Exam 24: Performance Measurement and Responsibility Accounting

Departmental contribution to overhead is the same as gross profit generated by that department.

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

A _____________________________ provides information for managers to use to evaluate the profitability or cost effectiveness of each department's activities.

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

A challenge in calculating the total costs and expenses of a department is:

Which of the following statements is correct concerning the elements of cycle time?

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 department that incurs costs without directly generating revenues is a:

A firm produces and sells two products,Plus and Max.The following information is available relating to setup costs (a part of factory overhead): With traditional two-stage allocation of overhead costs,using direct labor hours as the allocation base,the setup cost portion of overhead that is allocated to each unit of product for Plus and Max,respectively is:

Division X makes a part with the following characteristics: Division Y of the same company would like to purchase 10,000 units each period from Division X.Division Y now purchases the part from an outside supplier at a price of $17 each.Suppose Division X has ample excess capacity to handle all of Division Y's needs without any increase in fixed costs and without cutting into sales to outside customers.If Division X refuses to accept the $17 price internally and Division Y continues to buy from the outside supplier,the company as a whole will be:

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

Marian Corporation has two separate divisions that operate as profit centers.The following information is available for the most recent year: The Black Division occupies 20,000 square feet in the plant.The Navy Division occupies 30,000 square feet.Rent is an indirect expense and is allocated based on square footage.Rent expense for the year was $50,000.Compute gross profit for the Black and Navy Divisions,respectively.

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

Ultimo Co.operates three production departments as profit centers.The following information is available for its most recent year.Which department has the greatest departmental contribution to overhead and what is the amount contributed?

Flamingos,Inc.has four departments.The Administrative Department costs are allocated to the other three departments based on the number of employees in each and the Maintenance Department costs are allocated to the Assembly and Packaging Departments based on their occupied space.Data for these departments follows: The total amount of the Administrative Department's cost that would eventually be allocated to the Packaging Department is:

Return on investment can be split into which of the following two measures?

A cost incurred to produce or purchase two or more products at the same time is a(n):

In producing oat bran,the joint cost of milling the oats into bran,oatmeal,and animal feed is considered a direct cost to the oat bran,because the oat bran cannot be produced without incurring the joint cost.

Regardless of the system used in departmental cost analysis:

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: