Question 1

A useful measure used to evaluate the performance of an investment center is investment center residual income.

Accepted Answer

A) True 
 B)False

Question 2

When the selling division in an internal transfer has unsatisfied demand from outside customers for the product that is being transferred,then the lowest acceptable transfer price as far as the selling division is concerned is:

Accepted Answer

A)  variable cost of producing a unit of product.
B)  the full absorption cost of producing a unit of product.
C)  the market price charged to outside customers,less costs saved by transferring internally.
D)  the amount that the purchasing division would have to pay an outside seller to acquire a similar product for its use.
E)  all the costs of producing a unit of product.F) B) and E)
G) C) and E)

Question 3

Rent and maintenance expenses would most likely be allocated based on:

Accepted Answer

A)  Sales volume by department.
B)  Square feet of floor space occupied.
C)  Number of hours worked.
D)  Number of invoices processed.
E)  Number of employees in each department.F) B) and D)
G) C) and D)

Question 4

Data pertaining to a company's joint production for the current period follows:  Compute the cost to be allocated to Product M for this period's $660 of joint costs if the value basis is used.

Accepted Answer

A)  $264.
B)  $396.
C)  $330.
D)  $1,364.
E)  $796.F) B) and D)
G) All of the above

Question 5

Williams Co.operates three separate departments (R,S,T).The data below is provided for the current year:  Required:
Prepare an income statement showing the departmental contributions to overhead for the current year.

Accepted Answer

The answer of Williams Co.operates three separate departments (R,S,T).The data...

Question 6

The amount by which a department's sales exceed its direct expenses is:

Accepted Answer

A)  Net sales.
B)  Gross profit.
C)  Departmental profit.
D)  Contribution margin.
E)  Departmental contribution to overhead.F) B) and D)
G) All of the above

Question 7

Differential Chemical produced 10,000 gallons of Preon and 20,000 gallons of Paron.Joint costs incurred in producing the two products totaled $7,500.At the split-off point,Preon has a market value of $6.00 per gallon and Paron $2.00 per gallon.Compute the portion of the joint costs to be allocated to Preon if the value basis is used.

Accepted Answer

A)  $2,500.
B)  $3,000.
C)  $4,500.
D)  $5,625.
E)  $1,500.F) C) and E)
G) A) and D)

Question 8

An accounting system that is set up to control costs and evaluate managers' performance by assigning costs to the managers responsible for controlling them is called a:

Accepted Answer

A)  Cost accounting system.
B)  Managerial accounting system.
C)  Responsibility accounting system.
D)  Financial accounting system.
E)  Activity-based accounting system.F) A) and B)
G) C) and D)

Question 9

In a responsibility accounting system:

Accepted Answer

A)  Managers are responsible for their departments' controllable costs.
B)  Each accounting report contains all items allocated to a responsibility center.
C)  Organized and clear lines of authority and responsibility are only incidental.
D)  All managers at a given level have equal authority and responsibility.
E)  Outputs of the departments are not part of the evaluation process.F) B) and E)
G) None of the above

Question 10

Measures used to evaluate the manager of an investment center include investment turnover and profit margin.

Accepted Answer

A) True 
 B)False

Question 11

A lumber mill paid $70,000 for logs that produced 200,000 board feet of lumber in 3 different grades and amounts as follows:  Compute the portion of the $70,000 joint cost to be allocated to No.2 Common.

Accepted Answer

A)  $0.
B)  $17,500.
C)  $23,333.
D)  $35,000.
E)  $70,000.F) All of the above
G) A) and D)

Question 12

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 13

Wren Pork Company uses the relative market value method of allocating joint costs in its production of pork products.Relevant information for the current period follows:  The total joint cost for the current period was $43,000.How much of this cost should Wren Pork allocate to Loin chops?

Accepted Answer

A)  $0.
B)  $5,909.
C)  $8,600.
D)  $10,750.
E)  $43,000.F) None of the above
G) A) and B)

Question 14

Pepper Department 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 advertising expense allocated to Department C?

Accepted Answer

A)  $30,000.
B)  $9,000.
C)  $12,500.
D)  $10,800.
E)  $7,500.F) A) and E)
G) A) and D)

Question 15

A system of performance measures,including nonfinancial measures,used to assess company and division manager performance is:

Accepted Answer

A)  Hurdle rate.
B)  Return on investment.
C)  Balanced scorecard.
D)  Residual income.
E)  Investment turnover.F) A) and B)
G) All of the above

Question 16

The type of department that generates revenues and incurs costs,and its manager is responsible for the investments made in operating assets is called a:

Accepted Answer

A)  Profit center
B)  Cost center
C)  Service department
D)  Investment center
E)  Responsibility centerF) C) and E)
G) A) and B)

Question 17

The difference between a profit center and an investment center is

Accepted Answer

A)  an investment center incurs costs,but does not directly generate revenues.
B)  an investment center incurs no costs but does generate revenues.
C)  an investment center is responsible for investments made in operating assets.
D)  an investment center provides services to profit centers.
E)  There is no difference;investment center and profit center are synonymous.F) A) and D)
G) C) and E)

Question 18

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

Accepted Answer

responsibi...

