Question 1

Companies calculate the predetermined overhead rate at the beginning of an accounting period using the actual values of overhead costs.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following perspectives of the balanced scorecard focuses on the increase of company profits through increasing revenue growth and productivity?

Accepted Answer

A) financial 
B) customer 
C) internal business 
D) learning and growth 
A) financial 
B) customer 
C) internal business 
D) learning and growth

Question 3

Which of the following is a key performance indicator of the financial perspective in a balanced scorecard?

Accepted Answer

A) hours of employee training 
B) number of warranty claims 
C) percentage of market share 
D) return on investment 
A) hours of employee training 
B) number of warranty claims 
C) percentage of market share 
D) return on investment

Question 4

In selecting machine usage as the primary cost driver for the Production Department,management feels that there is a direct relationship between the number of machine hours used and the amount of overhead costs incurred.

Accepted Answer

A) True 
 B)False

Question 5

Cost center responsibility reports generally focus on the static budget variance.

Accepted Answer

A) True 
 B)False

Question 6

Huston Company,a manufacturer of office supplies,provides the following financial information:
 
Calculate the return on investment for the Pen Division.(Round your answer to two decimal places. )

Accepted Answer

A) 15.25% 
B) 12.24% 
C) 15.52% 
D) 15.00% 
A) 15.25% 
B) 12.24% 
C) 15.52% 
D) 15.00%

Question 7

The number of inspections,number of service calls and number of batches are all examples of ________.

Accepted Answer

A) direct labor costs 
B) service costs 
C) cost drivers 
D) allocable costs 
A) direct labor costs 
B) service costs 
C) cost drivers 
D) allocable costs

Question 8

Which of the following statements is true of performance reporting?

Accepted Answer

A) Responsibility reports should focus on the person responsible for unfavorable variances,rather than information. 
B) Managers should not be held accountable for uncontrollable variances. 
C) Only unfavorable variances should be explained in the reports. 
D) Every variance,regardless of magnitude,must be investigated by the managers. 
A) Responsibility reports should focus on the person responsible for unfavorable variances,rather than information. 
B) Managers should not be held accountable for uncontrollable variances. 
C) Only unfavorable variances should be explained in the reports. 
D) Every variance,regardless of magnitude,must be investigated by the managers.

Question 9

Moonrays,Inc.manufactures both normal and premium tube lights.The company allocates manufacturing overhead using a single plantwide rate with machine hours as the allocation base.Estimated overhead costs for the year are $106,000.Additional estimated information is given below.
 
Calculate the predetermined overhead allocation rate.(Round your answer to the nearest cent. )

Accepted Answer

A) $5.05 per direct labor hour 
B) $1.80 per machine hour 
C) $2.79 per machine hour 
D) $0.19 per direct labor hour 
A) $5.05 per direct labor hour 
B) $1.80 per machine hour 
C) $2.79 per machine hour 
D) $0.19 per direct labor hour

Question 10

Fill in the blanks:
Direct materials cost and direct labor cost can be ________ ________ to products.Manufacturing overhead costs are ________ in cost pools and then ________ to products.

Accepted Answer

Direct materials cost and dire

Question 11

Explain the difference between a controllable and a noncontrollable cost.

Accepted Answer

A controllable cost is one the

Question 12

For each of the following responsibility centers,state the typical focus of the responsibility report and briefly discuss the focus.

Accepted Answer

The answer of For each of the following responsibility centers,state...

Question 13

Both the sales volume variance and the flexible budget variance help revenue center managers understand why they have exceeded or fallen short of budgeted revenue.

Accepted Answer

A) True 
 B)False

Question 14

The return on investment formula focuses on the amount of operating income earned before considering other revenue and expense items,such as interest expense.

Accepted Answer

A) True 
 B)False

Question 15

The primary objective in setting transfer prices is to ________.

