Exam 12: Fundamentals of Management Control Systems

There is no single accounting measure that can fully measure the performance of a profit or investment center.There is no one single perfect measure.

Dual allocation is a cost allocation approach that separates direct and indirect costs,tracing the direct costs directly to the department that:

Which of the following statements is (are)false regarding the effective use of management control systems? (A)In general,single rate cost allocations should not be used in management control systems because clear control over the cost being allocated cannot be determined.(B)The primary reason to use a dual rate allocation system is to focus a manager's performance evaluation on factors under the manager's direct control.

Boxes-2-Go has two divisions,large and small,that share the common costs of the company's communications network.The annual common costs are $4,500,000.You have been provided with the following information for the upcoming year: What is the allocation rate for the upcoming,year assuming Boxes-2-Go uses the single-rate method and allocates common costs based on the time on the network?

Examples of pressures that can lead to financial fraud do not include:

Which of the following statements is (are)true regarding compensation? (A)Fixed compensation is generally not linked to measured performance;i.e. ,it is independent of measured performance.(B)Properly designed management control systems have contingent compensation items but not fixed compensation items.

The concepts of cost allocation that are used in manufacturing can also apply in:

Which of the following subunits is most likely to be considered an investment center?

Fenway Telcom has three divisions,commercial,retail,and consumer,that share the common costs of the company's computer server network.The annual common costs are $2,400,000.You have been provided with the following information for the upcoming year: Fenway Telcom uses the single rate method and allocates common costs based on the time on the network.What is the total computer server network cost allocated to the Retail Division?

The least complex segment or area of responsibility for which costs are allocated is a(n): (CMA adapted)

If a budgeted activity base is used as the base in cost allocation,each department's cost allocation will be predictable,and not influenced by the:

Which of the following subunits would most likely be considered a only cost center?

The Copy Department in the College of Business at State University provides photocopying service for both the Marketing and Economics Department.The following budget has been prepared for the year. If the Copy Department uses a dual rate for allocating its costs based on usage,how much cost will be allocated to the Marketing Department?

An operating unit that is responsible for revenues and costs is commonly referred to as a(n):

An operating unit of an organization is called a revenue center if it is responsible:

Which of the following three statements are correct? I.A profit center has control over both cost and revenue.II.An investment center has control over invested funds,but not over costs and revenue.III.A cost center has no control over sales.

Which of the following elements is not part of a management control system?

Rational managers will always make decisions that are in the best interest of the organization employing them.Rational managers will often make decisions that are in their best personal interest.

Which of the following is not a cost of decentralization?

Which one of the following will not occur in an organization that gives managers throughout the organization maximum freedom to make decisions? (CMA adapted)