Exam 24: Budgetary Control and Responsibility Accounting

Pippen Co. recorded operating data for its shoe division for the year. The company's desired return is 5%. Sales \ 1,000,000 Contribution margin 200,000 Total direct fixed costs 120,000 Average total operating assets 400,000 Which one of the following reflects the controllable margin for the year?

Return on investment is calculated by dividing

The dollar amount of the controllable margin

The linens department of a large department store is

Which of the following are financial measures of performance? 1) Controllable margin 2) Product quality 3) Labor productivity

An investment center generated a contribution margin of $400000 fixed costs of $200000 and sales of $2000000. The center's average operating assets were $800000. How much is the return on investment?

Controllable margin is subtracted from controllable fixed costs to get net income for a profit center.

A cost center incurs costs and generates revenues and cost center managers are evaluated on the profitability of their centers.

Which statement is true?

Controllable margin is most useful for

The best measure of the performance of the manager of a profit center is the

Data concerning manufacturing overhead for Wilson Industries are presented below. The Mixing Department is a cost center. An analysis of the overhead costs reveals that all variable costs are controllable by the manager of the Mixing Department and that 50% of supervisory costs are controllable at the department level. The flexible budget formula and the cost and activity for the months of July and August are as follows: Instructions (a) Prepare the responsibility reports for the Mixing Department for each month. (b) Comment on the manager's performance in controlling costs during the two month period.

Policies regarding when a difference between actual and planned results should be investigated are generally more restrictive for noncontrollable items than for controllable items.

In the formula for ROI idle plant assets are

Campbell Clothing produces men's ties. The following budgeted and actual amounts are for 2016: Cost Budget at 5,000 Units Actual Amounts at 5,800 Units Direct materials \ 60,000 \ 71,000 Direct labor 75,000 86,500 Equipment depreciation 5,000 5,000 Indirect labor 7,500 8,600 Indirect materials 9,000 9,600 Rent and insurance 12,000 13,000 Instructions Prepare a performance budget report for Campbell Clothing for the year.

Total ________________ costs will be the same on the master budget and on a flexible budget which reflects the actual level of activity.

A static budget is one that is geared to one level of activity.

At 18000 direct labor hours the flexible budget for indirect materials is $36000. If $37400 are incurred at 18400 direct labor hours the flexible budget report should show the following difference for indirect materials:

The accumulation of accounting data on the basis of the individual manager who has the authority to make day-to-day decisions about activities in an area is called