Exam 12: Responsibility Accounting, Quality Control, and Environmental Cost Management

The allocation of costs gives rise to several unique terms.Briefly discuss the following: cost object,cost allocation base,and cost allocation.

Davis Corporation is in the process of evaluating allocation bases so that selected costs can be charged to responsibility centers.Would the number of employees likely be a good base to use to allocate the costs of Human Resources,Building and Grounds,and Repairs and Maintenance to user centers?

An allocation base for a cost pool should ideally be a cost object.

County Cable Services Inc.is organized in three segments: Metro,Suburban,and Outlying.Data for the company and for these segments follow. A. A.Complete the segmented income statement for County Cable. B.Evaluate the three segment managers for consideration of a pay raise.Base the managers' performance on (1)absolute dollars of the appropriate profit measure,and (2)the appropriate profit measure as a percentage of service revenue.What causes any difference in rankings between the two approaches? B.The most appropriate performance measure is controllable profit margin,which is consistent with responsibility accounting.The rankings are: The difference in rankings between the two approaches is caused by the fact that Suburban has a slightly lower rate of variable cost incurrence than Metro (18.75% vs.20%).Notice that controllable fixed costs expressed as a percentage of sales are the same for both segments (40%).

Distinguishing between controllable and noncontrollable costs on a performance report may result in:

Costs incurred to reduce or eliminate pollution are commonly known as:

Which of the following choices best describes warranty costs and the cost of lost customer sales?

Which of the following is a helpful tool in identifying the frequency of quality-control problems?

Performance reports help managers use management by exception and effectively control operations.

The Telemarketing Department of a residential remodeling company would most likely be evaluated as a:

The costs that follow appeared on Shawnah's quality cost report: The sum of Shawnah's prevention and external failure costs is:

Responsibility accounting systems strive to:

A revenue center manager:

Kel-Leigh Corporation,with operations throughout the country,will soon allocate corporate overhead to the firm's various responsibility centers.Which of the following is definitely not a cost object in this situation?

Eliza,Inc.was having significant quality problems in its manufacturing plant.To remedy the situation,management implemented various up-front procedures and programs that were expected to reduce the production of bad units to acceptable (normal)levels and benefit the firm financially.If the procedures and programs functioned as intended,what is likely true about the amounts the company incurred for prevention cost,internal failure cost,and external failure cost?

The performance reports generated by a responsibility accounting system often form a "hierarchy of performance reports." Explain what is meant by this term.

Sand Fly Corporation operates two stores: J and K.The following information relates to J: J's segment contribution margin is:

The Asian Division of a multinational manufacturing organization would likely be classified as a:

Companies are devoting an increased amount of attention to environmental cost management.Briefly explain the difference between (A)private versus social environmental costs and (B)visible versus hidden environmental costs.Provide an example of each. A.Private environmental costs are those borne by a company or individual.Social,or public,environmental costs are those by the public at large.An example of a private (corporate)environmental cost is the cost to British Petroleum Company (BP)to clean up the 2010 oil spill in the Gulf of Mexico.One of the public environmental costs of that spill is the unquantifiable costs to citizens of the destruction of the natural wildlife habitat. B.Both private and social environmental costs may be visible or hidden.Visible environmental costs are those costs that are known and clearly identified with an environmental issue.Hidden environmental costs are those costs that have been caused by an environmental issue but not yet identified with it.Continuing the BP example,cleanup costs are visible environmental costs.Hidden costs are future negative health effects to humans and wildlife caused by the absorption of contaminants into the affected soils and water beds.

Quality of grade refers to: