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Exam 22: Performance Measurement and Responsibility Accounting

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Question 101

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Direct expenses are incurred for the joint benefit of more than one department; they cannot be readily traced to only one department.

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Question 102

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Pepper Department store allocates its service department expenses to its various operating (sales) departments.The following data is available for its service departments: The following information is available for its three operating (sales) departments: -What is the total advertising expense allocated to Department B?

A) $30,000.
B) $ 9,000.
C) $12,500.
D) $10,800.
E) $7,500.

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Question 103

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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: -The amount of depreciation that should be allocated to Drilling for the current period is:

The investment center return on investment is ________ divided by ________.

Chancellor Company is divided into four departments.Departments A and B are service departments and Departments 1 and 2 are operating (production)departments.The services of the two service departments are used by the other departments as follows: Complete the following table:

In a firm that manufactures clothing,the department that is responsible for actually assembling the garments could best be described as a(n) :

An example of a controllable cost is equipment depreciation expense.

Measures used to evaluate the manager of an investment center include investment turnover and profit margin.

A challenge in calculating the total costs and expenses of a department is:

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 the advertising cost that should be allocated to Drilling for the current period is:

Marian Corporation has two separate divisions that operate as profit centers.The following information is available for the most recent year: The Black Division occupies 20,000 square feet in the plant.The Navy Division occupies 30,000 square feet.Rent is an indirect expense and is allocated based on square footage.Rent expense for the year was $50,000. -Compute gross profit for the Black and Navy Divisions,respectively.

Using the information below,compute the cash conversion cycle:

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

The concepts of direct expenses and uncontrollable costs are essentially the same; also,indirect expenses and controllable costs are essentially the same.

Ultimo Co.operates three production departments as profit centers.The following information is available for its most recent year.Which department has the greatest departmental contribution to overhead (in dollars) and what is the amount contributed?

A profit center generates revenue,incurs costs,and has the authority to make significant investing decisions.

Pepper Department store allocates its service department expenses to its various operating (sales) departments.The following data is available for its service departments: The following information is available for its three operating (sales) departments: -What is the total expense allocated to Department B?

A retail store has three departments,A,B,and C,each of which has four full-time employees.The store does general advertising that benefits all departments.Advertising expense totaled $90,000 for the current year,and departmental sales were: Department A……………… $308,000 Department B……………… 644,000 Department C……………… 448,000 Total sales………………….$1,400,000 Calculate the amount of advertising expense that should be allocated to each department?

Division X makes a part that it sells to customers outside of the company.Data concerning this part appear below: Division Y of the same company would like to use the part manufactured by Division X in one of its products.Division Y currently purchases a similar part made by an outside company for $49 per unit and would substitute the part made by Division X.Division Y requires 5,000 units of the part each period.Division X has ample excess capacity to handle all of Division Y's needs without any increase in fixed costs and without cutting into outside sales.What is the lowest transfer price Division X will accept?

What is the purpose of a responsibility accounting system?