Question 1

Which of the following is an example of a financial performance measure which would be found in a balanced scorecard?

Accepted Answer

A)  Percentage of on-time delivery 
B)  Residual Income 
C)  Customer satisfaction 
D)  Cycle time 
E)  Employee turnover 
A)  Percentage of on-time delivery 
B)  Residual Income 
C)  Customer satisfaction 
D)  Cycle time 
E)  Employee turnover

Question 2

A report that specifies the expected and actual costs under the control of a manager is a:

Accepted Answer

A)  Segmental accounting report. 
B)  Managerial cost report. 
C)  Controllable expense report. 
D)  Departmental accounting report. 
E)  Responsibility accounting report. 
A)  Segmental accounting report. 
B)  Managerial cost report. 
C)  Controllable expense report. 
D)  Departmental accounting report. 
E)  Responsibility accounting report.

Question 3

A ______________________________ is the value used to record transfers of items between divisions of the same company.

Accepted Answer

The answer of A ______________________________ is the value used to...

Question 4

In a responsibility accounting system:

Accepted Answer

A)  Controllable costs are assigned to managers who are responsible for them. 
B)  Each accounting report contains all items allocated to a responsibility center. 
C)  Organized and clear lines of authority and responsibility are only incidental. 
D)  All managers at a given level have equal authority and responsibility. 
E)  Control over costs belongs only to the top level of management. 
A)  Controllable costs are assigned to managers who are responsible for them. 
B)  Each accounting report contains all items allocated to a responsibility center. 
C)  Organized and clear lines of authority and responsibility are only incidental. 
D)  All managers at a given level have equal authority and responsibility. 
E)  Control over costs belongs only to the top level of management.

Question 5

A sawmill bought a shipment of logs for $40,000. When cut, the logs produced a million board feet of lumber in the following grades: 
Type 1 - 400,000 bd. ft. priced to sell at $0.12 per bd. ft.
Type 2 - 400,000 bd. ft. priced to sell at $0.06 per bd. ft.
Type 3 - 200,000 bd. ft. priced to sell at $0.04 per bd. ft.
$\text { Type 1 } \quad \text { Type 2 }$
(A)$\$ 16,000 \quad \$ 16,000$
(B)$\$ 13,333 \quad \$ 4,444$
(C)$\$ 40,000 \quad \$ 24,000$
(D)$\$ 24,000 \quad \$ 12,000$
(E)$\$ 24,000 \quad \$ 8,000$ 
How much cost should be allocated to Type 1 and Type 2, respectively?

Accepted Answer

A)  A Above. 
B)  B Above. 
C)  C Above. 
D)  D Above. 
E)  E Above. 
A)  A Above. 
B)  B Above. 
C)  C Above. 
D)  D Above. 
E)  E Above.

Question 6

A _______________________ incurs costs and generates revenues.

Accepted Answer

The answer of A _______________________ incurs costs and generates revenues....

Question 7

Bevo Beef Company uses the relative market value method of allocating joint costs in their production of beef products. Relevant information for the current period follows: 
$\begin{array}{lrr}\text { Product } & \begin{array}{c}
\text { Production in } \
\text { Pounds }
\end{array} & \begin{array}{c}
\text { Market } \
\text { Price/lb. }
\end{array}\\hline
\text { Sirloin } & 3,000 & \$ 5.00 \
\text { Hamburger } & 10,000 & 2.00 \
\text { Rib eye } & 4,000 & 4.75 \
\text { Roast } & 6,000 & 3.50
\end{array}$
The total joint cost for the current period was $43,000. How much of this cost should Bevo Beef allocate to sirloin?

Accepted Answer

A)  $0 
B)  $5,909 
C)  $8,600 
D)  $10,750 
E)  $43,000 
A)  $0 
B)  $5,909 
C)  $8,600 
D)  $10,750 
E)  $43,000

Question 8

Bridgestreet, Inc. has three operating departments: Cutting, Assembling and Finishing. Cutting has 5,000 employees and occupies 15,000 square feet. Assembling has 4,000 employees and occupies 12,000 square feet. Finishing has 1,000 employees and occupies 23,000 square feet. Indirect factory costs for the current period were Administrative, $170,000 and Maintenance, $212,000. Administrative costs are allocated to operating departments based on the number of workers and maintenance costs are allocated to operating departments based on square footage occupied.
-Based on the above data, determine the maintenance cost allocated to each operating department of Bridgestreet, Inc.
$\begin{array}{|l|l|l|l|}
\hline \text { (A) } & \text { Cutting: } \$ 70,666 & \text { Assembling: } \$ 70,666 & \text { Finishing: } \$ 70,666 \
\hline \text { (B) } & \text { Cutting: } \$ 15,000 & \text { Assembling: } \$ 12,000 & \text { Finishing: } \$ 23,000 \\hline \text { (C) } & \text { Cutting: } \$ 63,600 & \text { Assembling: } \$ 50,880 & \text { Finishing: } \$ 97,520 \
\hline \text { (D) } & \text { Cutting: } \$ 127,333 & \text { Assembling: } \$ 127,333 & \text { Finishing: } \$ 127,333 \
\hline \text { E) } & \text { Cutting: } \$ 115,000 & \text { Assembling: } \$ 91,680 & \text { Finishing: } \$ 175,720 \
\hline
\end{array}$b

Accepted Answer

A)  A Above. 
B)  B Above. 
C)  C Above. 
D)  D Above. 
E)  E Above. 
A)  A Above. 
B)  B Above. 
C)  C Above. 
D)  D Above. 
E)  E Above.

Question 9

Which of the following is most likely to be considered a profit center?

Accepted Answer

A)  An individual retail store in a large chain. 
B)  The grocery department of a Wal-Mart Supercenter or Target Superstore. 
C)  The maintenance department of a large retail operation. 
D)  The personnel office of a business. 
E)  A stand-alone eye clinic. 
A)  An individual retail store in a large chain. 
B)  The grocery department of a Wal-Mart Supercenter or Target Superstore. 
C)  The maintenance department of a large retail operation. 
D)  The personnel office of a business. 
E)  A stand-alone eye clinic.

Question 10

What is the purpose of a departmental accounting system?

Accepted Answer

A departmental accounting syst

Question 11

A sawmill paid $70,000 for logs that produced 200,000 board feet of lumber in 3 different grades and amounts as follows: 
$\begin{array}{ll}\text { Grade } & \text { Production }& \text { Market Price }\\hline
\text { Structural } & 25,000 \text { board feet } &\$ 1,350 / 1,000 \mathrm{bd} \text {.ft. }\
\text { No. 1 Common } & 75,000 \text { board feet }&\$ 750 / 1,000 \mathrm{bd} \text {.ft. }\\text { No. } 2 \text { Common }&100,000 \text { board feet}&\$ 300 / 1,000  \mathrm{bd} \text {.ft. }
\end{array}$
How much of the $70,000 joint cost should be allocated to No. 2 Common?

Accepted Answer

A)  $0 
B)  $17,500 
C)  $23,333 
D)  $35,000 
E)  $70,000 
A)  $0 
B)  $17,500 
C)  $23,333 
D)  $35,000 
E)  $70,000

Question 12

___________________ are costs incurred to produce or purchase two or more products at the same time.

Accepted Answer

The answer of ___________________ are costs incurred to produce or...

Question 13

Mach Co. operates three manufacturing departments as profit centers. The following information is available for its most recent year:
$\begin{array}{rrrrr}&& \text { Cost of } & \text { Direct } & \text { Indirect } \
\text { Dept. }&\text { Sales } & \text { Goods Sold } & \text { Expenses } & \text { Expenses }\
1 & \$ 1,000,000 & \$ 700,000 & \$ 100,000 & \$ 80,000 \
2 & 400,000 & 150,000 & 40,000 & 100,000 \
3 & 700,000 & 300,000 & 150,000 & 20,000
\end{array}$

-Department 1's contribution to overhead as a percent of sales is:

Accepted Answer

A)  8% 
B)  40% 
C)  20% 
D)  30% 
E)  12% 
A)  8% 
B)  40% 
C)  20% 
D)  30% 
E)  12%

Question 14

Allocations of joint product costs can be based on the relative market values of the products:

Accepted Answer

A)  And never on the relative physical quantities of the products. 
B)  Plus an adjustment for future excess margins. 
C)  And not on any other basis. 
D)  At the time the products are separated. 
E)  Only if the products contain both direct and indirect costs. 
A)  And never on the relative physical quantities of the products. 
B)  Plus an adjustment for future excess margins. 
C)  And not on any other basis. 
D)  At the time the products are separated. 
E)  Only if the products contain both direct and indirect costs.

