Question 1

Direct material costs and direct labor costs cannot be easily traced to products.Therefore,they are allocated to products.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is a not a decision that management must make before calculating ROI and RI?

Accepted Answer

A) Should nonproductive assets be included in the average total asset calculation? 
B) Should gross book value or net book value of assets be used? 
C) Should a simple average of the beginning and ending total liabilities be used? 
D) Should a short term focus be used? 
A) Should nonproductive assets be included in the average total asset calculation? 
B) Should gross book value or net book value of assets be used? 
C) Should a simple average of the beginning and ending total liabilities be used? 
D) Should a short term focus be used?

Question 3

In many cases,the amount of the transfer price does not affect overall company profits.

Accepted Answer

A) True 
 B)False

Question 4

Why is using a single plantwide predetermined overhead allocation rate not always accurate?

Accepted Answer

Using a single plantwide predetermined o

Question 5

The term goal congruence refers to the ________.

Accepted Answer

A) matching of financial goals of the company with its nonfinancial goals 
B) aligning the goals of business segment managers with the goals of top management 
C) achievement of the goals set by the management by utilizing the resources available 
D) duplication of costs as a result of decentralization 
A) matching of financial goals of the company with its nonfinancial goals 
B) aligning the goals of business segment managers with the goals of top management 
C) achievement of the goals set by the management by utilizing the resources available 
D) duplication of costs as a result of decentralization

Question 6

A modification of the overhead allocation method which uses a single plantwide rate,is to use multiple predetermined overhead allocation rates that have different allocation bases.

Accepted Answer

A) True 
 B)False

Question 7

Huang Consumer Products has a small car division that operates as a profit center.Below is a partially completed responsibility report for the first quarter.
 
Compute the percentage variance for the flexible budget variance for sales revenue.(Round your answer to two decimal places. )

Accepted Answer

A) 2.12% F 
B) 2.12% U 
C) 3.91% U 
D) 3.91% F 
A) 2.12% F 
B) 2.12% U 
C) 3.91% U 
D) 3.91% F

Question 8

Atom,Inc.has a division that manufactures a component that sells for $160 and has a variable cost of $50.Another division of the company wants to purchase the component.Fixed cost per unit of the component is $20.What is the minimum transfer price if the division is operating at capacity?

Accepted Answer

A) $160 
B) $50 
C) $70 
D) $20 
A) $160 
B) $50 
C) $70 
D) $20

Question 9

A company uses a balanced scorecard and has established a key performance indicator for product quality.If the actual warranty claims are higher than expected,there is an indication that the quality standards have been met.

Accepted Answer

A) True 
 B)False

Question 10

Residual income is used as a key performance indicator for evaluating an investment center's financial performance.

Accepted Answer

A) True 
 B)False

Question 11

Archid,Inc. ,a manufacturer of spare parts,has two production departments-Assembling and Packaging.The Assembling department is mechanized,while the Packaging department is labor oriented.Estimated manufacturing overhead costs for the year were $17,700,000 for Assembling and $10,000,000 for Packaging.Calculate the department predetermined overhead allocation rates for the Assembling and Packaging departments,respectively,if the total estimated machine hours were 50,000 and labor hours were 22,000 for the year.(Round your answer to the nearest cent. )

Accepted Answer

A) $804.55,$200.00 
B) $354.00,$454.55 
C) $200.00,$804.55 
D) $354.00,$804.55 
A) $804.55,$200.00 
B) $354.00,$454.55 
C) $200.00,$804.55 
D) $354.00,$804.55

Question 12

Recreation Equipment Company has several divisions that are investment centers.Data for the Boat Division and the Trailer Division are shown here:
   
With regard to the efficient use of assets,the Boat Division has a higher return on investment (ROI)because it has the highest operating income.

Accepted Answer

A) True 
 B)False

Question 13

The transfer price should be an amount between the market price and the variable cost.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following statements is true?

Accepted Answer

A) Indirect costs must be allocated based on a single plant wide rate. 
B) Manufacturing overhead costs are individually assigned to products. 
C) Managers cannot wait until the end of the accounting period for product cost information. 
D) Managers can choose to wait until the end of the accounting period to allocate manufacturing overhead costs. 
A) Indirect costs must be allocated based on a single plant wide rate. 
B) Manufacturing overhead costs are individually assigned to products. 
C) Managers cannot wait until the end of the accounting period for product cost information. 
D) Managers can choose to wait until the end of the accounting period to allocate manufacturing overhead costs.