Accepted Answer

A) establish a system that determines the best transfer prices for the company as a whole 
B) evaluate the managers of the responsibility centers involved 
C) achieve goal congruence by selecting a price that will maximize overall company profits 
D) make it easy for managers to select prices that maximize division profits 
A) establish a system that determines the best transfer prices for the company as a whole 
B) evaluate the managers of the responsibility centers involved 
C) achieve goal congruence by selecting a price that will maximize overall company profits 
D) make it easy for managers to select prices that maximize division profits

Question 16

Regarding controllable costs,which of the following statements is incorrect?

Accepted Answer

A) The production manager cannot make the decision to replace older equipment. 
B) All costs are ultimately controllable at the upper levels of management. 
C) The production manager is not responsible for avoiding waste of direct materials. 
D) The production manager must be able to control all costs of his or her department. 
A) The production manager cannot make the decision to replace older equipment. 
B) All costs are ultimately controllable at the upper levels of management. 
C) The production manager is not responsible for avoiding waste of direct materials. 
D) The production manager must be able to control all costs of his or her department.

Question 17

Which of the following would most likely be evaluated using residual income?

Accepted Answer

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

Question 18

Johnson Construction Materials Company has a sales office that sells concrete culvert pipes to property developers.The sales office is a revenue center and prepares a monthly responsibility report.The following information is provided.
 
What is the flexible budget variance for the 40-inch pipe?

Accepted Answer

A) $950 U 
B) $10,050 F 
C) $10,050 U 
D) $950 F 
A) $950 U 
B) $10,050 F 
C) $10,050 U 
D) $950 F

Question 19

State the strategy for each of the perspectives of the balanced scorecard.

Accepted Answer

The answer of State the strategy for each of the...

Question 20

A modification of the overhead allocation method which uses a single plantwide rate,is to use multiple predetermined overhead allocation rates that have a single allocation base.

Accepted Answer

A) True 
 B)False

Exam 24: Cost Allocation and Responsibility Accounting

Companies calculate the predetermined overhead rate at the beginning of an accounting period using the actual values of overhead costs.

Which of the following perspectives of the balanced scorecard focuses on the increase of company profits through increasing revenue growth and productivity?

Which of the following is a key performance indicator of the financial perspective in a balanced scorecard?

In selecting machine usage as the primary cost driver for the Production Department,management feels that there is a direct relationship between the number of machine hours used and the amount of overhead costs incurred.

Cost center responsibility reports generally focus on the static budget variance.

Huston Company,a manufacturer of office supplies,provides the following financial information: Calculate the return on investment for the Pen Division.(Round your answer to two decimal places. )

The number of inspections,number of service calls and number of batches are all examples of ________.

Which of the following statements is true of performance reporting?

Fill in the blanks: Direct materials cost and direct labor cost can be ________ ________ to products.Manufacturing overhead costs are ________ in cost pools and then ________ to products.

Explain the difference between a controllable and a noncontrollable cost.

For each of the following responsibility centers,state the typical focus of the responsibility report and briefly discuss the focus.

Both the sales volume variance and the flexible budget variance help revenue center managers understand why they have exceeded or fallen short of budgeted revenue.

The return on investment formula focuses on the amount of operating income earned before considering other revenue and expense items,such as interest expense.

The primary objective in setting transfer prices is to ________.

Regarding controllable costs,which of the following statements is incorrect?

Which of the following would most likely be evaluated using residual income?

Johnson Construction Materials Company has a sales office that sells concrete culvert pipes to property developers.The sales office is a revenue center and prepares a monthly responsibility report.The following information is provided. What is the flexible budget variance for the 40-inch pipe?

State the strategy for each of the perspectives of the balanced scorecard.

A modification of the overhead allocation method which uses a single plantwide rate,is to use multiple predetermined overhead allocation rates that have a single allocation base.

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

Filters

Fill in the blanks: Direct materials cost and direct labor cost can be to products.Manufacturing overhead costs are in cost pools and then to products.