Question 1

A profit center performance report includes both revenues and expenses.

Accepted Answer

A) True 
 B)False

Question 2

Decentralized companies rarely struggle to achieve goal congruence.

Accepted Answer

A) True 
 B)False

Question 3

In a ________,the manager is responsible for generating revenues and controlling costs.

Accepted Answer

A) cost center 
B) profit center 
C) revenue center 
D) transfer pricing center 
A) cost center 
B) profit center 
C) revenue center 
D) transfer pricing center

Question 4

Louie's Music Co.produces three types of harmonicas: the junior model,the standard model and the professional model.The junior model requires 8 setups,the standard model requires 12 setups and the professional model requires 20 setups.The company expects to incur overhead costs of $28,000 where the cost driver is machine setups.How much overhead is assigned to each product?

Accepted Answer

A) 
  
B) 
  
C) 
  
D) 
  
A) 
  
B) 
  
C) 
  
D)

Question 5

Define market-based transfer price.When should market-based transfer pricing be used? Explain your answer.

Accepted Answer

Market-based transfer price is a transfe

Question 6

The transfer price is the transaction amount of one unit of goods when the transaction occurs between the company and its external customers.

Accepted Answer

A) True 
 B)False

Question 7

Net income is used in the numerator of the return on investment formula.

Accepted Answer

A) True 
 B)False

Question 8

Key performance indicators (KPIs)are summary performance measures that help managers assess whether the company is achieving its goals.

Accepted Answer

A) True 
 B)False

Question 9

Activity-based management (ABM)focuses on the primary activities a business performs,determines the costs of the activities,and then uses the cost information to make decisions.

Accepted Answer

A) True 
 B)False

Question 10

When operating at capacity,a market-based transfer price should be used.

Accepted Answer

A) True 
 B)False

Question 11

A company's "climate for action" is a corporate culture ________.

Accepted Answer

A) that encourages communication,change,and growth 
B) that is focused on strong,top-down command and control 
C) that is aimed exclusively at period earnings 
D) that discourages physical activity,sports,and recreation to improve employee health and morale 
A) that encourages communication,change,and growth 
B) that is focused on strong,top-down command and control 
C) that is aimed exclusively at period earnings 
D) that discourages physical activity,sports,and recreation to improve employee health and morale

Question 12

Percentage of market share and rate of on-time deliveries are indicators of the ________ perspective.

Accepted Answer

A) quality management 
B) internal business 
C) customer 
D) learning and growth 
A) quality management 
B) internal business 
C) customer 
D) learning and growth

Question 13

A cost-based transfer price considers the cost of producing the goods when determining the price.

Accepted Answer

A) True 
 B)False

Question 14

Sun,Inc.has average total assets of $300,000.The annual operating income of the company is $200,000.The target rate of return for the company is 15%.Calculate the residual income.

Accepted Answer

A) $45,000 
B) $100,000 
C) $30,000 
D) $155,000 
A) $45,000 
B) $100,000 
C) $30,000 
D) $155,000

Question 15

Responsibility accounting can help managers identify the causes of variances,thereby allowing them to determine what was controllable.

Accepted Answer

A) True 
 B)False

Question 16

In activity-based costing,the predetermined overhead allocation rate can be computed by ________.

Accepted Answer

A) dividing the total estimated overhead costs by the total estimated quantity of the overhead allocation base 
B) multiplying the actual quantity of the allocation based used by the allocated manufacturing overhead cost 
C) dividing the total estimated overhead costs by the total estimated direct labor costs 
D) dividing each product's total manufacturing cost by the associated number of units 
A) dividing the total estimated overhead costs by the total estimated quantity of the overhead allocation base 
B) multiplying the actual quantity of the allocation based used by the allocated manufacturing overhead cost 
C) dividing the total estimated overhead costs by the total estimated direct labor costs 
D) dividing each product's total manufacturing cost by the associated number of units

Question 17

Cost center responsibility reports typically focus on the flexible budget variance.

Accepted Answer

A) True 
 B)False

Question 18

The return on investment of a company is a measure of profitability and efficiency.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) 12.50% 
B) 9.60% 
C) 8.57% 
D) 10.91% 
A) 12.50% 
B) 9.60% 
C) 8.57% 
D) 10.91%

Question 20

List the primary goals of performance evaluation systems.

Accepted Answer

The goals of the performance e

Exam 24: Cost Allocation and Responsibility Accounting

A profit center performance report includes both revenues and expenses.

Decentralized companies rarely struggle to achieve goal congruence.

In a ________,the manager is responsible for generating revenues and controlling costs.

Define market-based transfer price.When should market-based transfer pricing be used? Explain your answer.

The transfer price is the transaction amount of one unit of goods when the transaction occurs between the company and its external customers.

Net income is used in the numerator of the return on investment formula.

Key performance indicators (KPIs)are summary performance measures that help managers assess whether the company is achieving its goals.

Activity-based management (ABM)focuses on the primary activities a business performs,determines the costs of the activities,and then uses the cost information to make decisions.

When operating at capacity,a market-based transfer price should be used.

A company's "climate for action" is a corporate culture ________.

Percentage of market share and rate of on-time deliveries are indicators of the ________ perspective.

A cost-based transfer price considers the cost of producing the goods when determining the price.

Sun,Inc.has average total assets of $300,000.The annual operating income of the company is $200,000.The target rate of return for the company is 15%.Calculate the residual income.

Responsibility accounting can help managers identify the causes of variances,thereby allowing them to determine what was controllable.

In activity-based costing,the predetermined overhead allocation rate can be computed by ________.

Cost center responsibility reports typically focus on the flexible budget variance.

The return on investment of a company is a measure of profitability and efficiency.

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

List the primary goals of performance evaluation systems.

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