Question 1

What is the purpose of a responsibility accounting system?

Accepted Answer

A responsibility accounting sy

Question 2

Marks Corporation has two operating departments, Drilling and Grinding, and an office. The three categories of office expenses are allocated to the two departments using different allocation bases. The following information is available for the current period: $\begin{array}{lll}
\text { Office Expenses } & \text { Total } & \text { Allocation Basis } \
\text { Salaries } & \$ 30,000& \text { Number of employees } \
\text { Depreciation } & 20,000 & \text { Cost of goods sold } \
\text { Advertising } & 40,000 & \text { Net sales }
\end{array}$ $\begin{array}{lrrr}
\text { Item } &{\text { Drilling }} & \text { Grinding } & \text { Total } \
\text { Number of employees } & 1,000 & 1,500& 2,500 \
\text { Net sales } & \$ 325,000 & \$ 475,000 & \$ 800,000 \
\text { Cost of goods sold } & \$ 75,000& \$ 125,000 & \$ 200,000
\end{array}$ The amount of the advertising cost that should be allocated to Grinding for the current period is:

Accepted Answer

A)  $16,250. 
B)  $45,000. 
C)  $23,750. 
D)  $325,000. 
E)  $54,250. 
A)  $16,250. 
B)  $45,000. 
C)  $23,750. 
D)  $325,000. 
E)  $54,250.

Question 3

The most useful allocation basis for the departmental costs of an advertising campaign for a storewide sale is likely to be:

Accepted Answer

A)  Floor space of each department. 
B)  Relative number of items each department had on sale. 
C)  Number of customers to enter each department. 
D)  An equal amount of cost for each department. 
E)  Proportion of sales of each department. 
A)  Floor space of each department. 
B)  Relative number of items each department had on sale. 
C)  Number of customers to enter each department. 
D)  An equal amount of cost for each department. 
E)  Proportion of sales of each department.

Question 4

What is the purpose of a departmental accounting system?

Accepted Answer

A departmental accounting syst

Question 5

The most useful data for evaluation of a manager's cost performance is based on:

Accepted Answer

A)  Controllable costs. 
B)  Contribution percentages. 
C)  Departmental contributions to overhead. 
D)  Uncontrollable expenses. 
E)  Direct costs. 
A)  Controllable costs. 
B)  Contribution percentages. 
C)  Departmental contributions to overhead. 
D)  Uncontrollable expenses. 
E)  Direct costs.

Question 6

The investment center return on investment is ________ divided by ________.

Accepted Answer

investments center net income;

Question 7

The number of hours that a department uses equipment and machinery is a reasonable basis for allocating depreciation.

Accepted Answer

A) True 
 B)False

Question 8

Part AR3 costs the Southwestern Division of Luxon Corporation $26 to make-direct materials are $10, direct labor is $4, variable manufacturing overhead is $9, and fixed manufacturing overhead is $3. Southwestern Division sells Part AR3 to other companies for $30. The Northeastern Division of Luxon Corporation can use Part AR3 in one of its products. The Southwestern Division has enough idle capacity to produce all of the units of Part AR3 that the Northeastern Division would require. What is the lowest transfer price at which the Southwestern Division should be willing to sell Part AR3 to the Northeastern Division?

Accepted Answer

A)  $30 
B)  $26 
C)  $23 
D)  $27 
E)  $21 
A)  $30 
B)  $26 
C)  $23 
D)  $27 
E)  $21

Question 9

Ready Company has two operating (production) departments: Assembly and Painting. Assembly has 150 employees and occupies 44,000 square feet; Painting has 100 employees and occupies 36,000 square feet. Indirect factory expenses for the current period are as follows:

Administration is allocated based on workers in each department; maintenance is allocated based on square footage. The total amount of indirect factory expenses that should be allocated to the Assembly Department for the current period is:

Accepted Answer

A)  $48,000. 
B)  $55,000. 
C)  $103,000. 
D)  $104,000. 
E)  $110,000. 
A)  $48,000. 
B)  $55,000. 
C)  $103,000. 
D)  $104,000. 
E)  $110,000.

Question 10

If a company reports profit margin of 31.6% and investment turnover of 1.30 for one of its investment centers, the return on investment must be:

Accepted Answer

A)  24.3%. 
B)  41.1%. 
C)  32.9%. 
D)  30.3%. 
E)  4.11%. 
A)  24.3%. 
B)  41.1%. 
C)  32.9%. 
D)  30.3%. 
E)  4.11%.

Question 11

Marks Corporation has two operating departments, Drilling and Grinding, and an office. The three categories of office expenses are allocated to the two departments using different allocation bases. The following information is available for the current period:     The amount of the total office expenses that should be allocated to Drilling for the current period is:

Accepted Answer

A)  $35,750. 
B)  $45,000. 
C)  $54,250. 
D)  $90,000. 
E)  $600,000. 
A)  $35,750. 
B)  $45,000. 
C)  $54,250. 
D)  $90,000. 
E)  $600,000.

Question 12

Ultimo Co. operates three production departments as profit centers. The following information is available for its most recent year. Department 1's contribution to overhead as a percent of sales is:

Accepted Answer

A)  52.5% 
B)  20.0% 
C)  35.7% 
D)  30.0% 
E)  57.1% 
A)  52.5% 
B)  20.0% 
C)  35.7% 
D)  30.0% 
E)  57.1%

Question 13

Explain the difference between direct and indirect expenses in accounting for departments.

Accepted Answer

Direct expenses are costs readily traced

Question 14

Profit center managers are evaluated on their ability to generate revenues in excess of costs.

Accepted Answer

A) True 
 B)False

Question 15

Carter Company reported the following financial numbers for one of its divisions for the year; average total assets of $4,100,000; sales of $4,525,000; cost of goods sold of $2,550,000; and operating expenses of $1,372,000. Compute the division's return on investment:

Accepted Answer

A)  30.3%. 
B)  23.6%. 
C)  13.3%. 
D)  10.4%. 
E)  14.7%. 
A)  30.3%. 
B)  23.6%. 
C)  13.3%. 
D)  10.4%. 
E)  14.7%.

Question 16

Dartford Company reported the following financial data for one of its divisions for the year; average investment center total assets of $3,500,000; investment center income $610,000; a target income of 12% of average invested assets. The residual income for the division is:

Accepted Answer

A)  $536,800. 
B)  $1,030,000. 
C)  $190,000. 
D)  $683,200. 
E)  $493,200. 
A)  $536,800. 
B)  $1,030,000. 
C)  $190,000. 
D)  $683,200. 
E)  $493,200.

Question 17

A firm produces and sells two products, Plus and Max. The following information is available relating to setup costs (a part of factory overhead):     Using number of setups as the activity base, the amount of setup cost allocated to each unit of product for Plus and Max, respectively is:

Accepted Answer

A)  $21.60; $.54. 
B)  $54.00; $27.00. 
C)  $60.00; $60.00. 
D)  $108.00; $2.70. 
E)  $200.00; $16,000.00 
A)  $21.60; $.54. 
B)  $54.00; $27.00. 
C)  $60.00; $60.00. 
D)  $108.00; $2.70. 
E)  $200.00; $16,000.00

Question 18

An example of a service department is the human resources department.

Accepted Answer

A) True 
 B)False

Question 19

A department can never be considered to be a profit center.

Accepted Answer

A) True 
 B)False

Question 20

Brownley Company has two service departments and two operating (production) departments. The Payroll Department services all three of the other departments in proportion to the number of employees in each. The Maintenance Department costs are allocated to the two operating departments in proportion to the floor space used by each. Listed below are the operating data for the current period:   The total cost of operating the Milling Department for the current period is:

Accepted Answer

A)  $14,280. 
B)  $15,912. 
C)  $76,500. 
D)  $90,780. 
E)  $92,412. 
A)  $14,280. 
B)  $15,912. 
C)  $76,500. 
D)  $90,780. 
E)  $92,412.

What is the purpose of a responsibility accounting system?

The most useful allocation basis for the departmental costs of an advertising campaign for a storewide sale is likely to be:

What is the purpose of a departmental accounting system?

The most useful data for evaluation of a manager's cost performance is based on:

The investment center return on investment is divided by .

The number of hours that a department uses equipment and machinery is a reasonable basis for allocating depreciation.

If a company reports profit margin of 31.6% and investment turnover of 1.30 for one of its investment centers, the return on investment must be:

Ultimo Co. operates three production departments as profit centers. The following information is available for its most recent year. Department 1's contribution to overhead as a percent of sales is:

Explain the difference between direct and indirect expenses in accounting for departments.

Profit center managers are evaluated on their ability to generate revenues in excess of costs.

Carter Company reported the following financial numbers for one of its divisions for the year; average total assets of $4,100,000; sales of $4,525,000; cost of goods sold of $2,550,000; and operating expenses of $1,372,000. Compute the division's return on investment:

Dartford Company reported the following financial data for one of its divisions for the year; average investment center total assets of $3,500,000; investment center income $610,000; a target income of 12% of average invested assets. The residual income for the division is:

A firm produces and sells two products, Plus and Max. The following information is available relating to setup costs (a part of factory overhead): Using number of setups as the activity base, the amount of setup cost allocated to each unit of product for Plus and Max, respectively is:

An example of a service department is the human resources department.

A department can never be considered to be a profit center.

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 Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Reporting Cash Flows

Analysis of Financial Statements

Time Value of Money

Lean Principles and Accounting

Accounting for Business Transactions

Filters

Exam 9: Performance Measurement and Responsibility Accounting

What is the purpose of a responsibility accounting system?

The most useful allocation basis for the departmental costs of an advertising campaign for a storewide sale is likely to be:

What is the purpose of a departmental accounting system?

The most useful data for evaluation of a manager's cost performance is based on:

The investment center return on investment is ________ divided by ________.

The number of hours that a department uses equipment and machinery is a reasonable basis for allocating depreciation.

If a company reports profit margin of 31.6% and investment turnover of 1.30 for one of its investment centers, the return on investment must be:

Ultimo Co. operates three production departments as profit centers. The following information is available for its most recent year. Department 1's contribution to overhead as a percent of sales is:

Explain the difference between direct and indirect expenses in accounting for departments.

Profit center managers are evaluated on their ability to generate revenues in excess of costs.

Carter Company reported the following financial numbers for one of its divisions for the year; average total assets of $4,100,000; sales of $4,525,000; cost of goods sold of $2,550,000; and operating expenses of $1,372,000. Compute the division's return on investment:

Dartford Company reported the following financial data for one of its divisions for the year; average investment center total assets of $3,500,000; investment center income $610,000; a target income of 12% of average invested assets. The residual income for the division is:

A firm produces and sells two products, Plus and Max. The following information is available relating to setup costs (a part of factory overhead): Using number of setups as the activity base, the amount of setup cost allocated to each unit of product for Plus and Max, respectively is:

An example of a service department is the human resources department.

A department can never be considered to be a profit center.

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 Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Reporting Cash Flows

Analysis of Financial Statements

Time Value of Money

Lean Principles and Accounting

Accounting for Business Transactions

Filters

The investment center return on investment is divided by .