Question 15

The payroll department of a manufacturing company is most likely to be a(n)________.

Accepted Answer

A) cost center 
B) revenue center 
C) investment center 
D) profit center 
A) cost center 
B) revenue center 
C) investment center 
D) profit center

Question 16

Which would be an appropriate cost driver for the shipping and receiving activity?

Accepted Answer

A) number of inspections 
B) number of machine hours 
C) number of batches 
D) number of pounds of product shipped 
A) number of inspections 
B) number of machine hours 
C) number of batches 
D) number of pounds of product shipped

Question 17

Opportunity cost is the benefit ________.

Accepted Answer

A) received by selling goods on behalf of another division 
B) received by selling goods to one of the other divisions within the company 
C) given up by purchasing goods at a price lower than its total manufacturing cost 
D) given up by choosing an alternate course of action 
A) received by selling goods on behalf of another division 
B) received by selling goods to one of the other divisions within the company 
C) given up by purchasing goods at a price lower than its total manufacturing cost 
D) given up by choosing an alternate course of action

Question 18

How is the use of a balanced scorecard as a performance evaluation system helpful to companies?

Accepted Answer

The balanced scorecard represents a majo

Question 19

Which of the following is not an advantage of activity-based costing?

Accepted Answer

A) Activity-based costing is easier and less time consuming to calculate. 
B) Activity-based costing information can be used to make decisions that will lead to improved customer satisfaction and greater profits. 
C) More accurate cost information can be obtained by using activity-based costing. 
D) Activity based costing considers the resources each product actually uses,so management can better control overhead costs. 
A) Activity-based costing is easier and less time consuming to calculate. 
B) Activity-based costing information can be used to make decisions that will lead to improved customer satisfaction and greater profits. 
C) More accurate cost information can be obtained by using activity-based costing. 
D) Activity based costing considers the resources each product actually uses,so management can better control overhead costs.

Question 20

List the four types of responsibility centers.For each center,state the responsibility of the manager.

Accepted Answer

The answer of List the four types of responsibility centers.For...

Exam 24: Cost Allocation and Responsibility Accounting

Direct material costs and direct labor costs cannot be easily traced to products.Therefore,they are allocated to products.

Which of the following is a not a decision that management must make before calculating ROI and RI?

In many cases,the amount of the transfer price does not affect overall company profits.

Why is using a single plantwide predetermined overhead allocation rate not always accurate?

The term goal congruence refers to the ________.

A modification of the overhead allocation method which uses a single plantwide rate,is to use multiple predetermined overhead allocation rates that have different allocation bases.

Huang Consumer Products has a small car division that operates as a profit center.Below is a partially completed responsibility report for the first quarter. Compute the percentage variance for the flexible budget variance for sales revenue.(Round your answer to two decimal places. )

Atom,Inc.has a division that manufactures a component that sells for $160 and has a variable cost of $50.Another division of the company wants to purchase the component.Fixed cost per unit of the component is $20.What is the minimum transfer price if the division is operating at capacity?

A company uses a balanced scorecard and has established a key performance indicator for product quality.If the actual warranty claims are higher than expected,there is an indication that the quality standards have been met.

Residual income is used as a key performance indicator for evaluating an investment center's financial performance.

Recreation Equipment Company has several divisions that are investment centers.Data for the Boat Division and the Trailer Division are shown here: With regard to the efficient use of assets,the Boat Division has a higher return on investment (ROI)because it has the highest operating income.

The transfer price should be an amount between the market price and the variable cost.

Which of the following statements is true?

The payroll department of a manufacturing company is most likely to be a(n)________.

Which would be an appropriate cost driver for the shipping and receiving activity?

Opportunity cost is the benefit ________.

How is the use of a balanced scorecard as a performance evaluation system helpful to companies?

Which of the following is not an advantage of activity-based costing?

List the four types of responsibility centers.For each center,state the responsibility of the manager.

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Plant Assets, natural Resources, and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Short-Term Business Decisions

Capital Investment Decisions

Filters