Question 19

A profit center generates revenue,incurs costs,and has the authority to make significant investing decisions.

Accepted Answer

A) True 
 B)False

Question 20

Holo Company reported the following financial numbers for one of its divisions for the year;average total assets of $5,800,000;sales of $5,375,000;cost of goods sold of $3,225,000;and operating expenses of $1,147,000.Assume a target income of 15% of average invested assets.Compute residual income for the division:

Accepted Answer

A)  $150,450.
B)  $196,750.
C)  $150,500.
D)  $133,000.
E)  $100,300.F) D) and E)
G) C) and D)

Exam 24: Performance Measurement and Responsibility Accounting

A system of performance measures,including nonfinancial measures,used to assess company and division manager performance is:

Correct Answer
verified

An accounting system that is set up to control costs and evaluate managers' performance by assigning costs to the managers responsible for controlling them is called a:

Correct Answer
verified

Wren Pork Company uses the relative market value method of allocating joint costs in its production of pork products.Relevant information for the current period follows: The total joint cost for the current period was $43,000.How much of this cost should Wren Pork allocate to Loin chops?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Williams Co.operates three separate departments (R,S,T).The data below is provided for the current year: Required: Prepare an income statement showing the departmental contributions to overhead for the current year.

Correct Answer
verified

The type of department that generates revenues and incurs costs,and its manager is responsible for the investments made in operating assets is called a:

Correct Answer
verified

When the selling division in an internal transfer has unsatisfied demand from outside customers for the product that is being transferred,then the lowest acceptable transfer price as far as the selling division is concerned is:

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

The amount by which a department's sales exceed its direct expenses is:

Correct Answer
verified

A lumber mill paid $70,000 for logs that produced 200,000 board feet of lumber in 3 different grades and amounts as follows: Compute the portion of the $70,000 joint cost to be allocated to No.2 Common.

Correct Answer
verified

A useful measure used to evaluate the performance of an investment center is investment center residual income.

Correct Answer
verified

A profit center generates revenue,incurs costs,and has the authority to make significant investing decisions.

Correct Answer
verified

In a responsibility accounting system:

Correct Answer
verified

The difference between a profit center and an investment center is

Correct Answer
verified

Measures used to evaluate the manager of an investment center include investment turnover and profit margin.

Correct Answer
verified

Rent and maintenance expenses would most likely be allocated based on:

Correct Answer
verified

Data pertaining to a company's joint production for the current period follows: Compute the cost to be allocated to Product M for this period's $660 of joint costs if the value basis is used.

Correct Answer
verified

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

Correct Answer
verified
responsibi...
View Answer

Exam 24: Performance Measurement and Responsibility Accounting

A system of performance measures,including nonfinancial measures,used to assess company and division manager performance is:

Correct AnswerverifiedShow Answer

An accounting system that is set up to control costs and evaluate managers' performance by assigning costs to the managers responsible for controlling them is called a:

Correct AnswerverifiedShow Answer

Wren Pork Company uses the relative market value method of allocating joint costs in its production of pork products.Relevant information for the current period follows: The total joint cost for the current period was $43,000.How much of this cost should Wren Pork allocate to Loin chops?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Williams Co.operates three separate departments (R,S,T).The data below is provided for the current year: Required: Prepare an income statement showing the departmental contributions to overhead for the current year.

Correct AnswerverifiedShow Answer

The type of department that generates revenues and incurs costs,and its manager is responsible for the investments made in operating assets is called a:

Correct AnswerverifiedShow Answer

When the selling division in an internal transfer has unsatisfied demand from outside customers for the product that is being transferred,then the lowest acceptable transfer price as far as the selling division is concerned is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The amount by which a department's sales exceed its direct expenses is:

Correct AnswerverifiedShow Answer

A lumber mill paid $70,000 for logs that produced 200,000 board feet of lumber in 3 different grades and amounts as follows: Compute the portion of the $70,000 joint cost to be allocated to No.2 Common.

Correct AnswerverifiedShow Answer

A useful measure used to evaluate the performance of an investment center is investment center residual income.

Correct AnswerverifiedShow Answer

A profit center generates revenue,incurs costs,and has the authority to make significant investing decisions.

Correct AnswerverifiedShow Answer

In a responsibility accounting system:

Correct AnswerverifiedShow Answer

The difference between a profit center and an investment center is

Correct AnswerverifiedShow Answer

Measures used to evaluate the manager of an investment center include investment turnover and profit margin.

Correct AnswerverifiedShow Answer

Rent and maintenance expenses would most likely be allocated based on:

Correct AnswerverifiedShow Answer

Data pertaining to a company's joint production for the current period follows: Compute the cost to be allocated to Product M for this period's $660 of joint costs if the value basis is used.

Correct AnswerverifiedShow Answer

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

Correct Answerverifiedresponsibi...View AnswerShow Answer

Correct Answer
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Correct Answer
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responsibi...
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