Exam 24: Cost Allocation and Responsibility Accounting

In a decentralized company,all the planning and controlling decisions are made by top management.

A high rate of employee turnover indicates that ________.

Dynamic Corporation provides the following financial information: Calculate the residual income of Dynamic Corporation.

A responsibility accounting system evaluates the performance of each responsibility center and its manager.

Ewan Logistics provides the following information: What is the company's residual income?

The following is divisional information for Falcon Enterprises: The target rate of return is 12% for the East Division and is 10% for the West Division. Compute residual income for each division.

Operating income alone does not indicate how efficiently a segment is using its assets.

The level of employee satisfaction is a key performance indicator of the ________ perspective of a balanced scorecard.

Which of the following is a disadvantage of decentralization?

The production manager is responsible for ________.

Bag Ladies,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 $25,500.Additional estimated information is given below. Calculate the amount of overhead to be allocated to Totes.(Round any percentages to two decimal places and your final answer to the nearest dollar. )

Uncontrollable costs are the costs that can be influenced by the decisions of a manager.

If a company allows division managers to negotiate a cost-based transfer price,it is better to use actual costs rather than standard costs.Otherwise,the selling division has no motivation to control costs.

To adequately evaluate an investment center's financial performance,summary performance measures should include both the division's operating income and its assets.

A radial tire manufacturer produces products in two departments-Divisions A and B.The company uses separate predetermined overhead allocation rates for each department to allocate its overhead.Divisions A and B have estimated manufacturing overhead costs of $170,000 and $350,000,respectively.Division A uses machine hours as the allocation base,and Division B uses direct labor hours as the allocation base.The total estimated machine hours were 34,000,and direct labor hours were 20,000 for the year.Calculate the departmental predetermined overhead allocation rates.(Round your answer to the nearest cent. )

To create goal congruence,some firms prefer calculating ROI based on the gross book value of asset.

One part of the balanced scorecard helps management answer the question,"How do we look to investors and creditors?" Which of the four perspectives is being described with this statement?

The predetermined overhead allocation rate is an estimated overhead cost per unit of the allocation base and is calculated at the beginning of the accounting period.

Return on investment measures the profitability of an investment center but not the efficiency in using its assets.

Uniox,Inc.intends to increase its profits by 50% in the next fiscal year.Which of the following is most likely to be a lag indicator in Uniox's performance report?