Deck 11: Reporting for Control

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Question
What were the total variable expenses in Store K?

A) $70,000.
B) $110,000.
C) $130,000.
D) $200,000.
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Question
In computing the margin in a ROI analysis,which of the following is used?

A) Sales in the denominator.
B) Operating income in the denominator.
C) Average operating assets in the denominator.
D) Residual income in the denominator.
Question
Which of the following is NOT an operating asset?

A) Cash.
B) Inventory.
C) Plant equipment.
D) Common shares.
Question
What were the total sales in Store J?

A) $100,000.
B) $150,000.
C) $250,000.
D) $400,000.
Question
Assuming that sales and operating income remain the same,which of the following statements about a company's return on investment is correct?

A) It will increase if operating assets increase.
B) It will decrease if operating assets decrease.
C) It will decrease if turnover decreases.
D) It will decrease if turnover increases.
Question
All other things being equal,which of the following is a consequence of an increase in a division's traceable fixed expenses?

A) The division's contribution margin ratio will decrease.
B) The division's segment margin ratio will remain the same.
C) The division's segment margin will decrease.
D) The overall company operating income will remain the same.
Question
All other things equal,a company's return on investment is affected by a change in which of the following? <strong>All other things equal,a company's return on investment is affected by a change in which of the following?  </strong> A) Option A B) Option B C) Option C D) Option D <div style=padding-top: 35px>

A) Option A
B) Option B
C) Option C
D) Option D
Question
What were Ieso Company's total fixed expenses for the year?

A) $40,000.
B) $100,000.
C) $140,000.
D) $170,000.
Question
During April,Division D of Carney Company had a segment margin ratio of 15%,a variable expense ratio of 60% of sales,and traceable fixed expenses of $15,000.Division D's sales were closest to which of the following?

A) $22,500.
B) $33,333.
C) $60,000.
D) $100,000.
Question
Which of the following is the numerator in the calculation of the turnover component of ROI?

A) Invested capital.
B) Total assets.
C) Operating income.
D) Sales.
Question
Which of the following statements provide(s)an argument in favour of including only a plant's net book value rather than gross book value as part of operating assets in the ROI computation?
I)Net book value is consistent with how plant and equipment items are reported on a balance sheet.
II)Net book value is consistent with the computation of operating income,which includes amortization as an operating expense.
III)Net book value allows ROI to decrease over time as assets get older.

A) I only.
B) III only.
C) I and II only.
D) I and III only.
Question
Which of the following is a correct definition of operating income?

A) Sales minus variable expenses.
B) Sales minus variable expenses and traceable fixed expenses.
C) Contribution margin minus traceable and common fixed expenses.
D) Income before interest and taxes (EBIT).
Question
What were the total fixed costs (traceable and common)for Canon Company for the year?

A) $24,000.
B) $25,000.
C) $49,000.
D) $50,000.
Question
All other things equal,which of the following events would generally cause an increase in a company's return on investment (ROI)?

A) An increase in average operating assets.
B) A decrease in sales.
C) A decrease in operating expenses.
D) An increase in operating expenses.
Question
What was the segment margin ratio in Store J?

A) 16%.
B) 24%.
C) 40%.
D) 60%.
Question
Divisions A and B of Denner Company reported the following results for October: <strong>Divisions A and B of Denner Company reported the following results for October:   If common fixed expenses were $31,000,what were the total fixed expenses?</strong> A) $31,000. B) $52,000. C) $62,000. D) $93,000. <div style=padding-top: 35px>
If common fixed expenses were $31,000,what were the total fixed expenses?

A) $31,000.
B) $52,000.
C) $62,000.
D) $93,000.
Question
More Company has two divisions: L and M.During July,the contribution margin in Division L was $60,000.The contribution margin ratio in Division M was 40%,and its sales were $250,000.Division M's segment margin was $60,000.The common fixed expenses were $50,000,and the company operating income was $20,000.What was the segment margin for Division L?

A) $0.
B) $10,000.
C) $50,000.
D) $60,000.
Question
How is a company's return on investment calculated?

A) Dividing the margin by the turnover.
B) Multiplying the margin by the turnover.
C) Dividing the turnover by the average operating assets.
D) Multiplying the turnover by the average operating assets.
Question
What were the variable costs for the South area for the year?

A) $65,000.
B) $162,500.
C) $185,000.
D) $230,000.
Question
What would be a good example of a common cost that normally could NOT be assigned to products on a segmented income statement except on an arbitrary basis?

A) Product advertising outlays.
B) Salary of a corporation president.
C) Direct materials.
D) The product manager's salary.
Question
(Appendix 11A)Which of the following would be classified as an appraisal cost on a quality cost report?

A) Supervision of testing and inspection activities.
B) Systems development.
C) Quality engineering.
D) Quality training.
Question
(Appendix 11A)Which of the following would be classified as a prevention cost on a quality cost report?

A) Cost of field servicing and handling complaints.
B) Warranty repairs and replacements.
C) Systems development.
D) Rework labour and overheaD.
Question
(Appendix 11A)What allocation method recognizes that service departments often provide each other with interdepartmental services,and it is therefore considered to be the most accurate method for allocating service department costs to operating departments?

A) The direct method.
B) The step-down method.
C) The reciprocal method.
D) The allocation by cost behaviour methoD.
Question
(Appendix 11A)Grant Company has several service departments that provide services to each other as well as to operating departments within the company.Which method would be least accurate in allocating the company's service department costs?

A) The sequential method.
B) The direct method.
C) The step-down method.
D) The reciprocal methoD.
Question
(Appendix 11A)Which of the following would be classified as a prevention cost on a quality cost report?

A) Re-entering data because of keying errors.
B) Rework labour and overhead.
C) Net cost of scrap.
D) Technical support provided to suppliers.
Question
Suppose a manager's performance is to be evaluated by residual income.Which of the following will NOT result in an increase in the residual income figure for this manager,assuming other factors remain constant?

A) An increase in sales.
B) An increase in the minimum required rate of return.
C) A decrease in expenses.
D) A decrease in operating assets.
Question
(Appendix 11A)An increase in appraisal costs will usually result in an increase in which of the following?

A) Prevention costs.
B) Internal failure costs.
C) External failure costs.
D) Opportunity costs.
Question
(Appendix 11A)When the selling division in an internal transfer has unsatisfied demand from outside customers for the product that is being transferred,what is the lowest acceptable transfer price as far as the selling division is concerned?

A) Variable cost of producing a unit of product.
B) The full absorption cost of producing a unit of product.
C) The market price charged to outside customers,less any costs saved by transferring internally.
D) The amount that the purchasing division would have to pay an outside seller to acquire a similar product for its use.
Question
(Appendix 11A)Parker Company has two service departments-cafeteria and engineering-and two operating departments.The number of employees in each department is given below: <strong>(Appendix 11A)Parker Company has two service departments-cafeteria and engineering-and two operating departments.The number of employees in each department is given below:   The costs of the Cafeteria are allocated to other departments on the basis of the number of employees in the departments.If these costs are budgeted at $69,375,what would be the amount of cost allocated to Engineering under the direct method?</strong> A) $0. B) $3,700. C) $3,750. D) $17,344. <div style=padding-top: 35px>
The costs of the Cafeteria are allocated to other departments on the basis of the number of employees in the departments.If these costs are budgeted at $69,375,what would be the amount of cost allocated to Engineering under the direct method?

A) $0.
B) $3,700.
C) $3,750.
D) $17,344.
Question
Effective decentralization is essential for which of the following management accounting practices in organizations?

A) Break-even analysis.
B) Product costing.
C) Segment reporting.
D) Activity-based costing.
Question
(Appendix 11A)Which of the following statements about quality costs is correct?

A) They relate only to the manufacturing process.
B) They should be focused on appraisal activities.
C) They are minimized by having a team of well-trained quality control inspectors.
D) They cut across departmental lines and often are not accumulated and reported to management.
Question
(Appendix 11A)Which of the following statements about reciprocal service department costs is correct?

A) They are allocated to producing departments under the direct method but not allocated to producing departments at all under the step-down method.
B) They are allocated to producing departments under the step-down method but not allocated to producing departments at all under the direct method.
C) They are not allocated to producing departments under either the direct or the step-down methods.
D) They are allocated to producing departments under both the direct and step-down methods.
Question
Delmar Corporation is considering the use of residual income as a measure of the performance of its divisions.What major disadvantage of this method should the company consider before deciding to institute it?

A) This method does not make allowance for difference in the size of compared divisions.
B) Opportunities may be undertaken that will decrease the overall return on investment.
C) The minimum required rate of return may eliminate desirable opportunities from consideration.
D) Residual income does not measure how effectively the division manager controls costs.
Question
The performance of the manager of Division A is evaluated by residual income.Which of the following would improve the manager's performance?

A) Increase in average operating assets.
B) Decrease in average operating assets.
C) Increase in minimum required return.
D) Decrease in operating income.
Question
(Appendix 11A)Boa Corp.uses the direct method to allocate service department overhead costs to operating departments.Information for the month of June follows: <strong>(Appendix 11A)Boa Corp.uses the direct method to allocate service department overhead costs to operating departments.Information for the month of June follows:   What would be the amount of maintenance department costs allocated to Operating Department A for June?</strong> A) $8,000. B) $8,800. C) $10,000. D) $20,000. <div style=padding-top: 35px>
What would be the amount of maintenance department costs allocated to Operating Department A for June?

A) $8,000.
B) $8,800.
C) $10,000.
D) $20,000.
Question
(Appendix 11A)Which of the following would be classified as a prevention cost on a quality cost report?

A) Lost sales arising from a reputation for poor quality.
B) Final product testing and inspection.
C) Net cost of spoilage.
D) Quality data gathering,analysis,and reporting.
Question
(Appendix 11A)Which of the following statements about the step-down method of allocating service department is correct?

A) It is a less accurate method of allocation than the direct method.
B) It cannot be used when a company has more than two service departments.
C) It is a simpler allocation than the direct method.
D) It ignores some interdepartmental services.
Question
(Appendix 11A)Which of the following would be classified as an appraisal cost on a quality cost report?

A) Returns and allowances arising from quality problems.
B) Downtime caused by quality problems.
C) Test and inspection of in-process goods.
D) Cost of field servicing and handling complaints.
Question
Consider the following three statements:
I)A profit centre has control over both cost and revenue.
II)An investment centre has control over invested funds,but not over costs and revenue.
III)A cost centre has no control over sales.
Which statement(s)is/are correct?

A) I only.
B) II only.
C) I and III only.
D) I and II only.
Question
Which of the following best describes a segment of a business responsible for both revenues and costs?

A) A cost centre.
B) An investment centre.
C) A profit centre.
D) A residual income centre.
Question
(Appendix 11A)What will be the total appraisal cost appearing on the quality cost report?

A) $128,000.
B) $165,000.
C) $185,000.
D) $196,000.
Question
(Appendix 11A)What will be the total external failure cost appearing on the quality cost report?

A) $54,000.
B) $95,000.
C) $175,000.
D) $328,000.
Question
(Appendix 11A)Which of the following would be classified as an appraisal cost on a quality cost report?

A) Quality circles.
B) Downtime caused by quality problems.
C) Supplies used in testing and inspection.
D) Quality engineering.
Question
(Appendix 11A)What will be the total external failure cost appearing on the quality cost report?

A) $119,000.
B) $143,000.
C) $277,000.
D) $628,000.
Question
(Appendix 11A)What will be the total prevention cost appearing on the quality cost report?

A) $102,000.
B) $112,000.
C) $130,000.
D) $167,000.
Question
(Appendix 11A)What will be the total internal failure cost appearing on the quality cost report?

A) $134,000.
B) $143,000.
C) $150,000.
D) $158,000.
Question
(Appendix 11A)What will be the total prevention cost appearing on the quality cost report?

A) $103,000.
B) $145,000.
C) $151,000.
D) $155,000.
Question
(Appendix 11A)What will be the total appraisal cost appearing on the quality cost report?

A) $75,000.
B) $92,000.
C) $102,000.
D) $112,000.
Question
(Appendix 11A)Which of the following would be classified as an external failure cost on a quality cost report?

A) Quality training.
B) Systems development.
C) Repairs and replacements beyond the warranty period.
D) Quality engineering.
Question
(Appendix 11A)What will be the total internal failure cost appearing on the quality cost report?

A) $54,000.
B) $75,000.
C) $80,000.
D) $121,000.
Question
(Appendix 11A)Which of the following would be classified as an external failure cost on a quality cost report?

A) Amortization of test equipment.
B) Test and inspection of in-process goods.
C) Test and inspection of incoming materials.
D) Warranty repairs and replacements.
Question
(Appendix 11A)Which of the following would be classified as an internal failure cost on a quality cost report?

A) Supplies used in testing and inspection.
B) Final product testing and inspection.
C) Net cost of scrap.
D) Amortization of test equipment.
Question
(Appendix 11A)What will be the total internal failure cost appearing on the quality cost report?

A) $64,000.
B) $113,000.
C) $121,000.
D) $124,000.
Question
(Appendix 11A)What will be the total prevention cost appearing on the quality cost report?

A) $43,000.
B) $45,000.
C) $47,000.
D) $51,000.
Question
(Appendix 11A)What will be the total appraisal cost appearing on the quality cost report?

A) $70,000.
B) $97,000.
C) $110,000.
D) $119,000.
Question
(Appendix 11A)What will be the total external failure cost appearing on the quality cost report?

A) $124,000.
B) $132,000.
C) $245,000.
D) $524,000.
Question
(Appendix 11A)Which of the following would be classified as an internal failure cost on a quality cost report?

A) Rework labour and overhead.
B) Technical support provided to suppliers.
C) Quality improvement projects.
D) Systems development.
Question
(Appendix 11A)What will be the total prevention cost appearing on the quality cost report?

A) $69,000.
B) $139,000.
C) $148,000.
D) $178,000.
Question
(Appendix 11A)Which of the following would be classified as an internal failure cost on a quality cost report?

A) Re-entering data because of keying errors.
B) Final product testing and inspection.
C) Supplies used in testing and inspection.
D) Amortization of test equipment.
Question
(Appendix 11A)Which of the following would be classified as an external failure cost on a quality cost report?

A) Product recalls.
B) Quality engineering.
C) Quality training.
D) Systems development.
Question
(Appendix 11A)What will be the total internal failure cost appearing on the quality cost report?

A) $99,000.
B) $102,000.
C) $158,000.
D) $211,000.
Question
(Appendix 11A)Assume that the company uses the step-down method of allocating Service Department costs to Operating Departments,and Building and Grounds costs are allocated first.How much Personnel Department cost would be allocated to Operating Department B?

A) $0.
B) $107,368.
C) $107,590.
D) $112,970.
Question
(Appendix 11A)What will be the total appraisal cost appearing on the quality cost report?

A) $99,000.
B) $155,000.
C) $170,000.
D) $197,000.
Question
(Appendix 11A)What will be the total appraisal cost appearing on the quality cost report?

A) $102,000.
B) $108,000.
C) $121,000.
D) $247,000.
Question
(Appendix 11A)What will be the total external failure cost appearing on the quality cost report?

A) $59,000.
B) $79,000.
C) $22,000.
D) $403,000.
Question
(Appendix 11A)What will be the total external failure cost appearing on the quality cost report?

A) $75,000.
B) $109,000.
C) $286,000.
D) $533,000.
Question
(Appendix 11A)Assume that the company uses the direct method of allocating Service Department costs to Operating Departments.How much Building & Grounds cost would be allocated to Operating Department A?

A) $20,903.
B) $21,600.
C) $24,000.
D) $29,700.
Question
(Appendix 11A)Assume again that the company uses the step-down method.What would be the total amount of cost allocated from the two Service Departments to the Operating Departments for the year?

A) $254,000.
B) $850,000.
C) $1,450,000.
D) $1,704,000.
Question
(Appendix 11A)What will be the total external failure cost appearing on the quality cost report?

A) $100,000.
B) $126,000.
C) $373,000.
D) $570,000.
Question
(Appendix 11A)What will be the total prevention cost appearing on the quality cost report?

A) $41,000.
B) $103,000.
C) $107,000.
D) $140,000.
Question
(Appendix 11A)What will be the total prevention cost appearing on the quality cost report?

A) $64,000.
B) $73,000.
C) $78,000.
D) $93,000.
Question
(Appendix 11A)Assume that the company uses the step-down method of allocating Service Department costs to Operating Departments,and Building and Grounds costs are allocated first.How much Personnel Department cost would be allocated to Operating Department A?

A) $0.
B) $90,000.
C) $92,430.
D) $205,400.
Question
The following data are available for the South Division of Redride Products,Inc.and the single product it makes: <strong>The following data are available for the South Division of Redride Products,Inc.and the single product it makes:   How many units must South sell each year to have an ROI of 16%?</strong> A) 52,000 units. B) 65,000 units. C) 240,000 units. D) 1,300,000 units.Note: Students will need to have an understanding of CVP analysis from chapter 4. <div style=padding-top: 35px>
How many units must South sell each year to have an ROI of 16%?

A) 52,000 units.
B) 65,000 units.
C) 240,000 units.
D) 1,300,000 units.Note: Students will need to have an understanding of CVP analysis from chapter 4.
Question
(Appendix 11A)What will be the total internal failure cost appearing on the quality cost report?

A) $104,000.
B) $147,000.
C) $166,000.
D) $247,000.
Question
(Appendix 11A)What will be the total appraisal cost appearing on the quality cost report?

A) $79,000.
B) $127,000.
C) $140,000.
D) $157,000.
Question
(Appendix 11A)What will be the total prevention cost appearing on the quality cost report?

A) $84,000.
B) $92,000.
C) $98,000.
D) $113,000.
Question
(Appendix 11A)What will be the total appraisal cost appearing on the quality cost report?

A) $74,000.
B) $78,000.
C) $81,000.
D) $181,000.
Question
(Appendix 11A)What will be the total internal failure cost appearing on the quality cost report?

A) $71,000.
B) $74,000.
C) $132,000.
D) $163,000.
Question
(Appendix 11A)What will be the total external failure cost appearing on the quality cost report?

A) $80,000.
B) $107,000.
C) $324,000.
D) $481,000.
Question
(Appendix 11A)What will be the total internal failure cost appearing on the quality cost report?

A) $85,000.
B) $127,000.
C) $146,000.
D) $217,000.
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Deck 11: Reporting for Control
1
What were the total variable expenses in Store K?

A) $70,000.
B) $110,000.
C) $130,000.
D) $200,000.
C
2
In computing the margin in a ROI analysis,which of the following is used?

A) Sales in the denominator.
B) Operating income in the denominator.
C) Average operating assets in the denominator.
D) Residual income in the denominator.
A
3
Which of the following is NOT an operating asset?

A) Cash.
B) Inventory.
C) Plant equipment.
D) Common shares.
D
4
What were the total sales in Store J?

A) $100,000.
B) $150,000.
C) $250,000.
D) $400,000.
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5
Assuming that sales and operating income remain the same,which of the following statements about a company's return on investment is correct?

A) It will increase if operating assets increase.
B) It will decrease if operating assets decrease.
C) It will decrease if turnover decreases.
D) It will decrease if turnover increases.
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6
All other things being equal,which of the following is a consequence of an increase in a division's traceable fixed expenses?

A) The division's contribution margin ratio will decrease.
B) The division's segment margin ratio will remain the same.
C) The division's segment margin will decrease.
D) The overall company operating income will remain the same.
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7
All other things equal,a company's return on investment is affected by a change in which of the following? <strong>All other things equal,a company's return on investment is affected by a change in which of the following?  </strong> A) Option A B) Option B C) Option C D) Option D

A) Option A
B) Option B
C) Option C
D) Option D
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8
What were Ieso Company's total fixed expenses for the year?

A) $40,000.
B) $100,000.
C) $140,000.
D) $170,000.
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9
During April,Division D of Carney Company had a segment margin ratio of 15%,a variable expense ratio of 60% of sales,and traceable fixed expenses of $15,000.Division D's sales were closest to which of the following?

A) $22,500.
B) $33,333.
C) $60,000.
D) $100,000.
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10
Which of the following is the numerator in the calculation of the turnover component of ROI?

A) Invested capital.
B) Total assets.
C) Operating income.
D) Sales.
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11
Which of the following statements provide(s)an argument in favour of including only a plant's net book value rather than gross book value as part of operating assets in the ROI computation?
I)Net book value is consistent with how plant and equipment items are reported on a balance sheet.
II)Net book value is consistent with the computation of operating income,which includes amortization as an operating expense.
III)Net book value allows ROI to decrease over time as assets get older.

A) I only.
B) III only.
C) I and II only.
D) I and III only.
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12
Which of the following is a correct definition of operating income?

A) Sales minus variable expenses.
B) Sales minus variable expenses and traceable fixed expenses.
C) Contribution margin minus traceable and common fixed expenses.
D) Income before interest and taxes (EBIT).
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13
What were the total fixed costs (traceable and common)for Canon Company for the year?

A) $24,000.
B) $25,000.
C) $49,000.
D) $50,000.
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14
All other things equal,which of the following events would generally cause an increase in a company's return on investment (ROI)?

A) An increase in average operating assets.
B) A decrease in sales.
C) A decrease in operating expenses.
D) An increase in operating expenses.
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15
What was the segment margin ratio in Store J?

A) 16%.
B) 24%.
C) 40%.
D) 60%.
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16
Divisions A and B of Denner Company reported the following results for October: <strong>Divisions A and B of Denner Company reported the following results for October:   If common fixed expenses were $31,000,what were the total fixed expenses?</strong> A) $31,000. B) $52,000. C) $62,000. D) $93,000.
If common fixed expenses were $31,000,what were the total fixed expenses?

A) $31,000.
B) $52,000.
C) $62,000.
D) $93,000.
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17
More Company has two divisions: L and M.During July,the contribution margin in Division L was $60,000.The contribution margin ratio in Division M was 40%,and its sales were $250,000.Division M's segment margin was $60,000.The common fixed expenses were $50,000,and the company operating income was $20,000.What was the segment margin for Division L?

A) $0.
B) $10,000.
C) $50,000.
D) $60,000.
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18
How is a company's return on investment calculated?

A) Dividing the margin by the turnover.
B) Multiplying the margin by the turnover.
C) Dividing the turnover by the average operating assets.
D) Multiplying the turnover by the average operating assets.
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19
What were the variable costs for the South area for the year?

A) $65,000.
B) $162,500.
C) $185,000.
D) $230,000.
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20
What would be a good example of a common cost that normally could NOT be assigned to products on a segmented income statement except on an arbitrary basis?

A) Product advertising outlays.
B) Salary of a corporation president.
C) Direct materials.
D) The product manager's salary.
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21
(Appendix 11A)Which of the following would be classified as an appraisal cost on a quality cost report?

A) Supervision of testing and inspection activities.
B) Systems development.
C) Quality engineering.
D) Quality training.
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22
(Appendix 11A)Which of the following would be classified as a prevention cost on a quality cost report?

A) Cost of field servicing and handling complaints.
B) Warranty repairs and replacements.
C) Systems development.
D) Rework labour and overheaD.
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23
(Appendix 11A)What allocation method recognizes that service departments often provide each other with interdepartmental services,and it is therefore considered to be the most accurate method for allocating service department costs to operating departments?

A) The direct method.
B) The step-down method.
C) The reciprocal method.
D) The allocation by cost behaviour methoD.
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24
(Appendix 11A)Grant Company has several service departments that provide services to each other as well as to operating departments within the company.Which method would be least accurate in allocating the company's service department costs?

A) The sequential method.
B) The direct method.
C) The step-down method.
D) The reciprocal methoD.
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25
(Appendix 11A)Which of the following would be classified as a prevention cost on a quality cost report?

A) Re-entering data because of keying errors.
B) Rework labour and overhead.
C) Net cost of scrap.
D) Technical support provided to suppliers.
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26
Suppose a manager's performance is to be evaluated by residual income.Which of the following will NOT result in an increase in the residual income figure for this manager,assuming other factors remain constant?

A) An increase in sales.
B) An increase in the minimum required rate of return.
C) A decrease in expenses.
D) A decrease in operating assets.
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27
(Appendix 11A)An increase in appraisal costs will usually result in an increase in which of the following?

A) Prevention costs.
B) Internal failure costs.
C) External failure costs.
D) Opportunity costs.
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28
(Appendix 11A)When the selling division in an internal transfer has unsatisfied demand from outside customers for the product that is being transferred,what is the lowest acceptable transfer price as far as the selling division is concerned?

A) Variable cost of producing a unit of product.
B) The full absorption cost of producing a unit of product.
C) The market price charged to outside customers,less any costs saved by transferring internally.
D) The amount that the purchasing division would have to pay an outside seller to acquire a similar product for its use.
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29
(Appendix 11A)Parker Company has two service departments-cafeteria and engineering-and two operating departments.The number of employees in each department is given below: <strong>(Appendix 11A)Parker Company has two service departments-cafeteria and engineering-and two operating departments.The number of employees in each department is given below:   The costs of the Cafeteria are allocated to other departments on the basis of the number of employees in the departments.If these costs are budgeted at $69,375,what would be the amount of cost allocated to Engineering under the direct method?</strong> A) $0. B) $3,700. C) $3,750. D) $17,344.
The costs of the Cafeteria are allocated to other departments on the basis of the number of employees in the departments.If these costs are budgeted at $69,375,what would be the amount of cost allocated to Engineering under the direct method?

A) $0.
B) $3,700.
C) $3,750.
D) $17,344.
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30
Effective decentralization is essential for which of the following management accounting practices in organizations?

A) Break-even analysis.
B) Product costing.
C) Segment reporting.
D) Activity-based costing.
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31
(Appendix 11A)Which of the following statements about quality costs is correct?

A) They relate only to the manufacturing process.
B) They should be focused on appraisal activities.
C) They are minimized by having a team of well-trained quality control inspectors.
D) They cut across departmental lines and often are not accumulated and reported to management.
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32
(Appendix 11A)Which of the following statements about reciprocal service department costs is correct?

A) They are allocated to producing departments under the direct method but not allocated to producing departments at all under the step-down method.
B) They are allocated to producing departments under the step-down method but not allocated to producing departments at all under the direct method.
C) They are not allocated to producing departments under either the direct or the step-down methods.
D) They are allocated to producing departments under both the direct and step-down methods.
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33
Delmar Corporation is considering the use of residual income as a measure of the performance of its divisions.What major disadvantage of this method should the company consider before deciding to institute it?

A) This method does not make allowance for difference in the size of compared divisions.
B) Opportunities may be undertaken that will decrease the overall return on investment.
C) The minimum required rate of return may eliminate desirable opportunities from consideration.
D) Residual income does not measure how effectively the division manager controls costs.
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34
The performance of the manager of Division A is evaluated by residual income.Which of the following would improve the manager's performance?

A) Increase in average operating assets.
B) Decrease in average operating assets.
C) Increase in minimum required return.
D) Decrease in operating income.
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35
(Appendix 11A)Boa Corp.uses the direct method to allocate service department overhead costs to operating departments.Information for the month of June follows: <strong>(Appendix 11A)Boa Corp.uses the direct method to allocate service department overhead costs to operating departments.Information for the month of June follows:   What would be the amount of maintenance department costs allocated to Operating Department A for June?</strong> A) $8,000. B) $8,800. C) $10,000. D) $20,000.
What would be the amount of maintenance department costs allocated to Operating Department A for June?

A) $8,000.
B) $8,800.
C) $10,000.
D) $20,000.
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36
(Appendix 11A)Which of the following would be classified as a prevention cost on a quality cost report?

A) Lost sales arising from a reputation for poor quality.
B) Final product testing and inspection.
C) Net cost of spoilage.
D) Quality data gathering,analysis,and reporting.
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37
(Appendix 11A)Which of the following statements about the step-down method of allocating service department is correct?

A) It is a less accurate method of allocation than the direct method.
B) It cannot be used when a company has more than two service departments.
C) It is a simpler allocation than the direct method.
D) It ignores some interdepartmental services.
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38
(Appendix 11A)Which of the following would be classified as an appraisal cost on a quality cost report?

A) Returns and allowances arising from quality problems.
B) Downtime caused by quality problems.
C) Test and inspection of in-process goods.
D) Cost of field servicing and handling complaints.
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39
Consider the following three statements:
I)A profit centre has control over both cost and revenue.
II)An investment centre has control over invested funds,but not over costs and revenue.
III)A cost centre has no control over sales.
Which statement(s)is/are correct?

A) I only.
B) II only.
C) I and III only.
D) I and II only.
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40
Which of the following best describes a segment of a business responsible for both revenues and costs?

A) A cost centre.
B) An investment centre.
C) A profit centre.
D) A residual income centre.
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41
(Appendix 11A)What will be the total appraisal cost appearing on the quality cost report?

A) $128,000.
B) $165,000.
C) $185,000.
D) $196,000.
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42
(Appendix 11A)What will be the total external failure cost appearing on the quality cost report?

A) $54,000.
B) $95,000.
C) $175,000.
D) $328,000.
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43
(Appendix 11A)Which of the following would be classified as an appraisal cost on a quality cost report?

A) Quality circles.
B) Downtime caused by quality problems.
C) Supplies used in testing and inspection.
D) Quality engineering.
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44
(Appendix 11A)What will be the total external failure cost appearing on the quality cost report?

A) $119,000.
B) $143,000.
C) $277,000.
D) $628,000.
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45
(Appendix 11A)What will be the total prevention cost appearing on the quality cost report?

A) $102,000.
B) $112,000.
C) $130,000.
D) $167,000.
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46
(Appendix 11A)What will be the total internal failure cost appearing on the quality cost report?

A) $134,000.
B) $143,000.
C) $150,000.
D) $158,000.
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47
(Appendix 11A)What will be the total prevention cost appearing on the quality cost report?

A) $103,000.
B) $145,000.
C) $151,000.
D) $155,000.
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48
(Appendix 11A)What will be the total appraisal cost appearing on the quality cost report?

A) $75,000.
B) $92,000.
C) $102,000.
D) $112,000.
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49
(Appendix 11A)Which of the following would be classified as an external failure cost on a quality cost report?

A) Quality training.
B) Systems development.
C) Repairs and replacements beyond the warranty period.
D) Quality engineering.
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50
(Appendix 11A)What will be the total internal failure cost appearing on the quality cost report?

A) $54,000.
B) $75,000.
C) $80,000.
D) $121,000.
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51
(Appendix 11A)Which of the following would be classified as an external failure cost on a quality cost report?

A) Amortization of test equipment.
B) Test and inspection of in-process goods.
C) Test and inspection of incoming materials.
D) Warranty repairs and replacements.
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52
(Appendix 11A)Which of the following would be classified as an internal failure cost on a quality cost report?

A) Supplies used in testing and inspection.
B) Final product testing and inspection.
C) Net cost of scrap.
D) Amortization of test equipment.
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53
(Appendix 11A)What will be the total internal failure cost appearing on the quality cost report?

A) $64,000.
B) $113,000.
C) $121,000.
D) $124,000.
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54
(Appendix 11A)What will be the total prevention cost appearing on the quality cost report?

A) $43,000.
B) $45,000.
C) $47,000.
D) $51,000.
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55
(Appendix 11A)What will be the total appraisal cost appearing on the quality cost report?

A) $70,000.
B) $97,000.
C) $110,000.
D) $119,000.
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56
(Appendix 11A)What will be the total external failure cost appearing on the quality cost report?

A) $124,000.
B) $132,000.
C) $245,000.
D) $524,000.
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57
(Appendix 11A)Which of the following would be classified as an internal failure cost on a quality cost report?

A) Rework labour and overhead.
B) Technical support provided to suppliers.
C) Quality improvement projects.
D) Systems development.
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58
(Appendix 11A)What will be the total prevention cost appearing on the quality cost report?

A) $69,000.
B) $139,000.
C) $148,000.
D) $178,000.
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59
(Appendix 11A)Which of the following would be classified as an internal failure cost on a quality cost report?

A) Re-entering data because of keying errors.
B) Final product testing and inspection.
C) Supplies used in testing and inspection.
D) Amortization of test equipment.
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60
(Appendix 11A)Which of the following would be classified as an external failure cost on a quality cost report?

A) Product recalls.
B) Quality engineering.
C) Quality training.
D) Systems development.
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61
(Appendix 11A)What will be the total internal failure cost appearing on the quality cost report?

A) $99,000.
B) $102,000.
C) $158,000.
D) $211,000.
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62
(Appendix 11A)Assume that the company uses the step-down method of allocating Service Department costs to Operating Departments,and Building and Grounds costs are allocated first.How much Personnel Department cost would be allocated to Operating Department B?

A) $0.
B) $107,368.
C) $107,590.
D) $112,970.
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63
(Appendix 11A)What will be the total appraisal cost appearing on the quality cost report?

A) $99,000.
B) $155,000.
C) $170,000.
D) $197,000.
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64
(Appendix 11A)What will be the total appraisal cost appearing on the quality cost report?

A) $102,000.
B) $108,000.
C) $121,000.
D) $247,000.
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65
(Appendix 11A)What will be the total external failure cost appearing on the quality cost report?

A) $59,000.
B) $79,000.
C) $22,000.
D) $403,000.
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66
(Appendix 11A)What will be the total external failure cost appearing on the quality cost report?

A) $75,000.
B) $109,000.
C) $286,000.
D) $533,000.
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67
(Appendix 11A)Assume that the company uses the direct method of allocating Service Department costs to Operating Departments.How much Building & Grounds cost would be allocated to Operating Department A?

A) $20,903.
B) $21,600.
C) $24,000.
D) $29,700.
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68
(Appendix 11A)Assume again that the company uses the step-down method.What would be the total amount of cost allocated from the two Service Departments to the Operating Departments for the year?

A) $254,000.
B) $850,000.
C) $1,450,000.
D) $1,704,000.
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69
(Appendix 11A)What will be the total external failure cost appearing on the quality cost report?

A) $100,000.
B) $126,000.
C) $373,000.
D) $570,000.
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70
(Appendix 11A)What will be the total prevention cost appearing on the quality cost report?

A) $41,000.
B) $103,000.
C) $107,000.
D) $140,000.
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71
(Appendix 11A)What will be the total prevention cost appearing on the quality cost report?

A) $64,000.
B) $73,000.
C) $78,000.
D) $93,000.
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72
(Appendix 11A)Assume that the company uses the step-down method of allocating Service Department costs to Operating Departments,and Building and Grounds costs are allocated first.How much Personnel Department cost would be allocated to Operating Department A?

A) $0.
B) $90,000.
C) $92,430.
D) $205,400.
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73
The following data are available for the South Division of Redride Products,Inc.and the single product it makes: <strong>The following data are available for the South Division of Redride Products,Inc.and the single product it makes:   How many units must South sell each year to have an ROI of 16%?</strong> A) 52,000 units. B) 65,000 units. C) 240,000 units. D) 1,300,000 units.Note: Students will need to have an understanding of CVP analysis from chapter 4.
How many units must South sell each year to have an ROI of 16%?

A) 52,000 units.
B) 65,000 units.
C) 240,000 units.
D) 1,300,000 units.Note: Students will need to have an understanding of CVP analysis from chapter 4.
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74
(Appendix 11A)What will be the total internal failure cost appearing on the quality cost report?

A) $104,000.
B) $147,000.
C) $166,000.
D) $247,000.
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75
(Appendix 11A)What will be the total appraisal cost appearing on the quality cost report?

A) $79,000.
B) $127,000.
C) $140,000.
D) $157,000.
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76
(Appendix 11A)What will be the total prevention cost appearing on the quality cost report?

A) $84,000.
B) $92,000.
C) $98,000.
D) $113,000.
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77
(Appendix 11A)What will be the total appraisal cost appearing on the quality cost report?

A) $74,000.
B) $78,000.
C) $81,000.
D) $181,000.
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78
(Appendix 11A)What will be the total internal failure cost appearing on the quality cost report?

A) $71,000.
B) $74,000.
C) $132,000.
D) $163,000.
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79
(Appendix 11A)What will be the total external failure cost appearing on the quality cost report?

A) $80,000.
B) $107,000.
C) $324,000.
D) $481,000.
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k this deck
80
(Appendix 11A)What will be the total internal failure cost appearing on the quality cost report?

A) $85,000.
B) $127,000.
C) $146,000.
D) $217,000.
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