charter oak acc102 week 9 test part 1

1. Which of the following is not a valid reason for developing responsibility center information?

Answer

2. In evaluating the long-run contribution of a particular profit center to the overall profitability of the company, management should be most interested in the center’s:

Answer

3. Fixed costs of a department that a manager can't change are called:

Answer

4. Kenny's Deli is organized as an investment center with the following information available, what is the responsibility margin of the deli during the year?

Sales - $220,000

Variable Expenses - $100,000

Traceable fixed costs - $56,000

Average total assets - $95,000

Answer

5. 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:

Answer

6. The primary difference between a cost center and profit center is that:

Answer

7. The bookstore or a University would be classified as:

Answer

8) The most common value used for transfer pricing is:

Answer

9. Which of the following is NOT true about responsibility centers?

Answer

10. Which of the following is NOT one of the basic steps in the operation of a responsibility accounting system?

Answer

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

Answer

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

Answer

13. Responsibility margin is equal to:

Answer

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

Answer

Use the following to answer question 15. You can also reference page963 Exhibit 22-4 in the text book

Entire Company Division 1 Division 2

Sales $575,000 $400,000 $175,000

Variable 247,500 (1) (2)

-------- -------- --------

CM $327,500 $ $

Fixed 110,000 (3) (4)

------- -------- ---------

RM $217,500 (5) (6)

11. Variable costs are (1) 40% of sales and (2) 50% of sales. Fixed costs traceable to divisions: (3) $40,000, and (4) $70,000. What is the division responsibility margin for the Division 2 (6)?

Answer