Question 15

A difficult problem in calculating the total costs and expenses of a department is:

Accepted Answer

A)  Determining the gross profit ratio. 
B)  Assigning direct costs to the department. 
C)  Assigning indirect expenses to the department. 
D)  Determining the amount of sales of the department. 
E)  Determining the direct expenses of the department. 
A)  Determining the gross profit ratio. 
B)  Assigning direct costs to the department. 
C)  Assigning indirect expenses to the department. 
D)  Determining the amount of sales of the department. 
E)  Determining the direct expenses of the department.

Question 16

A dairy allocates the cost of unprocessed milk to the production of milk, cream, butter and cheese. For the current period, unprocessed milk was purchased for $240,000, and the following quantities of product and sales revenues were produced. 
$\begin{array}{lrr}&\text { Pounds }\
\text { Product }& \text { Price per }&\text { Pounds }\
\text { Milk } & 100,000 & \$ 0.90 \
\text { Cheese } & 50,000 & 2.20 \
\text { Butter } & 20,000 & 1.00 \
\text { Cream } & 10,000 & 3.00
\end{array}$
How much of the $240,000 cost should be allocated to milk?

Accepted Answer

A)  $0 
B)  $86,400 
C)  $90,000 
D)  $133,333 
E)  $240,000 
A)  $0 
B)  $86,400 
C)  $90,000 
D)  $133,333 
E)  $240,000

Question 17

Generally, it does not matter how cost allocations are designed and explained, because most employees do not care whether the allocations appear to be fair or not.

Accepted Answer

A) True 
 B)False

Question 18

Departmental contribution to overhead is the amount of revenues for that department less its direct expenses.

Accepted Answer

A) True 
 B)False

Question 19

Responsibility account performance reports:

Accepted Answer

A)  Become more detailed at higher levels of management. 
B)  Become less detailed at higher levels of management. 
C)  Are equally detailed at all levels of management. 
D)  Are useful in any format. 
E)  Are irrelevant. 
A)  Become more detailed at higher levels of management. 
B)  Become less detailed at higher levels of management. 
C)  Are equally detailed at all levels of management. 
D)  Are useful in any format. 
E)  Are irrelevant.

Question 20

The China Department of the Coulsen Department Store had sales of $282,000, cost of goods sold of $198,750, indirect expenses of $19,875, and direct expenses of $41,250 for the current period. What is the China Department's contribution to overhead as a percent of sales?

Accepted Answer

$282,000 - $198,750

Exam 22: Decentralization and Performance Evaluation

Which of the following is an example of a financial performance measure which would be found in a balanced scorecard?

A report that specifies the expected and actual costs under the control of a manager is a:

A ______________________________ is the value used to record transfers of items between divisions of the same company.

In a responsibility accounting system:

A _______________________ incurs costs and generates revenues.

Which of the following is most likely to be considered a profit center?

What is the purpose of a departmental accounting system?

___________________ are costs incurred to produce or purchase two or more products at the same time.

Allocations of joint product costs can be based on the relative market values of the products:

A difficult problem in calculating the total costs and expenses of a department is:

Generally, it does not matter how cost allocations are designed and explained, because most employees do not care whether the allocations appear to be fair or not.

Departmental contribution to overhead is the amount of revenues for that department less its direct expenses.

Responsibility account performance reports:

The China Department of the Coulsen Department Store had sales of $282,000, cost of goods sold of $198,750, indirect expenses of $19,875, and direct expenses of $41,250 for the current period. What is the China Department's contribution to overhead as a percent of sales?

Introducing Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash and Internal Controls

Accounts and Notes Receivable

Long-Term Assets

Current Liabilities

Long-Term Liabilities

Corporate Reporting and Analysis

Reporting and Analyzing Cash Flows

Analyzing Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity-Based Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing and Performance Reporting

Master Budgets and Performance Planning

Flexible Budgets and Standard Costing

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Investments and International Operations

Accounting for Partnerships

Appendix : Accounting With Special Journals

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