Exam 12: Responsibility Accounting, Operational Performance Measures, and the Balanced Scorecard

For a company that uses responsibility accounting, which of the following costs is least likely to appear on a performance report of an assembly-line supervisor?

When using a balanced scorecard, which of the following is typically classified as an internal-operations performance measure?

Segmented income statements are used to show revenues, expenses, and income for major parts of an organization. Required: A. Consider a regional chain of department stores that has two or three stores in each of several cities. One way to segment this business is geographically. Describe another way of segmenting the firm. B. Segmented income statements often distinguish between "fixed expenses controllable by the segment manager" and "fixed expenses traceable to the segment, but controllable by others." Assume that the Cleveland district has three retail stores. Give two examples of each type of fixed cost. C. Common costs create difficulties when preparing segmented income statements. Define "common costs," give an example for the regional chain of department stores, and explain in general terms why such costs create a problem.

Leisure Time owns six hotels in Hawaii, collectively known as the Hawaiian Division. The various hotels, including the Surf & Sun, have operating departments (such as Maintenance, Housekeeping, and Food and Beverage) that are evaluated as either cost centers or profit centers. The Food and Beverage Department, for example, is a profit center, with activities divided into three segments: Banquets and Catering, Restaurants, and Kitchen. If Leisure Time uses a performance-reporting system that is based on responsibility accounting, which of the following disclosures is likely to occur?

A segment contribution margin would reflect the impact of:

Lead indicators guide management to:

An allocation base for a cost pool should ideally be:

Higgins Corporation is in the process of overhauling the performance evaluation system for its Los Angeles manufacturing division, which produces and sells parts that are popular in the aerospace industry. Which of the following is least likely to be chosen to evaluate the overall operations of the Los Angeles division?

Fog City Retail operates a retail store in Phoenix, Las Vegas, and Portland. The following information relates to the Phoenix facility: • The store sold 65,000 units at $18.00 each, after having purchased the units from various suppliers for $12.50. Phoenix salespeople are paid a 5% commission based on gross sales dollars. • Phoenix's sales manager oversees the placement of local advertising contracts, which totaled $54,000 for the year. Local property taxes amounted to $14,500. • The sales manager's $65,000 salary is set by Phoenix's store manager. In contrast, the store manager's $134,000 salary is determined by Fog City's vice president. • Phoenix incurred $6,800 of other noncontrollable costs. • Nontraceable (common) corporate overhead totaled $68,000. Fog City's corporate headquarters is located in Portland, and the company uses responsibility accounting to evaluate performance. Required: Prepare a segmented income statement for the Phoenix store, being sure to disclose the segment contribution margin, the segment controllable profit margin, and segment profit margin.

The allocation of costs gives rise to several unique terms. Briefly discuss the following: cost object, cost allocation base, and cost allocation.

The Asian Division of a multinational manufacturing organization would likely be classified as a:

If the head of a hotel's food and beverage operation is held accountable for revenues and costs, the food and beverage operation would be considered a (n):

The performance reports generated by a responsibility accounting system often form a "hierarchy of performance reports." Explain what is meant by this term.

Management of Children Are Precious (CAP), an operator of day-care facilities, wants the company's profit to be subdivided by center. The firm's accountant has provided the following data: CAP's advertising, which is handled by the home office, is not reflected in the preceding figures and amounted to $60,000. If advertising expense were allocated to centers based on actual center profitability, the amount of advertising expense allocated to the Irvine center would be closest to:

The difference between the profit margin controllable by a segment manager and the segment profit margin is caused by:

Sand Fly Corporation operates two stores: J and K. The following information relates to J: Sales revenue \ 1,300,000 Variable operating expenses 600,000 Fixed expenses: Traceable to J and controllable by J 275,000 Traceable to J and controllable by others 80,000 J's segment contribution margin is:

A responsibility center in which the manager is held accountable for the profitable use of assets and capital is commonly known as a (n):

The following data relate to Department no. 2 of Eva Corporation: Segment contribution margin \ 540,000 Profit margin controllable by the segment manager 320,000 Segment profit margin 60,000 On the basis of this information, fixed costs traceable to Department no. 2 but controllable by others are:

An investment center manager:

Which of the following would be the best measure on which to base a segment manager's performance evaluation for purposes of granting a bonus?