Question 1

Variable costing is a method of reporting that deals only with a manager's controllable, variable costs.

Accepted Answer

A) True 
 B)False  False

Question 2

Use the following performance report for a cost center of the Dry Cat Food Division for the month ended December 31 to answer the question below.   The flexible budget is based on how many units produced?

Accepted Answer

A)  0 units 
B)  30 units 
C)  70 units 
D)  100 units 
A)  0 units 
B)  30 units 
C)  70 units 
D)  100 units C

Question 3

Which of the following is a type of incentive compensation?

Accepted Answer

A)  Health insurance 
B)  Profit-sharing plans 
C)  Pension plans 
D)  Flexible spending programs 
A)  Health insurance 
B)  Profit-sharing plans 
C)  Pension plans 
D)  Flexible spending programs B

Question 4

Compute the current liabilities for the Yi Yo investment center as shown below.

Accepted Answer

A)  $475 
B)  $525 
C)  $1,000 
D)  $11,500 
A)  $475 
B)  $525 
C)  $1,000 
D)  $11,500

Question 5

Identify the following and show the formula for calculating each:
a. ROI
b. RI
c. EVA

Accepted Answer

a. ROI = Return on Investment
Formula:
R

Question 6

Using the following information, prepare a traditional income statement and a variable costing income statement:

Accepted Answer

The answer of Using the following information, prepare a traditional...

Question 7

The manager of Center C is responsible for the online order operations of a large retailer. What type of responsibility center is Center C?

Accepted Answer

A)  Discretionary cost center 
B)  Profit center 
C)  Revenue center 
D)  Investment center 
A)  Discretionary cost center 
B)  Profit center 
C)  Revenue center 
D)  Investment center

Question 8

Determine the April 20xx residual income for an investment center with the following information: $\begin{array}{lr}
\text { Operating income for the month ended April 30, 20xx } & \$ 13,000,000 \
\text { Assets at March 31,20xx } & 10,200,000 \
\text { Assets at April 30,20xx } & 13,150,000 \
\text { Desired ROI } & 49 \% \
\text { Actual ROI } & 60 \%
\end{array}$

Accepted Answer

A)  $6,556,500 
B)  $6,880,000 
C)  $7,279,250 
D)  $7,045,750 
A)  $6,556,500 
B)  $6,880,000 
C)  $7,279,250 
D)  $7,045,750

Question 9

Variable costing allows a manager to classify controllable costs as

Accepted Answer

A)  either variable or fixed. 
B)  variable only. 
C)  fixed only. 
D)  either short-term variable or long-term variable. 
A)  either variable or fixed. 
B)  variable only. 
C)  fixed only. 
D)  either short-term variable or long-term variable.

Question 10

For purposes of computing EVA, the minimum desired rate or return on an investment is known as

Accepted Answer

A)  ROI. 
B)  cost of capital. 
C)  residual income. 
D)  profit margin. 
A)  ROI. 
B)  cost of capital. 
C)  residual income. 
D)  profit margin.

Question 11

An organization chart assists in management control.

Accepted Answer

A) True 
 B)False

Question 12

The manager of Center B produces a product that is not sold to an external party. What type of responsibility center is Center B?

Accepted Answer

A)  Cost center 
B)  Discretionary cost center 
C)  Profit center 
D)  Revenue center 
A)  Cost center 
B)  Discretionary cost center 
C)  Profit center 
D)  Revenue center

Question 13

Which of the following represents a basic stakeholder of an organization?

Accepted Answer

A)  The account receivable clerk of the organization 
B)  A vice president of the organization 
C)  A line supervisor of the organization 
D)  All of these choices 
A)  The account receivable clerk of the organization 
B)  A vice president of the organization 
C)  A line supervisor of the organization 
D)  All of these choices

Question 14

Why is it important that a manager's evaluation be based only on those revenues and costs that he or she can control?

Accepted Answer

It is important that a manager's evaluat

Question 15

The use of quantitative tools to gauge an organization's performance in relation to a specific goal or an expected outcome is known as

Accepted Answer

A)  responsibility accounting. 
B)  an asset turnover. 
C)  a performance management and evaluation system. 
D)  a performance measurement. 
A)  responsibility accounting. 
B)  an asset turnover. 
C)  a performance management and evaluation system. 
D)  a performance measurement.

Question 16

A responsibility center whose manager is held accountable for both revenues and costs and for the resulting operating income is called a profit center.

Accepted Answer

A) True 
 B)False

Question 17

For residual income figures to be comparable on a companywide basis, all investment centers must have equal access to resources and similar asset investment bases.

Accepted Answer

A) True 
 B)False

Question 18

Incentive awards are utilized mainly to encourage long-term performance.

Accepted Answer

A) True 
 B)False

Question 19

A performance management and evaluation system is a set of procedures that account for and report on

Accepted Answer

A)  qualitative performance. 
B)  quantitative performance. 
C)  employee performance. 
D)  quantitative and qualitative performance. 
A)  qualitative performance. 
B)  quantitative performance. 
C)  employee performance. 
D)  quantitative and qualitative performance.

Question 20

If a performance report contains items that are out of a manager's control, the entire responsibility accounting system can be called into question.

Accepted Answer

A) True 
 B)False

Exam 25: Performance Management and Evaluation

Variable costing is a method of reporting that deals only with a manager's controllable, variable costs.

Use the following performance report for a cost center of the Dry Cat Food Division for the month ended December 31 to answer the question below. The flexible budget is based on how many units produced?

Which of the following is a type of incentive compensation?

Compute the current liabilities for the Yi Yo investment center as shown below.

Identify the following and show the formula for calculating each: a. ROI b. RI c. EVA

Using the following information, prepare a traditional income statement and a variable costing income statement:

The manager of Center C is responsible for the online order operations of a large retailer. What type of responsibility center is Center C?

Determine the April 20xx residual income for an investment center with the following information: Operating income for the month ended April 30, 20xx \ 13,000,000 Assets at March 31,20xx 10,200,000 Assets at April 30,20xx 13,150,000 Desired ROI 49\% Actual ROI 60\%

Variable costing allows a manager to classify controllable costs as

For purposes of computing EVA, the minimum desired rate or return on an investment is known as

An organization chart assists in management control.

The manager of Center B produces a product that is not sold to an external party. What type of responsibility center is Center B?

Which of the following represents a basic stakeholder of an organization?

Why is it important that a manager's evaluation be based only on those revenues and costs that he or she can control?

The use of quantitative tools to gauge an organization's performance in relation to a specific goal or an expected outcome is known as

A responsibility center whose manager is held accountable for both revenues and costs and for the resulting operating income is called a profit center.

For residual income figures to be comparable on a companywide basis, all investment centers must have equal access to resources and similar asset investment bases.

Incentive awards are utilized mainly to encourage long-term performance.

A performance management and evaluation system is a set of procedures that account for and report on

If a performance report contains items that are out of a manager's control, the entire responsibility accounting system can be called into question.

Uses of Accounting Information and the Financial Statements

Analyzing Business Transactions

Measuring Business Income

Completing the Accounting Cycle

Financial Reporting and Analysis

The Operating Cycle and Merchandising Operations

Internal Control

Inventories

Cash and Receivables

Current Liabilities and Fair Value Accounting

Long Term Assets

Contributed Capital

Long Term Liabilities

The Corporate Income Statement and the Statement of Stockholders Equity

The Statement of Cash Flows

Financial Performance Measurement

Partnerships

The Changing Business Environment-A Managers Pers

Cost Concepts and Cost Allocation

Costing Systems: Job Order Costing

Costing Systems Process Costing

Activity-Based Systems-Abm and Lean

Cost Behavior Analysis

The Budgeting Process

Standard Costing and Variance Analysis

Short Run Decision Analysis

Capital Investment Analysis

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