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

Assume that the Los Angeles division increases its promotion expense,a controllable fixed cost,by $10,000.As a result,revenues increase by $50,000.If variable expenses are tied directly to revenues,the new Los Angeles segment profit margin is:

Common costs are charged to a company's operating segments when preparing a segmented income statement.

A segment contribution margin would reflect the impact of:

Fog City Retail operates a retail store in Phoenix,Las Vegas,and Portland.The following information relates to the Phoenix facility: · The store sold 65,000 units at $18.00 each,after having purchased the units from various suppliers for $12.50.Phoenix salespeople are paid a 5% commission based on gross sales dollars. · Phoenix's sales manager oversees the placement of local advertising contracts,which totaled $54,000 for the year.Local property taxes amounted to $14,500. · The sales manager's $65,000 salary is set by Phoenix's store manager.In contrast,the store manager's $134,000 salary is determined by Fog City's vice president. · Phoenix incurred $6,800 of other noncontrollable costs. · Nontraceable (common)corporate overhead totaled $68,000. Fog City's corporate headquarters is located in Portland,and the company uses responsibility accounting to evaluate performance. Required: Prepare a segmented income statement for the Phoenix store,being sure to disclose the segment contribution margin,the segment controllable profit margin,and segment profit margin.

Cost pools should be charged to responsibility centers by using:

Which of the following costs would be classified as an internal failure cost on a quality report?

The difference between the profit margin controllable by a segment manager and the segment profit margin is caused by:

Henry Company is preparing a segmented income statement,subdivided into departments (billing,purchasing,and telemarketing).Which of the following choices correctly describes the accounting treatment of the firm's compensation cost for key executives (president and vice-presidents)?

Clean-up costs are commonly classified as:

Which of the following costs would be classified as an external failure cost on a quality report?

Companies are devoting an increased amount of attention to quality costs.Briefly explain the difference between internal failure costs and external failure costs.Which of these two costs will likely be more troublesome for an organization that desires to succeed in an extremely competitive marketplace? Briefly discuss.