Question Details

Accounting 101 PART 4 BUDGETARY CONTROL AND
RESPONSIBILITY ACCOUNTING

71.	The linens department of a large department store is
		a.	not a responsibility center.
		b.	a profit center.
		c.	a cost center.
		d.	an investment center.

	72.	The foreign subsidiary of a large corporation is
		a.	not a responsibility center.
		b.	a profit center.
		c.	a cost center.
		d.	an investment center.

	73.	The maintenance department of a manufacturing company is a(n)
		a.	segment.
		b.	profit center.
		c.	cost center.
		d.	investment center.

	74.	Which of the following is not a correct match?
			1.	Incurs costs
			2.	Generates revenue
			3.	Controls investment funds
		a.	Investment Center	1, 2, 3
		b.	Cost Center	1
		c.	Profit Center	1, 2, 3
		d.	All are correct matches.
	75.	A cost center
		a.	only incurs costs and does not directly generate revenues.
		b.	incurs costs and generates revenues.
		c.	is a responsibility center of a company which incurs losses.
	d.	is a responsibility center which generates profits and evaluates the investment cost of earning the profit.

	76.	A manager of a cost center is evaluated mainly on
		a.	the profit that the center generates.
		b.	his or her ability to control costs.
		c.	the amount of investment it takes to support the cost center.
		d.	the amount of revenue that can be generated.

	77.	Performance reports for cost centers compare actual
		a.	total costs with static budget data.
		b.	total costs with flexible budget data.
		c.	controllable costs with static budget data.
		d.	controllable costs with flexible budget data.

	78.	In the performance report for cost centers,
		a.	controllable and noncontrollable costs are reported.
		b.	fixed costs are not reported.
		c.	no distinction is made between fixed and variable costs.
		d.	only material and controllable costs are reported.

	79.	Of the following choices, which contain both a traceable fixed cost and a common fixed cost?
a.	Profit center manager's salary and timekeeping costs for a responsibility center's employees.
b.	Company president's salary and company personnel department costs.
c.	Company personnel department costs and timekeeping costs for a responsibility center's employees.
d.	Depreciation on a responsibility center's equipment and supervisory salaries for the center.

	80.	Which of the following is not an indirect fixed cost?
		a.	Company president's salary
		b.	Depreciation on the company building housing several profit centers
		c.	Company personnel department costs
		d.	Profit center supervisory salaries

	81.	All of the following statements about a responsibility report are correct except that
		a.	only controllable costs are included.
		b.	it compares actual costs with flexible budget data.
		c.	a distinction is made between variable and fixed costs.
		d.	it continues the concept of management by exception.

	82.	The best measure of the performance of the manager of a profit center is the
		a.	rate of return on investment.
		b.	success in meeting budgeted goals for controllable costs.
		c.	amount of controllable margin generated by the profit center.
		d.	amount of contribution margin generated by the profit center.
	83.	Controllable margin is defined as
		a.	sales minus variable costs.
		b.	sales minus contribution margin.
		c.	contribution margin less controllable fixed costs.
		d.	contribution margin less noncontrollable fixed costs.

	84.	Controllable margin is most useful for
		a.	external financial reporting.
		b.	preparing the master budget.
		c.	performance evaluation of profit centers.
		d.	break-even analysis.

	85.	Which of the following will not result in an unfavorable controllable margin difference?
		a.	Sales exceeding budget; costs under budget
		b.	Sales exceeding budget; costs over budget
		c.	Sales under budget; costs under budget
		d.	Sales under budget; costs over budget

	86.	Given below is an excerpt from a management performance report:
				   Budget		    Actual		Difference
			Contribution margin	$1,000,000	$1,050,000	$50,000
			Controllable fixed costs	$   500,000	$   450,000	$50,000
		The manager's overall performance
		a.	is 20% below expectations.
		b.	is 20% above expectations.
		c.	is equal to expectations.
		d.	cannot be determined from information given.

	87.	Which of the following are financial measures of performance?
			1.	Controllable margin
			2.	Product quality
			3.	Labor productivity
		a.	1
		b.	2
		c.	3
		d.	1 and 3

	88.	Given below is an excerpt from a management performance report:
				  Budget		  Actual		Difference
		Contribution margin	$600,000	$580,000	$20,000  U
		Controllable fixed costs	$200,000	$220,000	$20,000  U
		The manager's overall performance
		a.	is 10% above expectations.
		b.	is 10% below expectations.
		c.	is equal to expectations.
		d.	cannot be determined from the information provided.

 
	89.	A responsibility report for a profit center will
		a.	not show controllable fixed costs.
		b.	not show indirect fixed costs.
		c.	show noncontrollable fixed costs.
		d.	not show cumulative year-to-date results.

	90.	The dollar amount of the controllable margin
		a.	is usually higher than the contribution margin.
		b.	is usually lower than the contribution margin.
		c.	is always equal to the contribution margin.
		d.	cannot be a negative figure.