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Exam 9: Performance Measurement and Responsibility Accounting

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Question 61

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Describe the information found on a responsibility accounting performance report.

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A responsibility accounting pe...

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Question 62

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Marks Corporation has two operating departments, Drilling and Grinding, and an office. The three categories of office expenses are allocated to the two departments using different allocation bases. The following information is available for the current period: $\begin{array}{lrrr}\text { Item } & \text { Drilling } & \text { Grinding } & \text { Total } \\\text { Number of employees } & 1,000 & 1,500 & 2,500 \\\text { Net sales } & \$ 325,000 & \$ 475,000 & \$ 800,000 \\\text { Cost of goods sold } & \$ 75,000 & \$ 125,000 & \$ 200,000\end{array}$ The amount of depreciation that should be allocated to Grinding for the current period is:

A) $20,000.
B) $25,000.
C) $7,500.
D) $12,500.
E) $40,000.

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Question 63

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Which of the following is not one of the perspectives used to analyze performance using the balanced scorecard?

Two investment centers at Marshman Corporation have the following current-year income and asset data: The return on investment (ROI) for Investment Center A is:

Define joint costs and explain how joint costs can be allocated.

Joint costs can be allocated either using a physical basis or a value basis.

Costs that the manager has the power to determine or at least significantly affect are called:

Carter Company reported the following financial numbers for one of its divisions for the year; average total assets of $4,100,000; sales of $4,525,000; cost of goods sold of $2,550,000; and operating expenses of $1,372,000. Compute the division's return on investment:

Decentralization refers to companies that have multiple locations.

Direct expenses require allocation across departments because they cannot be readily traced to one department.

The amount by which a department's sales exceed its direct expenses is:

Joint costs are costs incurred in producing or purchasing a single product.

A department's direct expenses are usually considered uncontrollable costs.

Marks Corporation has two operating departments, Drilling and Grinding, and an office. The three categories of office expenses are allocated to the two departments using different allocation bases. The following information is available for the current period: The amount of salaries that should be allocated to Grinding for the current period is:

A college uses advisors who work with all students in all divisions of the college. The most useful allocation basis for the salaries of these employees would likely be:

Costs that the manager does not have the power to determine or at least significantly affect are:

Marks Corporation has two operating departments, Drilling and Grinding, and an office. The three categories of office expenses are allocated to the two departments using different allocation bases. The following information is available for the current period: $\begin{array} { l c c c } \text { Office Expenses } & \text { Total } & { \text { Allocation Basi5 } } \\\text { Salaries } & \$30,000 & \text { Number of employees } \\\text { Depreciation } & 20,000 & \text { Cost of goods sold } \\\text { Advertisirg } & 40,000 & \text { Net sales } & \\\text { Item } & \text { Drilling } & \text { Grinding } & \text { Tatal } \\\text { Number of employees } & 1,000 & 1,500 & 2,500 \\\text { Net sales } & \$325,000 & \$ 475,000 & 800,000 \\\text { Cast of goods sald } & \$75,000 & \$ 125,000 & 200,000\end{array}$ The amount of salaries that should be allocated to Drilling for the current period is:

Return on investment is a useful measure to evaluate the performance of a cost center manager.

The Mixed Nuts Division of Yummy Snacks, Inc. had the following operating results last year: Yummy expects identical operating results in the division this year. The Mixed Nuts Division has the ability to produce and sell 200,000 pounds of product annually. Assume that the Trail Mix Division of Yummy wants to purchase an additional 20,000 pounds of nuts from the Mixed Nuts Division. Mixed Nuts will be able to increase its profit by accepting any transfer price above:

What is the cycle time for a manufacturer? What does it reveal about the manufacturing process?