Exam 22: Responsibility Accounting and Transfer Pricing

Division X supplies partially completed units of product to division Y.The divisions negotiated a price of $30 plus 20% per unit.Assuming Division X completed and transferred 5,000 units to division Y,the total transfer price on this transaction is:

[The following information applies to the questions displayed below.] Chic Jewelers views each branch location as an investment center.The local branch reported the following results for the current year: -The contribution margin ratio of the local branch is closest to:

The human resources department of a large company would be considered:

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

Performance margin is equal to controllable fixed costs minus the contribution margin.

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

[The following information applies to the questions displayed below.] Steel Fabricating,Inc.manufactures furniture at its plants in Akron,Greensboro,and Schenectady.The company prepares monthly income statements segmented by plant.These income statements are organized to disclose contribution margin,performance margin,and responsibility margin for each plant,in addition to operating income for the company as a whole. -Of the following,which should be classified as a common fixed cost?

Disneyland charges visitors for admission to the park but not for individual rides or attractions."Splash Mountain" is one of the rides in Disneyland.The Walt Disney Company should evaluate "Splash Mountain" as:

The transfer price is the dollar amount used in recording sales to primary customers.

In deciding how the store will benefit most from increasing the sales of selected departments,the store manager should be most interested in the:

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

In preparing a responsibility income statement that shows contribution margin and responsibility margin,generally two concepts are involved in allocating costs to the various centers.These concepts are:

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 assigning costs to centers,each center is charged with costs attributed to the center and based on company-wide rates.

[The following information applies to the questions displayed below.] Chic Jewelers views each branch location as an investment center.The local branch reported the following results for the current year: -The contribution margin of the local branch is:

[The following information applies to the questions displayed below.] Dalton Co.follows a policy of allocating all common costs equally among its profit centers.A partial responsibility income statement for a typical month is shown below: After evaluating these data,Dalton Co.decides to close Profit Center 3.This action eliminates all revenue,variable costs,and fixed costs traceable to Center 3,but eliminates only $35,000 in common fixed costs.Closing Profit Center 3 has no effect upon the responsibility margins of Centers 1 and 2. -Closing Profit Center 3 should cause Dalton's monthly operating income to:

An investment center:

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

An example of a profit center is:

A responsibility income statement generally does not show the: