Exam 22: Responsibility Accounting and Transfer Pricing

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Accounting terminology Listed below are seven technical accounting terms introduced or emphasized in this chapter: Each of the following statements may (or may not)describe one of these technical terms.In the space provided beside each statement,indicate the accounting term described,or answer "None" if the statement does not correctly describe any of the terms. (a)Costs that jointly benefit several responsibility centers of the business and that do not vary significantly with changes in sales volume. (b)The amount charged by a responsibility center for the goods it sells to another responsibility center. (c)Used to evaluate the performance of a manager based solely on revenue and costs under the manager's control. (d)A responsibility center of a business that may be evaluated by the return earned on assets. (e)The subtotal in a responsibility income statement that is most useful in evaluating the short-term effects of various marketing strategies on profitability.

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Question 61

The contribution margin approach to preparing reports for managers classifies costs into fixed and variable costs.

(True/False)

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Question 62

Successful operation of a responsibility accounting system requires all of the following except:

(Multiple Choice)

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Question 63

Responsibility income statement Classico's Pizza,a chain of pizza parlors,views each branch location as an investment center.The local branch reported the following results for the current year: Compute the following measures for this investment center: (a)Contribution margin: $_______ (b)Contribution margin ratio: _% (c)Responsibility margin: $_ (d)Increase in annual responsibility margin that would be expected to result from a 10% increase in sales volume: $_______

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Question 64

Responsibility margin is equal to:

(Multiple Choice)

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Question 65

Using a responsibility income statement Shown below is the current monthly income statement of Metro Video,by profit centers: On the basis of this information,compute the increase in monthly income from operations that may be expected to result from each of the following actions: (a)Spending $5,000 per month in advertising is expected to increase sales in the Equipment Sales Department by 35%.$__ (b)Closing the Equipment Sales Department and allowing the Video Rentals Department to expand is expected to increase the revenue of the Video Rentals Department by $105,000 per month.This action also is expected to increase fixed costs traceable to the Video Rentals Department by $40,000 per month.$_

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Question 66

The term responsibility center reflects the idea that the "centers" of a business usually are defined in a manner such that each center is:

(Multiple Choice)

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Question 67

The part of a business a particular manager is held responsible for is called a:

(Multiple Choice)

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Question 68

If a company wanted to evaluate the manager's ability to control costs,the company would probably look at the:

(Multiple Choice)

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Question 69

The responsibility margin is calculated by:

(Multiple Choice)

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Question 70

Common fixed costs jointly benefit several parts of the business and would not change significantly even if one of the parts of the business were discontinued.

(True/False)

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Question 71

Traceable fixed costs that the manager of a department cannot change are called:

(Multiple Choice)

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Question 72

Showing 61 - 72 of 72

The contribution margin approach to preparing reports for managers classifies costs into fixed and variable costs.

Successful operation of a responsibility accounting system requires all of the following except:

Responsibility margin is equal to:

The term responsibility center reflects the idea that the "centers" of a business usually are defined in a manner such that each center is:

The part of a business a particular manager is held responsible for is called a:

If a company wanted to evaluate the manager's ability to control costs,the company would probably look at the:

The responsibility margin is calculated by:

Common fixed costs jointly benefit several parts of the business and would not change significantly even if one of the parts of the business were discontinued.

Traceable fixed costs that the manager of a department cannot change are called:

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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