Exam 12: Fundamentals of Management Control Systems

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

One advantage of decentralization is faster response time to changes in the organization's environment by local managers.Local managers have the authority to make decisions,so the response time is faster.

Properly designed management control systems have both fixed compensation and contingent compensation.If contingent is too small there is not enough incentive,if the proportion of contingent is too high there is too much risk.

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.The allocation reflects the cost behavior.

The purpose of the Data Processing Department of Falena Corporation is to assist the various departments of the corporation with their information needs free of charge.The Data Processing Department would best be evaluated as a:

Which of the following is not a characteristic of a decentralized organization?

____________ is the delegation of decision-making authority to lower management levels within the organization.

Responsibility accounting defines an operating center that is responsible for revenue and costs as a(n): (CMA adapted)

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: The cost accountant determined $2,700,000 of the communication network's costs were fixed and should be allocated based on the number of calls.The remaining costs should be allocated based on the time on the network.What is the total communication network costs allocated to the Large Box Division,assuming the company uses dual-rates to allocate common costs?

The design and use of management control systems affects how an individual makes and implements decisions.Control systems influence behavior.

Which of the following items would not be classified as a contingent compensation item?

Which of the following is not an internal control?

Revenue center and profit center managers are both responsible for meeting

Assets invested in a responsibility center are included in a performance report of a:

The Document Creation Center (DCC)for Alegis Corp.provides photocopying and document services for three departments in the St.Paul office.The following budget has been prepared for the year. If DCC uses a dual rate for allocating its costs based on usage,how much cost will be allocated to the Software Development Department?

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

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,how much cost will be allocated to the Economics Department,assuming the Economics Department actually made 1,500,000 copies during the year?

Which of the following items would be classified as a fixed compensation item?

The Document Creation Center (DCC)for Alegis Corp.provides photocopying and document services for three departments in the St.Paul office.The following budget has been prepared for the year. If DCC uses a dual-rate for allocating its costs,how much cost will be allocated to the Training Department,assuming the Training Department actually made 2,770,000 copies during the year?

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: The cost accountant determined $1,700,000 of the server network's costs were fixed and should be allocated based on the number of connections.The remaining costs should be allocated based on the time on the network.What is total server network costs allocated to the Retail Division,assuming the company uses dual-rates to allocate common costs?