Exam 13: Responsibility Accounting,support Department Allocations,and Transfer Pricing

Bradley Corporation Bradley Corporation has three production departments A,B,and C.Bradley Corporation also has two service departments,Administration and Personnel.Administration costs are allocated based on value of assets employed,and Personnel costs are allocated based on number of employees.Assume that Administration provides more service to the other departments than does the Personnel Department. Admin. \ 900,000 25 \ 450,000 Personnel 350,000 10 600,000 A 700,000 15 300,000 B 200,000 5 150,000 C 250,000 10 800,000 Refer to Bradley Corporation.Assume that Administration costs have been allocated and the balance in Personnel is $860,000.What amount is allocated to B (round to the nearest dollar)?

The transfer of authority,responsibility,and decision-making rights from the top to the lower level of an organization is referred to as ____________________.

Office Systems Corporation Office Systems Corporation manufactures and sells various high-tech office automation products.Two divisions of Office Systems Corporation are the Computer Chip Division and the Computer Division.The Computer Chip Division manufactures one product,a "super chip," that can be used by both the Computer Division and other external customers.The following information is available on this month's operations in the Computer Chip Division: Selling price per chip \5 0 Variable costs per chip \2 0 Fixed production costs \ 60,000 Fixed SG\&A costs \ 90,000 Monthly capacity 10,000 chip External sales 6,000 chip Internal sales 0 chip Presently,the Computer Division purchases no chips from the Computer Chips Division,but instead pays $45 to an external supplier for the 4,000 chips it needs each month. Refer to Office Systems Corporation.Assume that next month's costs and levels of operations in the Computer and Computer Chip Divisions are similar to this month.What is the maximum of the transfer price range for a possible transfer of the chip from one division to the other?

Top management can preserve the autonomy of division managers and encourage an optimal level of internal transactions by

Which service department cost allocation method assigns indirect costs to cost objects after considering interrelationships of the cost objects? $\text {\underline{Algebraic method. } }$                                 $\text {\underline{ Step method} }$

Bradley Corporation Bradley Corporation has three production departments A,B,and C.Bradley Corporation also has two service departments,Administration and Personnel.Administration costs are allocated based on value of assets employed,and Personnel costs are allocated based on number of employees.Assume that Administration provides more service to the other departments than does the Personnel Department. Admin. \ 900,000 25 \ 450,000 Personnel 350,000 10 600,000 A 700,000 15 300,000 B 200,000 5 150,000 C 250,000 10 800,000 Refer to Bradley Corporation.Using the step method,what amount of Administration costs is allocated to C (round to the nearest dollar)?

A transfer pricing system is also known as

A responsibility center in which a manger has only the authority to control cost is referred to as a(n)_________________________.

The most accurate method for allocating service department costs is the

The accounting practices that are practiced by a decentralized organization are referred to as ___________________________________.

Crosby Corporation Crosby Corporation has two service departments: Data Processing and Administration/Personnel.The company also has three divisions: X,Y,and Z.Data Processing costs are allocated based on hours of use and Administration/Personnel costs are allocated based on number of employees. Administration /Personnel \ 400,000 10 3,300 Data Processing 850,000 5 1,100 X 450,000 30 1,800 Y 300,000 15 2,200 Z 550.000 25 4,500 Assume that Data Processing provides more service than Administration/Personnel. Refer to Crosby Corporation.Assume that Data Processing costs have been allocated and the balance in Administration is $600,000.Using the step method,what amount is allocated to Y?

The most valid reason for using something other than a full-cost-based transfer price between units of a company is because a full-cost price

In a responsibility accounting system,costs are classified into categories on the basis of

The overhead allocation method that allocates service department costs without consideration of services rendered to other service departments is the

The cost object under the control of a manager is called a(n)____ center.

A responsibility center whose manager is responsible for generating revenues and controlling expenses is referred to as a ______________________________.

Bradley Corporation Bradley Corporation has three production departments A,B,and C.Bradley Corporation also has two service departments,Administration and Personnel.Administration costs are allocated based on value of assets employed,and Personnel costs are allocated based on number of employees.Assume that Administration provides more service to the other departments than does the Personnel Department. Admin. \ 900,000 25 \ 450,000 Personnel 350,000 10 600,000 A 700,000 15 300,000 B 200,000 5 150,000 C 250,000 10 800,000 Refer to Bradley Corporation.Using the direct method,what amount of Personnel costs is allocated to B (round to the nearest dollar)?

Bradley Corporation Bradley Corporation has three production departments A,B,and C.Bradley Corporation also has two service departments,Administration and Personnel.Administration costs are allocated based on value of assets employed,and Personnel costs are allocated based on number of employees.Assume that Administration provides more service to the other departments than does the Personnel Department. Admin. \ 900,000 25 \ 450,000 Personnel 350,000 10 600,000 A 700,000 15 300,000 B 200,000 5 150,000 C 250,000 10 800,000 Refer to Bradley Corporation.Using the direct method,what amount of Administration costs is allocated to C (round to the nearest dollar)?

Crosby Corporation Crosby Corporation has two service departments: Data Processing and Administration/Personnel.The company also has three divisions: X,Y,and Z.Data Processing costs are allocated based on hours of use and Administration/Personnel costs are allocated based on number of employees. Administration /Personnel \ 400,000 10 3,300 Data Processing 850,000 5 1,100 X 450,000 30 1,800 Y 300,000 15 2,200 Z 550.000 25 4,500 Assume that Data Processing provides more service than Administration/Personnel. Refer to Crosby Corporation.Using the direct method,what amount of Data Processing costs is allocated to Z (round to the nearest dollar)?

Office Systems Corporation Office Systems Corporation manufactures and sells various high-tech office automation products.Two divisions of Office Systems Corporation are the Computer Chip Division and the Computer Division.The Computer Chip Division manufactures one product,a "super chip," that can be used by both the Computer Division and other external customers.The following information is available on this month's operations in the Computer Chip Division: Selling price per chip \5 0 Variable costs per chip \2 0 Fixed production costs \ 60,000 Fixed SG\&A costs \ 90,000 Monthly capacity 10,000 chip External sales 6,000 chip Internal sales 0 chip Presently,the Computer Division purchases no chips from the Computer Chips Division,but instead pays $45 to an external supplier for the 4,000 chips it needs each month. Refer to Office Systems Corporation.Assume,for this question only,that the Computer Chip Division is selling all that it can produce to external buyers for $50 per unit.How would overall corporate profits be affected if it sells 4,000 units to the Computer Division at $45? (Assume that the Computer Division can purchase the super chip from an outside supplier for $45. )