Question 1

Regardless of the system used in departmental cost analysis:

Accepted Answer

A) Direct costs are allocated, indirect costs are not. 
B) Indirect costs are allocated, direct costs are not. 
C) Both direct and indirect costs are allocated. 
D) Neither direct nor indirect costs are allocated. 
E) Total departmental costs will always be the same. 
A) Direct costs are allocated, indirect costs are not. 
B) Indirect costs are allocated, direct costs are not. 
C) Both direct and indirect costs are allocated. 
D) Neither direct nor indirect costs are allocated. 
E) Total departmental costs will always be the same.

Question 2

Departmental contribution to overhead is the same as gross profit generated by that department.

Accepted Answer

A) True 
 B)False

Question 3

A cost incurred in producing or purchasing two or more products at the same time is a(n):

Accepted Answer

A) Product cost. 
B) Incremental cost. 
C) Differential cost. 
D) Joint cost. 
E) Fixed cost. 
A) Product cost. 
B) Incremental cost. 
C) Differential cost. 
D) Joint cost. 
E) Fixed cost.

Question 4

Departmental wage expenses are direct expenses of that department.

Accepted Answer

A) True 
 B)False

Question 5

Traditional two-stage cost allocation means that indirect costs are first allocated to both operating and service departments,then operating department costs are allocated to service departments.

Accepted Answer

A) True 
 B)False

Question 6

Renton Co.has two operating (production)departments supported by a number of service departments.The following information was collected for a recent period:
   Indirect costs are allocated as follows:
 salaries on the basis of sales,office expenses on the basis of the number of employees,and all other costs on the basis of square footage.Additional information about the production departments follows:
   Sales for the Machining Department are $724,404 and sales for the Assembly Department are $356,796.Determine the departmental contribution to overhead and the departmental net income for each production department.

Accepted Answer

The answer of Renton Co.has two operating (production)departments supported by...

Question 7

Cycle time is calculated by process time plus inspection time plus move time plus _____________.

Accepted Answer

The answer of Cycle time is calculated by process time...

Question 8

Blower Company is divided into four departments.Departments A and B are service departments and Departments 1 and 2 are operating (production)departments.The services of the two service departments are used by the other departments as follows:
   Complete the following table:

Accepted Answer

The answer of Blower Company is divided into four departments.Departments...

Question 9

Burien,Inc.,operates a retail store with two departments,A and B.Its departmental income statement for the current year follows:
   
Burien allocates building depreciation,maintenance,and utilities on the basis of square footage.Office expenses are allocated on the basis of sales.
Management is considering an expansion to a three-department operation.The proposed Department C would generate $120,000 in additional sales and have a 17.5% contribution to overhead.The company owns its building.Opening Department C would redistribute the square footage to each department as follows:
 A,19,040; B,21,760 sq.ft.; C,13,600.Increases in indirect expenses would include:
 maintenance,$500; utilities,$3,800; and office expenses,$1,200.
Complete the following departmental income statements,showing projected results of operations for the three sales departments.(Round amounts to the nearest whole dollar.)

Accepted Answer

@#IMG-DLM& ^*$3,300 + $500 = $3,

Question 10

Costs that the manager has the power to determine or at least strongly influence are called:

Accepted Answer

A) Uncontrollable costs. 
B) Controllable costs. 
C) Joint costs. 
D) Direct costs. 
E) Indirect costs. 
A) Uncontrollable costs. 
B) Controllable costs. 
C) Joint costs. 
D) Direct costs. 
E) Indirect costs.

Question 11

What is the primary purpose for using a responsibility accounting system?

Accepted Answer

A responsibility accounting system is de

Question 12

What is the cycle time for a manufacturer?
 What does it reveal about the manufacturing process?

Accepted Answer

Step 1 is to accumulate direct expenses

Question 13

A responsibility accounting performance report displays:

Accepted Answer

A) Only actual costs. 
B) Only budgeted costs. 
C) Both actual costs and budgeted costs. 
D) Only direct costs. 
E) Only indirect costs. 
A) Only actual costs. 
B) Only budgeted costs. 
C) Both actual costs and budgeted costs. 
D) Only direct costs. 
E) Only indirect costs.

