Question 1

Depreciation on the factory would be an example of a:

Accepted Answer

A) Controllable fixed cost. 
B) Period cost. 
C) Responsibility cost. 
D) Committed fixed cost. 
A) Controllable fixed cost. 
B) Period cost. 
C) Responsibility cost. 
D) Committed fixed cost.

Question 2

In a responsibility income statement,the term common fixed costs describes fixed costs that:

Accepted Answer

A) Are under the manager's immediate control. 
B) Jointly benefit several responsibility centers of the business. 
C) Occur in virtually every responsibility center of the business (such as salaries). 
D) Are easily traceable to specific profit centers. 
A) Are under the manager's immediate control. 
B) Jointly benefit several responsibility centers of the business. 
C) Occur in virtually every responsibility center of the business (such as salaries). 
D) Are easily traceable to specific profit centers.

Question 3

Profit centers generate revenues and costs.

Accepted Answer

A) True 
 B)False

Question 4

San Francisco's famous St.Francis Hotel is owned by Westin Hotel and Resort Group.Westin should evaluate the St.Francis as:

Accepted Answer

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

Question 5

An investment center is a profit center in which management can make related capital investment choices.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

Revenue,less variable costs,less traceable fixed costs,is called the contribution margin.

Accepted Answer

A) True 
 B)False

Question 8

The concept of contribution margin applies:

Accepted Answer

A) Only to investment centers. 
B) Only to profit centers. 
C) Only to cost centers. 
D) To all types of responsibility centers. 
A) Only to investment centers. 
B) Only to profit centers. 
C) Only to cost centers. 
D) To all types of responsibility centers.

Question 9

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: $________

Accepted Answer

(a)$630,00

Question 10

Responsibility margin is equal to revenue,less:

Accepted Answer

A) Contribution margin and traceable fixed costs. 
B) Variable costs. 
C) Variable costs and traceable fixed costs. 
D) Variable fixed costs,traceable fixed costs,and common costs. 
A) Contribution margin and traceable fixed costs. 
B) Variable costs. 
C) Variable costs and traceable fixed costs. 
D) Variable fixed costs,traceable fixed costs,and common costs.

Question 11

The responsibility margin is calculated by:

Accepted Answer

A) Subtracting fixed costs traceable to a center from its contribution margin. 
B) Subtracting common fixed costs from the contribution margin. 
C) Subtracting variable costs from sales. 
D) Subtracting common fixed costs from variable costs. 
A) Subtracting fixed costs traceable to a center from its contribution margin. 
B) Subtracting common fixed costs from the contribution margin. 
C) Subtracting variable costs from sales. 
D) Subtracting common fixed costs from variable costs.

Question 12

[The following information applies to the questions displayed below.]
Patterson's Department Store prepares monthly income statements by sales departments.These income statements are organized to show contribution margin,performance margin,and responsibility margin for each sales department,as well as operating income for the store as a whole.
-Depreciation of the fixtures and equipment used exclusively in a particular sales department should be classified as a:

Accepted Answer

A) Common fixed cost. 
B) Variable cost. 
C) Controllable fixed cost. 
D) Committed fixed cost. 
A) Common fixed cost. 
B) Variable cost. 
C) Controllable fixed cost. 
D) Committed fixed cost.

Question 13

All costs become traceable at some level of the organization.

Accepted Answer

A) True 
 B)False

Question 14

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 15

A responsibility income statement shows the revenue and expenses of each cost center within a particular part of a business.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A) Responsible for earning a specified amount of profit. 
B) Responsible for all business operations in a specific region. 
C) Under the control of a specified center manager. 
D) Approximately the same size. 
A) Responsible for earning a specified amount of profit. 
B) Responsible for all business operations in a specific region. 
C) Under the control of a specified center manager. 
D) Approximately the same size.

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

[The following information applies to the questions displayed below.]
Patterson's Department Store prepares monthly income statements by sales departments.These income statements are organized to show contribution margin,performance margin,and responsibility margin for each sales department,as well as operating income for the store as a whole.
-The monthly salaries of the employees of the store's Accounting Department should be classified as a:

Accepted Answer

A) Common fixed cost. 
B) Traceable fixed cost. 
C) Committed fixed cost. 
D) Controllable fixed cost. 
A) Common fixed cost. 
B) Traceable fixed cost. 
C) Committed fixed cost. 
D) Controllable fixed cost.

Question 19

One of the unique services provided by San Francisco's St.Francis Hotel is cleaning and polishing coins (pocket change)for the guests.From the standpoint of hotel management,this "money laundry" should be viewed as:

Accepted Answer

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

Question 20

The dollar amount used by one division which supplies a good or a service to another division within a company is called a:

Accepted Answer

A) Market price. 
B) Transfer price. 
C) Fair price. 
D) Agreed-upon price. 
A) Market price. 
B) Transfer price. 
C) Fair price. 
D) Agreed-upon price.

Exam 22: Responsibility Accounting and Transfer Pricing

Depreciation on the factory would be an example of a:

In a responsibility income statement,the term common fixed costs describes fixed costs that:

Profit centers generate revenues and costs.

San Francisco's famous St.Francis Hotel is owned by Westin Hotel and Resort Group.Westin should evaluate the St.Francis as:

An investment center is a profit center in which management can make related capital investment choices.

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

Revenue,less variable costs,less traceable fixed costs,is called the contribution margin.

The concept of contribution margin applies:

Responsibility margin is equal to revenue,less:

The responsibility margin is calculated by:

All costs become traceable at some level of the organization.

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

A responsibility income statement shows the revenue and expenses of each cost center within a particular part of a business.

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

One of the unique services provided by San Francisco's St.Francis Hotel is cleaning and polishing coins (pocket change)for the guests.From the standpoint of hotel management,this "money laundry" should be viewed as:

The dollar amount used by one division which supplies a good or a service to another division within a company is called a:

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

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

the Time Value of Money: Future Amounts and Present Values

Forms of Business Organization

Filters