Question 1

An accounting system designed to measure the performance of each center within a business is

Accepted Answer

A) True 
 B)False  False

Question 2

A common cost may become a traceable cost as it moves up to larger responsibility centers.

Accepted Answer

A) True 
 B)False  True

Question 3

An investment center:

Accepted Answer

A) Is a profit center for which management is able to objectively measure the cost of the assets used in the center's operations. 
B) Is a cost center for which management is able to identify the original amount invested. 
C) May be either a cost center or a profit center. 
D) Is a subunit of the organization that provides services to other centers within the organization. 
A) Is a profit center for which management is able to objectively measure the cost of the assets used in the center's operations. 
B) Is a cost center for which management is able to identify the original amount invested. 
C) May be either a cost center or a profit center. 
D) Is a subunit of the organization that provides services to other centers within the organization. A

Question 4

Many companies view performance margin as a more useful tool than responsibility margin for evaluating segment managers.This is because:

Accepted Answer

A) Managers have no control over traceable fixed costs. 
B) Performance margin is not affected by the size of the department. 
C) Performance margin indicates the change in operating income that would result from closing the department. 
D) Performance margin includes only those revenue and costs under the manager's direct control. 
A) Managers have no control over traceable fixed costs. 
B) Performance margin is not affected by the size of the department. 
C) Performance margin indicates the change in operating income that would result from closing the department. 
D) Performance margin includes only those revenue and costs under the manager's direct control.

Question 5

John Thomas is the manager of materials movement for the Syracuse plant of Carrier Corporation.Thomas should be evaluated as manager of:

Accepted Answer

A) A cost center. 
B) An investment center. 
C) A profit center (other than an investment center). 
D) Human resources under his supervision. 
A) A cost center. 
B) An investment center. 
C) A profit center (other than an investment center). 
D) Human resources under his supervision.

Question 6

The responsibility margin is the contribution margin less common fixed costs.

Accepted Answer

A) True 
 B)False

Question 7

Sloan Sporting Goods has stores in four geographic regions.Each region has at least 20 stores.In the company's responsibility accounting system,sales are recorded separately for each sales department within each store.The total sales for a particular region are determined by:

Accepted Answer

A) Combining the total sales of all stores in that region. 
B) Using a separate revenue account to record the sales transaction for each region. 
C) Taking a percentage of the company's total sales that is equal to the percentage of the company's stores located in that region. 
D) Adding together the sales tickets for all sales transactions in the region. 
A) Combining the total sales of all stores in that region. 
B) Using a separate revenue account to record the sales transaction for each region. 
C) Taking a percentage of the company's total sales that is equal to the percentage of the company's stores located in that region. 
D) Adding together the sales tickets for all sales transactions in the region.

Question 8

Profit centers generate revenues and costs.

Accepted Answer

A) True 
 B)False

Question 9

Responsibility income statements
Identify and discuss briefly the two concepts generally used in assigning costs to responsibility centers of a business.

Accepted Answer

In assigning costs to parts of a busines

Question 10

Disneyland is one of several theme parks owned by The Walt Disney Company.Disneyland should be evaluated as:

Accepted Answer

A) An investment center. 
B) A cost center. 
C) An entertainment center. 
D) A profit center (other than an investment center). 
A) An investment center. 
B) A cost center. 
C) An entertainment center. 
D) A profit center (other than an investment center).

Question 11

Responsibility accounting systems measures the performance of:

Accepted Answer

A) The entire company. 
B) Each center individually. 
C) Both the entire company and each center individually. 
D) Neither the entire company nor each center individually. 
A) The entire company. 
B) Each center individually. 
C) Both the entire company and each center individually. 
D) Neither the entire company nor each center individually.

Question 12

The contribution margin is calculated by:

Accepted Answer

A) Subtracting fixed costs from sales. 
B) Subtracting variable costs from sales. 
C) Subtracting fixed and variable costs from sales. 
D) Subtracting common costs from sales. 
A) Subtracting fixed costs from sales. 
B) Subtracting variable costs from sales. 
C) Subtracting fixed and variable costs from sales. 
D) Subtracting common costs from sales.

Question 13

Parker's newly hired director of accounting services feels that the property taxes on the Cairo factory should be allocated to the fabricating,assembly,and finishing departments based upon the square footage they occupy.Of the following,which is not a valid reason to reject this recommendation?

Accepted Answer

A) The property taxes would not change even if one or more of the departments were eliminated. 
B) Such an allocation violates GAAP. 
C) The property taxes are not under the control of department managers. 
D) The allocation may imply changes in efficiency that are unrelated to center performance. 
A) The property taxes would not change even if one or more of the departments were eliminated. 
B) Such an allocation violates GAAP. 
C) The property taxes are not under the control of department managers. 
D) The allocation may imply changes in efficiency that are unrelated to center performance.

Question 14

In responsibility income statements,revenue is first assigned to the centers responsible for creating that revenue.

Accepted Answer

A) True 
 B)False

Question 15

If a business activity qualifies as a profit center,it cannot also qualify as an investment center.

Accepted Answer

A) True 
 B)False

Question 16

Responsibility income statement-preparation
Gameland Village is segmented into two sales departments: software and video games.During April,these two departments reported the following operating results:   In addition,fixed costs common to both departments amounted to $42,000.
Complete the following segmented income statement for Gameland Village.Follow the contribution margin approach,and show percentages as well as dollar amounts.Conclude your income statement with the company's income from operations.

Accepted Answer

The answer of Responsibility income statement-preparation
Gameland Village is segmented into...

Question 17

Responsibility margin is useful in evaluating the consequences of short-run marketing strategies,while contribution margin is more useful in evaluating long-term profitability.

Accepted Answer

A) True 
 B)False

Question 18

Traceable fixed costs usually cannot be eliminated even if the center is closed.

Accepted Answer

A) True 
 B)False

Question 19

A cost that is directly traceable to a particular center must be a variable cost.

Accepted Answer

A) True 
 B)False

Question 20

In a responsibility accounting system,the recording of revenue and costs begins with the:

Accepted Answer

A) Most profitable segments of the business. 
B) Least profitable segments of the business. 
C) Broadest areas of management responsibility. 
D) Smallest areas of management responsibility. 
A) Most profitable segments of the business. 
B) Least profitable segments of the business. 
C) Broadest areas of management responsibility. 
D) Smallest areas of management responsibility.

Exam 22: Responsibility Accounting and Transfer Pricing

An accounting system designed to measure the performance of each center within a business is

A common cost may become a traceable cost as it moves up to larger responsibility centers.

An investment center:

Many companies view performance margin as a more useful tool than responsibility margin for evaluating segment managers.This is because:

John Thomas is the manager of materials movement for the Syracuse plant of Carrier Corporation.Thomas should be evaluated as manager of:

The responsibility margin is the contribution margin less common fixed costs.

Sloan Sporting Goods has stores in four geographic regions.Each region has at least 20 stores.In the company's responsibility accounting system,sales are recorded separately for each sales department within each store.The total sales for a particular region are determined by:

Profit centers generate revenues and costs.

Responsibility income statements Identify and discuss briefly the two concepts generally used in assigning costs to responsibility centers of a business.

Disneyland is one of several theme parks owned by The Walt Disney Company.Disneyland should be evaluated as:

Responsibility accounting systems measures the performance of:

The contribution margin is calculated by:

Parker's newly hired director of accounting services feels that the property taxes on the Cairo factory should be allocated to the fabricating,assembly,and finishing departments based upon the square footage they occupy.Of the following,which is not a valid reason to reject this recommendation?

In responsibility income statements,revenue is first assigned to the centers responsible for creating that revenue.

If a business activity qualifies as a profit center,it cannot also qualify as an investment center.

Responsibility margin is useful in evaluating the consequences of short-run marketing strategies,while contribution margin is more useful in evaluating long-term profitability.

Traceable fixed costs usually cannot be eliminated even if the center is closed.

A cost that is directly traceable to a particular center must be a variable cost.

In a responsibility accounting system,the recording of revenue and costs begins with the:

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Accruals and Deferrals

The Accounting Cycle: Reporting Financial Results

Merchandising Activities

Financial Assets

Inventories and the Cost of Goods Sold

Plant and Intangible Assets

Liabilities

Stockholders Equity: Paid-In Capital

Income and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Management Accounting: a Business Partner

Job Order Cost Systems and Overhead Allocations

Process Costing

Costing and the Value Chain

Cost-Volume-Profit Analysis

Incremental Analysis

Operational Budgeting

Standard Cost Systems

Rewarding Business Performance

Capital Budgeting

Forms of Business Organization

The Time Value of Money: Future Amounts and Present Values

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