets. 
B) The Boat Division uses its assets less efficiently than the Trailer Division does because it has a lower return on investment. 
C) The Boat Division shows a more efficient use of assets than the Trailer Division because it has a higher operating income. 
D) The Boat Division is financially more successful than the Trailer Division because it shows an increase in assets. 
A) The Boat Division's performance is better than that of the Trailer Division because it has higher assets. 
B) The Boat Division uses its assets less efficiently than the Trailer Division does because it has a lower return on investment. 
C) The Boat Division shows a more efficient use of assets than the Trailer Division because it has a higher operating income. 
D) The Boat Division is financially more successful than the Trailer Division because it shows an increase in assets.

Question 17

The responsibility report of Keith Parker,the manager of one of the divisions of an auto parts manufacturing company,includes profits as well as return on investment and residual income.Keith is most likely the manager of a(n)________.

Accepted Answer

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

Question 18

The following is divisional information for EVQ Enterprises:
   
The target rate of return is 12% for the East Division and is 10% for the West Division.
Compute the return on investment for each division.(Round to one decimal place. )

Accepted Answer

Average assets: (Beginning ass

Question 19

Modiste,Inc.manufactures two kinds of bags-totes and satchels.The company allocates manufacturing overhead using a single plantwide rate with direct labor cost as the allocation base.Estimated overhead costs for the year are $26,000.Additional estimated information is given below.
 
Calculate the predetermined overhead allocation rate.(Round your answer to two decimal places. )

Accepted Answer

A) 92.69% 
B) 49.41% 
C) 94.50% 
D) 1.58% 
A) 92.69% 
B) 49.41% 
C) 94.50% 
D) 1.58%

Question 20

Milliken,Inc.provides the following information:
 
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

Exam 24: Cost Allocation and Responsibility Accounting

The limitations of financial performance measures ________.

Residual income indicates how ________.

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

The limitations of financial performance measures reinforce the importance of the balanced scorecard.

Huntswell Corporation has two major divisions: Agricultural Products and Industrial Products.It provides the following information for the year. Calculate the profit margin for the Industrial Division of the company.(Round your answer to two decimal places. )

The manager of a profit center is responsible for generating revenues and managing the center's invested capital.

Management by exception directs the management's attention to important differences between the actual and the budgeted amounts.

Which of the following managers is likely to have the most diverse responsibilities?

Discuss the difference between a centralized company and a decentralized company.

An investment center manager is responsible for generating profits and managing invested capital.

Howard Consumer Products has a small car 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. ) Howard Consumer Products Responsibility Report

Summarize the four steps in an activity-based costing system:

Which of the following best describes the manager of a profit center?

Lakefront Equipment Company has several divisions that are investment centers.Data for the Boat Division and the Trailer Division are shown here: Which of the following statements would be the most meaningful interpretation of this data?

The responsibility report of Keith Parker,the manager of one of the divisions of an auto parts manufacturing company,includes profits as well as return on investment and residual income.Keith is most likely the manager of a(n)________.

The following is divisional information for EVQ Enterprises: The target rate of return is 12% for the East Division and is 10% for the West Division. Compute the return on investment for each division.(Round to one decimal place. )

Milliken,Inc.provides the following information: Calculate the sales volume variance.

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

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