Question 1

Nonfinancial measures of performance include profit targets and required return on investment.

Accepted Answer

A) True 
 B)False

Question 2

Segments are responsibility centers for which a separate measure of revenues and costs is obtained.

Accepted Answer

A) True 
 B)False

Question 3

Key performance indicators for a balanced scorecard are usually grouped into two categories.

Accepted Answer

A) True 
 B)False

Question 4

CIS Company has the following information available:
 $\begin{array} { l  }
 \text {Quality engineering of products }&\$20,000 \
 \text {Technical support provided by CIS to suppliers }&\$2,000 \
 \text {Cost of field servicing }&\$80,000 \
 \text {Supervision of testing activities }&\$30,000 \
 \text {Net cost of spoilage }&\$55,000 \
 \text {Depreciation of testing equipment }&\$4,500 \
 \text {Plant utilities in inspection area }&\$100,000 \
 \text {Retesting of reworked products }&\$200,000 \
 \text {Lost sales arising from a reputation for poor quality products }&\$ 1,000,000\
 \text { Reinspection of reworked products}&\$ 44,000\
 \text {Warranty replacements }&\$3,000 \
 \text {Returns and allowances given to customers due to quality issues }&\$5,500 \
 \text {Rework laborand overhead }&\$70,000 \
\end{array}$
 
Required:
Prepare the quality cost report for CIS Company.

Accepted Answer

Prevention Costs
 @#IMG-DLM& A

Question 5

Costs of defective components or products that are scrapped or reworked are examples of ________ costs.

Accepted Answer

A)  prevention 
B)  appraisal 
C)  internal failure 
D)  external failure 
A)  prevention 
B)  appraisal 
C)  internal failure 
D)  external failure

Question 6

In the management control system,feedback and learning affect all elements of the system.

Accepted Answer

A) True 
 B)False

Question 7

The following information is available for Bargain Books and its two divisions,Textbooks and Fiction Books.
$\begin{array}{lll}
&\text { Whole } && \text { fiction } & \
&\text { Company } & \text { textbooks } & \text { books }\
\text { Net sales }&\$100,000&\$60,000&\$40,000
\end{array}$
Fixed costs controllable by
$\begin{array}{lll}
\text { Division Manager }&16,500 & 12,500 & 4,000 \
\text { Fixed costs controlled by others }&8,000 & 5,000 & 3,000
\end{array}$
Variable costs:
$$\begin{array} { l l l l } 
\text { Cost of merchandise sold } & 24,500 & 17,500 & 7,000 \
\text { Operating expenses } & 16,400 & 10,000 & 6,400 \
\text { Unallocated costs } & \text { B,000 } & &
\end{array}$$
What is the contribution by segment for the Textbooks Division?

Accepted Answer

A)  $15,000 
B)  $20,000 
C)  $32,500 
D)  $42,500 
A)  $15,000 
B)  $20,000 
C)  $32,500 
D)  $42,500

Question 8

Which of the following statements about managerial effort is FALSE?

Accepted Answer

A)  Managerial effort is the exertion towards a goal. 
B)  Goal congruence must be accompanied by managerial effort. 
C)  Managerial effort includes all conscious actions that result in more efficiency and effectiveness. 
D)  Managerial effort does not have to accompany goal congruence. 
A)  Managerial effort is the exertion towards a goal. 
B)  Goal congruence must be accompanied by managerial effort. 
C)  Managerial effort includes all conscious actions that result in more efficiency and effectiveness. 
D)  Managerial effort does not have to accompany goal congruence.

Question 9

External failure costs associated with quality control do NOT include ________.

Accepted Answer

A)  field repairs 
B)  rework 
C)  customer returns of goods 
D)  warranty expense 
A)  field repairs 
B)  rework 
C)  customer returns of goods 
D)  warranty expense

Question 10

Most employees perform better when performance reports lead to ________.

Accepted Answer

A)  goal congruence 
B)  managerial effort 
C)  managerial control 
D)  personal rewards 
A)  goal congruence 
B)  managerial effort 
C)  managerial control 
D)  personal rewards

Question 11

Which of the following is NOT an appraisal cost for quality control?

Accepted Answer

A)  inspection and testing of purchased materials 
B)  product quality audits 
C)  maintenance of test equipment 
D)  training program for material suppliers 
A)  inspection and testing of purchased materials 
B)  product quality audits 
C)  maintenance of test equipment 
D)  training program for material suppliers

Question 12

To identify defective products,companies incur inspection costs or ________ costs.

Accepted Answer

A)  prevention 
B)  appraisal 
C)  internal failure 
D)  external failure 
A)  prevention 
B)  appraisal 
C)  internal failure 
D)  external failure

Question 13

Which of the following statements about responsibility centers is FALSE?

Accepted Answer

A)  Responsibility centers usually have one goal. 
B)  Management control systems monitor responsibility center goals. 
C)  Responsibility centers are usually classified according to their managers' primary financial responsibility. 
D)  Cost centers, profit centers and investment centers are all examples of responsibility centers. 
A)  Responsibility centers usually have one goal. 
B)  Management control systems monitor responsibility center goals. 
C)  Responsibility centers are usually classified according to their managers' primary financial responsibility. 
D)  Cost centers, profit centers and investment centers are all examples of responsibility centers.

Question 14

Fixed costs not controllable by a segment manager usually include depreciation and property taxes on the building used by the segment.

Accepted Answer

A) True 
 B)False

Question 15

Smiley Company has the following results:
$\begin{array}{ll}
\text { Rolls of film processed } & 350,000 \
\text { Sales revenue } & \$ 1,200,000 \
\text { Direct labor hours worked } & 5,500 \
\text { Direct labor cost } & \$ 47,000
\end{array}$
If productivity is measured using the number of rolls of film processed per direct labor hour,what is the productivity of Smiley Company?

Accepted Answer

A)  $3.43 per roll 
B)  $260.87 per direct labor hour 
C)  2,553% of direct labor cost 
D)  63.64 rolls per direct labor hour 
A)  $3.43 per roll 
B)  $260.87 per direct labor hour 
C)  2,553% of direct labor cost 
D)  63.64 rolls per direct labor hour

Question 16

Which of the following is NOT a prevention activity for quality control?

Accepted Answer

A)  improvements in production processes 
B)  engineering analyses to improve product design for better manufacturing 
C)  inspection of incoming materials 
D)  quality training of employees 
A)  improvements in production processes 
B)  engineering analyses to improve product design for better manufacturing 
C)  inspection of incoming materials 
D)  quality training of employees

Question 17

Rework costs for manufactured products are a form of ________ costs.

Accepted Answer

A)  prevention 
B)  appraisal 
C)  internal failure 
D)  external failure 
A)  prevention 
B)  appraisal 
C)  internal failure 
D)  external failure

Question 18

Total quality management is the application of quality principles to the most important of an organization's departments to satisfy customers.

Accepted Answer

A) True 
 B)False

Question 19

The following information is available for Stonefield Inc.and its two divisions,Crushed Stone and Fieldstone.
$\begin{array}{lll}
&\text { Whole } & \text { Crushed } & \
&\text { Company } & \text { Stone } & \text { Fieldstone }\
\text { Net sales }&\$100,000&\$50,000&\$50,000
\end{array}$
Fixed costs controllable by
$\begin{array}{lll}
\text { Division Manager }&16,500 & 12,500 & 4,000 \
\text { Fixed costs controlled by others }&8,000 & 5,000 & 3,000
\end{array}$
Variable costs:
$\begin{array} { l  }
 \text {Controllable by segment manager }&24,500&17,500&7,000\ \text {Controllable by others }&16,400&10,000&6,400\ \text {Unallocated costs }&1,000\
\end{array}$

What is the contribution controllable by the manager of the Fieldstone Division?

Accepted Answer

A)  $29,600 
B)  $32,600 
C)  $36,000 
D)  $36,600 
A)  $29,600 
B)  $32,600 
C)  $36,000 
D)  $36,600

Question 20

In recent years,companies in the United States have discovered it is more cost effective to prevent defects than to detect and correct them.