Question 14

A college uses advisors who work with all students in all divisions of the college.The most useful allocation basis for the salaries of these employees would likely be:

Accepted Answer

A) number of classes offered in each division. 
B) student graduation rate. 
C) square footage of each division. 
D) number of students advised from each division. 
E) relative salaries of division heads. 
A) number of classes offered in each division. 
B) student graduation rate. 
C) square footage of each division. 
D) number of students advised from each division. 
E) relative salaries of division heads.

Question 15

What is a cost center?

Accepted Answer

A cost center incurs costs without direc

Question 16

A ______________________________ accumulates and reports costs and expenses that a manager is responsible for,including budgeted amounts.

Accepted Answer

responsibi

Question 17

The allocation bases for assigning indirect costs include:

Accepted Answer

A) Only physical bases. 
B) Only cost bases. 
C) Only value bases. 
D) Only unit bases. 
E) Any appropriate and reasonable bases. 
A) Only physical bases. 
B) Only cost bases. 
C) Only value bases. 
D) Only unit bases. 
E) Any appropriate and reasonable bases.

Question 18

The following data is available for the Cleaning Services Department of Amitol Co.
   Required:
 Calculate departmental contribution to overhead for the Cleaning Services Department,including the department's contribution as a percentage of revenues.

Accepted Answer

The answer of The following data is available for the...

Question 19

Division P of Turbo Corporation has the capacity for making 75,000 wheel sets per year and regularly sells 60,000 each year on the outside market.The regular sales price is $100 per wheel set,and the variable production cost per unit is $65.Division Q of Turbo Corporation currently buys 30,000 wheel sets (of the kind made by Division P)yearly from an outside supplier at a price of $90 per wheel set.If Division Q were to buy the 30,000 wheel sets it needs annually from Division P at $87 per wheel set,the change in annual net operating income for the company as a whole,compared to what it is currently,would be:

Accepted Answer

A) $600,000 
B) $225,000 
C) $750,000 
D) $135,000 
E) $700,000 
A) $600,000 
B) $225,000 
C) $750,000 
D) $135,000 
E) $700,000

Question 20

The following is a partially completed lower section of a departmental expense allocation spreadsheet for Stoneham.It reports the total amounts of direct and indirect expenses for the four departments.Purchasing department expenses are allocated to the operating departments on the basis of purchase orders.Maintenance department expenses are allocated based on square footage.Compute the amount of Purchasing department expense to be allocated to Fabrication.

Accepted Answer

A) $6,400. 
B) $9,900. 
C) $8,100. 
D) $17,600. 
E) $25,600. 
A) $6,400. 
B) $9,900. 
C) $8,100. 
D) $17,600. 
E) $25,600.

Exam 24: Performance Measurement and Responsibility Accounting

Regardless of the system used in departmental cost analysis:

Departmental contribution to overhead is the same as gross profit generated by that department.

A cost incurred in producing or purchasing two or more products at the same time is a(n):

Departmental wage expenses are direct expenses of that department.

Traditional two-stage cost allocation means that indirect costs are first allocated to both operating and service departments,then operating department costs are allocated to service departments.

Cycle time is calculated by process time plus inspection time plus move time plus _____________.

Blower Company is divided into four departments.Departments A and B are service departments and Departments 1 and 2 are operating (production)departments.The services of the two service departments are used by the other departments as follows: Complete the following table:

Costs that the manager has the power to determine or at least strongly influence are called:

What is the primary purpose for using a responsibility accounting system?

What is the cycle time for a manufacturer? What does it reveal about the manufacturing process?

A responsibility accounting performance report displays:

A college uses advisors who work with all students in all divisions of the college.The most useful allocation basis for the salaries of these employees would likely be:

What is a cost center?

A ______________________________ accumulates and reports costs and expenses that a manager is responsible for,including budgeted amounts.

The allocation bases for assigning indirect costs include:

The following data is available for the Cleaning Services Department of Amitol Co. Required: Calculate departmental contribution to overhead for the Cleaning Services Department,including the department's contribution as a percentage of revenues.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, natural Resources, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Capital Budgeting and Managerial Decisions

Time Value of Money B

Activity-Based Costing C

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