Question 1

A responsibility accounting performance report usually compares actual costs to budgeted costs amounts by management level.

Accepted Answer

A) True 
 B)False

Question 2

Departmental income statements are prepared for service departments but not operating departments.

Accepted Answer

A) True 
 B)False

Question 3

Allocating costs to service departments involves accumulating revenues and direct expenses,allocating indirect expenses,and preparing the department income statement.

Accepted Answer

A) True 
 B)False

Question 4

A college uses advisors who work with all students in all divisions of the college.The most useful allocation basis for the salaries of these employees would likely be:

Accepted Answer

A) number of classes offered in each division. 
B) student graduation rate. 
C) square footage of each division. 
D) number of students advised from each division. 
E) relative salaries of division heads.

Question 5

Indirect expenses are incurred for the joint benefit of more than one department; they cannot be readily traced to only one department.

Accepted Answer

A) True 
 B)False

Question 6

A selling department is usually evaluated as a profit center.

Accepted Answer

A) True 
 B)False

Question 7

A ________ accumulates and reports costs and expenses that a manager is responsible for,including budgeted amounts.

Accepted Answer

The answer of A ________ accumulates and reports costs and...

Question 8

Super Grocery store allocates its service department expenses to its various operating (sales)departments.The following data is available for its service departments: The following information is available for its three operating (sales)departments:
What is the total administrative expense allocated to the Meats department?

Accepted Answer

A) $6,000. 
B) $9,000. 
C) $4,145. 
D) $1,200. 
E) $3,000.

Question 9

Advertising expense can be reasonably allocated to departments on the basis of each department's proportion of sales.

Accepted Answer

A) True 
 B)False

Question 10

The salaries of employees who spend all their time working in one department are:

Accepted Answer

A) Variable expenses. 
B) Indirect expenses. 
C) Direct expenses. 
D) Responsibility expenses. 
E) Unavoidable expenses.

Question 11

A company has two departments,Y and Z that incur wage expenses.An analysis of the total wage expense of $19,000 indicates that Dept.Y had a direct wage expense of $2,000 and Dept.Z had a direct wage expense of $3,500.The remaining expenses are indirect and analysis indicates they should be allocated evenly between the two departments.Departmental wage expenses for Dept.Y and Dept.Z,respectively,are:

Accepted Answer

A) $8,750; $10,250. 
B) $10,250; $8,750. 
C) $9,500; $9,500. 
D) $2,000; $3,500. 
E) $6,750; $6,750.

Question 12

What is a cost center and how is its performance evaluated?

Accepted Answer

The answer of What is a cost center and how...

Question 13

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.

Question 14

Departmental information is usually distributed to the public as part of the company's annual report and footnotes.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

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 amount of administration 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.

Question 17

A(n)________ is a department that generates revenues and incurs costs and whose manager is also responsible for using the center's assets to generate income for the center.

Accepted Answer

The answer of A(n)________ is a department that generates revenues...

Question 18

Franklin Co.has three departments: purchasing,human resources,and assembly.In a recent month the three departments incurred two shared indirect expenses.The amounts of the indirect expenses and the bases used to allocate them follow.Use this information to allocate each of the two indirect expenses across the three departments using the tables provided below.
  Departmental data for the company's recent reporting period follow.

Accepted Answer

The answer of Franklin Co.has three departments: purchasing,human resources,and assembly.In...

Question 19

A cost center is a unit of a business that incurs costs without directly generating revenues.All of the following are considered cost centers except:

Accepted Answer

A) Accounting department at Warner Bros. 
B) Purchasing department at Best Buy. 
C) Research department at Microsoft. 
D) Advertising department at Hertz. 
E) Juice division at Coca Cola.

Question 20

Joint costs are costs incurred in producing or purchasing a single product.

Accepted Answer

A) True 
 B)False

Exam 22: Performance Measurement and Responsibility Accounting

A responsibility accounting performance report usually compares actual costs to budgeted costs amounts by management level.

Departmental income statements are prepared for service departments but not operating departments.

Allocating costs to service departments involves accumulating revenues and direct expenses,allocating indirect expenses,and preparing the department income statement.

A college uses advisors who work with all students in all divisions of the college.The most useful allocation basis for the salaries of these employees would likely be:

Indirect expenses are incurred for the joint benefit of more than one department; they cannot be readily traced to only one department.

A selling department is usually evaluated as a profit center.

A ________ accumulates and reports costs and expenses that a manager is responsible for,including budgeted amounts.

Advertising expense can be reasonably allocated to departments on the basis of each department's proportion of sales.

The salaries of employees who spend all their time working in one department are:

What is a cost center and how is its performance evaluated?

Departmental information is usually distributed to the public as part of the company's annual report and footnotes.

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

A(n)________ is a department that generates revenues and incurs costs and whose manager is also responsible for using the center's assets to generate income for the center.

A cost center is a unit of a business that incurs costs without directly generating revenues.All of the following are considered cost centers except:

Joint costs are costs incurred in producing or purchasing a single product.