Accepted Answer

A) True 
 B)False

Nonfinancial measures of performance include profit targets and required return on investment.

Segments are responsibility centers for which a separate measure of revenues and costs is obtained.

Key performance indicators for a balanced scorecard are usually grouped into two categories.

Costs of defective components or products that are scrapped or reworked are examples of ________ costs.

In the management control system,feedback and learning affect all elements of the system.

Which of the following statements about managerial effort is FALSE?

External failure costs associated with quality control do NOT include ________.

Most employees perform better when performance reports lead to ________.

Which of the following is NOT an appraisal cost for quality control?

To identify defective products,companies incur inspection costs or ________ costs.

Which of the following statements about responsibility centers is FALSE?

Fixed costs not controllable by a segment manager usually include depreciation and property taxes on the building used by the segment.

Smiley Company has the following results: Rolls of film processed 350,000 Sales revenue \ 1,200,000 Direct labor hours worked 5,500 Direct labor cost \ 47,000 If productivity is measured using the number of rolls of film processed per direct labor hour,what is the productivity of Smiley Company?

Which of the following is NOT a prevention activity for quality control?

Rework costs for manufactured products are a form of ________ costs.

Total quality management is the application of quality principles to the most important of an organization's departments to satisfy customers.

In recent years,companies in the United States have discovered it is more cost effective to prevent defects than to detect and correct them.

Managerial Accounting,the Business Organization,and Professional Ethics

Introduction to Cost Behavior and Cost Volume Profit Relationships

Measurement of Cost Behavior

Cost Management Systems and Activity-Based Costing

Relevant Information for Decision Making With a Focus on Pricing Decisions

Relevant Information for Decision Making With a Focus on Operational Decisions

Introduction to Budgets and Preparing the Master Budget

Flexible Budgets and Variance Analysis

Management Control in Decentralized Organizations

Capital Budgeting

Cost Allocation

Accounting for Overhead Costs

Job-Order Costing and Process-Costing Systems

Basic Accounting: Concepts, techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

Understanding and Analyzing Consolidated Financial Statements

Filters

Exam 9: Management Control Systems and Responsibility Accounting

Nonfinancial measures of performance include profit targets and required return on investment.

Segments are responsibility centers for which a separate measure of revenues and costs is obtained.

Key performance indicators for a balanced scorecard are usually grouped into two categories.

Costs of defective components or products that are scrapped or reworked are examples of ________ costs.

In the management control system,feedback and learning affect all elements of the system.

Which of the following statements about managerial effort is FALSE?

External failure costs associated with quality control do NOT include ________.

Most employees perform better when performance reports lead to ________.

Which of the following is NOT an appraisal cost for quality control?

To identify defective products,companies incur inspection costs or ________ costs.

Which of the following statements about responsibility centers is FALSE?

Fixed costs not controllable by a segment manager usually include depreciation and property taxes on the building used by the segment.

Smiley Company has the following results: Rolls of film processed 350,000 Sales revenue \ 1,200,000 Direct labor hours worked 5,500 Direct labor cost \ 47,000 If productivity is measured using the number of rolls of film processed per direct labor hour,what is the productivity of Smiley Company?

Which of the following is NOT a prevention activity for quality control?

Rework costs for manufactured products are a form of ________ costs.

Total quality management is the application of quality principles to the most important of an organization's departments to satisfy customers.

In recent years,companies in the United States have discovered it is more cost effective to prevent defects than to detect and correct them.

Managerial Accounting,the Business Organization,and Professional Ethics

Introduction to Cost Behavior and Cost Volume Profit Relationships

Measurement of Cost Behavior

Cost Management Systems and Activity-Based Costing

Relevant Information for Decision Making With a Focus on Pricing Decisions

Relevant Information for Decision Making With a Focus on Operational Decisions

Introduction to Budgets and Preparing the Master Budget

Flexible Budgets and Variance Analysis

Management Control in Decentralized Organizations

Capital Budgeting

Cost Allocation

Accounting for Overhead Costs

Job-Order Costing and Process-Costing Systems

Basic Accounting: Concepts, techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

Understanding and Analyzing Consolidated Financial Statements

Filters