Question 1

Cost allocations based on dual rates assume that a common cost can be separated into a fixed and variable component.

Accepted Answer

A) True 
 B)False

Question 2

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?

Accepted Answer

A) $741,667 
B) $657,143 
C) $425,000 
D) $211,765

Question 3

If the Copy Department uses a dual rate for allocating its costs based on usage,how much cost will be allocated to the Economics Department?

Accepted Answer

A) $85,000 
B) $90,000 
C) $105,000 
D) $120,000

Question 4

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 2,100,000 copies during the year?

Accepted Answer

A) $85,000 
B) $92,500 
C) $132,500 
D) $112,500

Question 5

Delegated decision authority is the specification of what decisions a subordinate can make in the organization.

Accepted Answer

A) True 
 B)False

Question 6

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?

Accepted Answer

A) $85,000 
B) $90,000 
C) $150,000 
D) $170,000

Question 7

Properly designed management control systems will eliminate fraudulent behavior by maximizing goal congruence within the organization.

Accepted Answer

A) True 
 B)False

Question 8

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 the total server network costs allocated to the Commercial Division assuming the company uses dual-rates to allocate common costs?

Accepted Answer

A) $514,286 
B) $480,000 
C) $600,000 
D) $565,000

Question 9

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?

Accepted Answer

A) $180,050 
B) $190,079 
C) $193,900 
D) $203,100

Question 10

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

Accepted Answer

A) Administrative salaries 
B) Sales commissions 
C) Stock options 
D) Piece rates

Question 11

The Sarbanes-Oxley Act of 2002 requires that management of publicly traded companies

Accepted Answer

A) use investment centers to evaluate top managers. 
B) report on the adequacy of the company's internal controls over financial reporting. 
C) compensate managers with fixed compensation plans only. 
D) eliminate stock options for managerial compensation.

Question 12

Properly designed management control systems can totally eliminate the inherent conflict between individual behavior and organizational goals.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

If DCC uses a dual rate for allocating its costs based on usage,how much cost will be allocated to the Training Department?

Accepted Answer

A) $183,750 
B) $210,000 
C) $195,000 
D) $222,857

Question 15

When comparing performance report information for top management with that of lower-level management,(CMA adapted)

Accepted Answer

A) top management reports are more detailed. 
B) lower-level management reports are typically for longer time periods. 
C) top management reports show control over fewer costs. 
D) lower-level management reports are likely to contain more quantitative data and less financial data. 
E) top management reports are usually not of the exception type but present a complete analysis of all variances.

Question 16

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

Accepted Answer

A) only for costs. 
B) only for revenues. 
C) for costs and revenues. 
D) for investments in assets.

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A) expense center. 
B) revenue center. 
C) profit center. 
D) asset center.

Question 19

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?

Accepted Answer

A) $77,500 
B) $92,500 
C) $132,500 
D) $112,500

Question 20

The controllability concept states that managers should be held responsible for

Accepted Answer

A) all items over which they have decision-making authority. 
B) costs and revenues,but not investments in assets used in their division. 
C) only items that are allocated to their divisions on a per-unit basis. 
D) fixed compensation items,but not contingent compensation items.

Exam 12: Fundamentals of Management Control Systems

Cost allocations based on dual rates assume that a common cost can be separated into a fixed and variable component.

If the Copy Department uses a dual rate for allocating its costs based on usage,how much cost will be allocated to the Economics Department?

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 2,100,000 copies during the year?

Delegated decision authority is the specification of what decisions a subordinate can make in the organization.

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?

Properly designed management control systems will eliminate fraudulent behavior by maximizing goal congruence within the organization.

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?

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

The Sarbanes-Oxley Act of 2002 requires that management of publicly traded companies

Properly designed management control systems can totally eliminate the inherent conflict between individual behavior and organizational goals.

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

If DCC uses a dual rate for allocating its costs based on usage,how much cost will be allocated to the Training Department?

When comparing performance report information for top management with that of lower-level management,(CMA adapted)

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

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

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

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?

The controllability concept states that managers should be held responsible for