FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 24: Performance Measurement and Responsibility Accounting

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 1

Multiple Choice

Review LaterAdd Note

Review Later

Regardless of the system used in departmental cost analysis:

A) Direct costs are allocated, indirect costs are not.
B) Indirect costs are allocated, direct costs are not.
C) Neither direct nor indirect costs are allocated.
D) Total departmental costs will always be the same.
E) Both direct and indirect costs are allocated.

F) None of the above
G) A) and B)

Correct Answer

verified

Show Answer

Question 2

Multiple Choice

Review LaterAdd Note

Review Later

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: $\begin{array}{lll}\text { Ottice Expenses } & \text { Total } & \text { Allocation Basis } \\\text { Salaries } & \$ 30,000 & \text { Number of employees } \\\text { Depreciation } & 20,000 & \text { Cost of goods sold } \\\text { Advertising } & 40,000 & \text { Net sales }\end{array}$ $\begin{array}{lrrrr}\text {Item}&\text {Drilling}&\text {Grinding}&\text {Total}\\\text { Number of emplovees } & 1,000 & 1,500 & 2,500 \\\text { Net sales } & \$ 325,000 & \$ 475,000 & \$ 800,000 \\\text { Cost of goods sold } & \$ 75,000 & \$ 125,000 & \$ 200,000\end{array}$ -The amount of the advertising cost that should be allocated to Drilling for the current period is:

A) $ 23,750.
B) $16,250.
C) $325,000.
D) $ 45,000.
E) $ 54,250.

F) D) and E)
G) B) and C)

Correct Answer

verified

Show Answer

Question 3

Multiple Choice

Review LaterAdd Note

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

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: $\begin{array}{lll}\text { Ottice Expenses } & \text { Total } & \text { Allocation Basis } \\\text { Salaries } & \$ 30,000 & \text { Number of employees } \\\text { Depreciation } & 20,000 & \text { Cost of goods sold } \\\text { Advertising } & 40,000 & \text { Net sales }\end{array}$ $\begin{array}{lrrrr}\text {Item}&\text {Drilling}&\text {Grinding}&\text {Total}\\\text { Number of emplovees } & 1,000 & 1,500 & 2,500 \\\text { Net sales } & \$ 325,000 & \$ 475,000 & \$ 800,000 \\\text { Cost of goods sold } & \$ 75,000 & \$ 125,000 & \$ 200,000\end{array}$ - The amount of the total office expenses that should be allocated to Drilling for the current period is:

Match the following terms with the appropriate definition

Riemer, Inc. has four departments. Information about these departments is listed below. Maintenance is a service department. If allocated maintenance cost is based on floor space occupied by each of the other departments, compute the amount of maintenance cost allocated to the Cutting Department. $\begin{array}{lrrrrr}&\text { Maintenance } & \text { Cutting } & \text { Assembly } & \text { Packaging }\\\text { Direct costs } & \$ 18,000 & \$ 30,000 & \$ 70,000 & \$ 45,000 \\\text { Sq. ft. of space } & 500 & 1,500 & 2,000 & 2,500 \\\text { No. of employees } & 2 & 3 & 16 & 4\end{array}$

A lumber mill paid $70,000 for logs that produced 200,000 board feet of lumber in 3 different grades and amounts as follows: $\begin{array} { l r r r } { \text { Grade } } & \text { Production } & \text { Market Price } \\\text { Structural } & 25,000 \text { board feet } & \mathbf { \$ } 1,350 / 1,000 \text { bd. ft. } \\\text { No. 1 Common } & 75,000 \text { board feet } & \$ \$ 750 / 1,000 \text { bd. ft. } \\\text { No. 2 Common } & 100,000 \text { board feet } & \mathbf { \$ } 300 / 1,000 \text { bd. ft. }\end{array}$ Compute the portion of the $70,000 joint cost to be allocated to No. 2 Common if the value basis is used.

The Dark Chocolate Division of Yummy Snacks, Inc. had the following operating results last year: $\begin{array} { l r } \text { Sales (150,000 pounds of chocolate) } & \$ 60,000 \\\text { Variable expenses } & 37,500 \\\text { Contribution margin } & 22,500 \\\text { Fixed expenses } & 12,000 \\\text { Profit } & \$ 10,500\end{array}$ Assume that the Dark Chocolate Division is currently operating at its capacity of 200,000 pounds of chocolate. Also assume again that the Peanut Butter Division wants to purchase an additional 20,000 pounds of chocolate from Dark Chocolate. Under these conditions, what amount per pound of chocolate would Dark Chocolate have to charge Peanut Butter in order to maintain its current Profit?

The type of department that generates revenues and incurs costs, and its manager is responsible for the investments made in operating assets is called a(n) :

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:

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: $\begin{array} { l | l | l | l | l } & \text { Dept. A } & \text { Dept. B } & \text { Dept. 1 } & \text { Dept. 2 } \\\hline \text { Services of: } & & & & \\\hline \text { Department A } \ldots \ldots \ldots & & 50 \% & 20 \% & 30 \% \\\hline \text { Department B } \ldots \ldots \ldots & & & 40 \% & 60 \% \\\hline \text { Direct costs incured by each department } & \$ 60,000 & \$ 50,000 & \$ 70,000 & \$ 80,000\end{array}$ Complete the following table:

Flamingos, Inc. has four departments. The Administrative Department costs are allocated to the other three departments based on the number of employees in each and the Maintenance Department costs are allocated to the Assembly and Packaging Departments based on their occupied space. Data for these departments follows: $\begin{array} { l | r | r | r | r } & \text { Admin } & \text { Maintenance } & \text { Assembly } & \text { Packaging } \\\hline \text { Operating costs } & \$ 30,000 & \$ 15,000 & \$ 70,000 & \$ 45,000 \\\text { No. of employees } & & 2 & 6 & 4 \\\text { Sq. ft. of space } & & & 2,000 & 3,000\end{array}$ The total amount of the Administrative Department's cost that would eventually be allocated to the Packaging Department is:

An accounting system that accumulates and reports costs incurred by each service department for management to evaluate the performance of a department is a:

The difference between a profit center and an investment center is

A lumber mill bought a shipment of logs for $40,000. When cut, the logs produced a million board feet of lumber in the following grades. Compute the cost to be allocated to Type 1 and Type 2 lumber, respectively, if the value basis is used. Type 1-400,000 bd. ft. priced to sell at $0.12 per bd. ft. Type 2- 400,000 bd. ft. priced to sell at $0.06 per bd. ft. Type 3- 200,000 bd. ft. priced to sell at $0.04 per bd. ft.

An accounting system that is set up to control costs and evaluate managers' performance by assigning costs to the managers responsible for controlling them is called a(n) :

In the two-stage cost allocation, ________ costs are allocated to operating departments, and the operating department costs are allocated to .

A company rents a small building with 10,000 square feet of space for $100,000 per year. The rent is allocated to the company's three departments on the basis of the value of the space occupied by each. Department One occupies 1,500 square feet of ground-floor space, Department Two occupies 3,500 square feet of ground-floor space, and Department Three occupies 5,000 square feet of second-floor space. If rent for comparable floor space in the neighborhood averages $15.00 per sq. ft. for ground-floor space and $10.00 per sq. ft. for second-floor space, what annual rent expense should be charged to each department?

A company produces two products, XX and YY, from a single raw material called Zub. Zub is purchased in 55-gallon drums, and the contents of one drum are sufficient to produce 30 gallons of XX and 15 gallons of YY. XX sells for $10.00 per gallon and YY sells for $30.00 per gallon. During the current period, the company used 400 drums of Zub to produce XX and YY. The cost of Zub was $90 per drum. Required: (1) If the cost of Zub is allocated to the XX and YY products on the basis of the number of gallons produced, how much of the total cost of the 400 drums should be charged to each product? (2) If the cost of Zub is allocated to the XX and YY products in proportion to their market values, how much of the total cost of the 400 drums should be charged to each product? (3) Which basis of allocating the cost is most likely to be used by the company?

The Mixed Nuts Division of Yummy Snacks, Inc. had the following operating results last year: $\begin{array} { l r } \text { Sales (140,000 pounds of product) } & \$ 70,000 \\\text { Variable expenses } & 42,000 \\\text { Contribution margin } & \$ 28,000 \\\text { Fixed expenses } & \$ 12,000 \\\text { Income } & \$ 16,000\end{array}$ 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: