Exam 18: Strategic Performance Measurement: Cost Centers, Profit Centers, and the Balanced Scorecard

The process by which managers at all levels in the firm gain information about the performance of tasks within the firm and judge that performance against pre-established criteria is:

Todweed Academy allocates marketing and administrative costs to its three schools based on total annual tuition revenue for the schools: Lower Middle Upper School School School School Total Tuition revenue \ 1,000,000 \ 800,000 \ 1,200,000 \ 3,000,000 Marketing and administrative \1 ,200,000 Using revenue as an allocation base, the amount of costs allocated to the Lower School is calculated to be:

Under the principal-agent model of contract relationships, situations such as machine breakdowns or a decrease in market demand would be classified under:

Tokless Inc. planned and manufactured 400,000 units of its single product in 2019, its first year of operations. Variable manufacturing costs were $50 per unit of production. Planned and fixed manufacturing costs were $800,000. Marketing and administrative costs (all fixed) were $600,000 in 2019. Tokless Inc. sold 195,000 units of product in 2019 at $65 per unit. Full costing operating income for 2019 is calculated to be:

Sand and Sea Resorts owns and operates two resorts in a coastal town. Both resorts are located on a barrier island that is connected to the mainland by a high bridge. One resort is located on the beach and is called the Crystal Coast Resort. The other resort is located on the inland waterway which passes between the town and the mainland; it is called the Harborview Resort. Some key information about the two resorts for the current year is shown below. Harborview Crystal Coast Total Revenue (000) \ 3,500 \ 6,500 \ 10,000 Square feet 75,000 225,000 300,000 Rooms 60 140 200 Assets (000) \ 100,000 \ 400,000 \ 500,000 The nontraceable operating costs of the resort amount to $\$ 4,000,000$ . By careful study, the management accountant at Sand and Sea has determined that, while the costs are not directly traceable, the total of $\$ 4$ million could be fairly allocated to the four cost drivers as follows. Cost Driver Amount Allocated Revenue \ 200,000 Square feet 100,000 Rooms 600,000 Assets (000) 3,100,000 Using the information regarding the allocation of the $4 million to the four cost drivers, determine the amount of cost to be allocated to the Harborview Resort.

Which of the following is not an objective of management control?

In an income statement prepared using the variable costing method, which of the following terms should appear? Gross Profit (margin) Net income A) Yes Yes B) Yes No C) No No D) No Yes

Sand and Sea Resorts owns and operates two resorts in a coastal town. Both resorts are located on a barrier island that is connected to the mainland by a high bridge. One resort is located on the beach and is called the Crystal Coast Resort. The other resort is located on the inland waterway which passes between the town and the mainland; it is called the Harborview Resort. Some key information about the two resorts for the current year is shown below. Harborview Crystal Coast Total Revenue (000) \ 3,500 \ 6,500 \ 10,000 Square feet 75,000 225,000 300,000 Rooms 60 140 200 Assets (000) \ 100,000 \ 400,000 \ 500,000 The nontraceable operating costs of the resort amount to $\$ 4,000,000$ . By careful study, the management accountant at Sand and Sea has determined that, while the costs are not directly traceable, the total of $\$ 4$ million could be fairly allocated to the four cost drivers as follows. Cost Driver Amount Allocated Revenue \ 200,000 Square feet 100,000 Rooms 600,000 Assets (000) 3,100,000 The Crystal Coast resort is likely to be favored in terms of a lower cost allocation under:

In the principal-agent model, the manager is modeled as having all of the following elements except:

The benefits of decentralized management in a firm include all of the following except: