Question 1

A cost center manager does not have the ability to produce revenue.

Accepted Answer

A cost center manager is responsible for managing expenses and does not directly generate revenue; their focus is on controlling costs rather than producing sales or revenue.

Question 2

A cost center manager:

Accepted Answer

A cost center manager is primarily responsible for controlling costs and does not have the ability to produce revenue, which distinguishes their role from those involved in generating sales or overseeing profit centers.

Question 3

The continual search for the most effective method of accomplishing a task by comparing existing methods and performance levels with those of other organizations, or with other subunits within the same organization is known as a gain-sharing plan.

Accepted Answer

The description provided refers to the concept of benchmarking, not a gain-sharing plan. Benchmarking involves comparing one's business processes and performance metrics to industry bests or best practices from other companies, whereas a gain-sharing plan is a system where employees receive bonuses based on the productivity or profitability improvements of their organization.

Question 4

Performance reports are unique in that they do not incorporate budgets and variance analysis.

Accepted Answer

Performance reports often include budgets and variance analysis to compare actual results against planned or budgeted performance, highlighting areas of over or underperformance.

Question 5

Halpern Corporation is in the process of overhauling the performance evaluation system for its San Diego manufacturing division, which produces and sells parts that are popular in the aerospace industry. Which of the following is least likely to be chosen to evaluate the overall operations of the San Diego division?

Accepted Answer

A cost center is least likely to be chosen for evaluating the overall operations of a division that produces and sells products, as it focuses primarily on controlling costs and does not account for revenue generation, which is a key aspect of a manufacturing division's performance.

Question 6

Inventory control is important in achieving the benefits of a just-in-time (JIT) philosophy.

Accepted Answer

Inventory control is crucial in a JIT system to reduce inventory levels, minimize waste, and respond quickly to customer demand, thereby achieving efficiency and cost savings.

Question 7

Costs that are traceable to a segment and are completely beyond the influence of the segment manager can be advantageously divided in segment reports into two distinct responsibilities - those for segments and those for segment managers.

Accepted Answer

Traceable costs can be divided into those that are controllable by the segment manager and those that are not, allowing for clearer accountability and performance evaluation in segment reports.

Question 8

The typical balanced scorecard is best described as containing both financial and nonfinancial performance measures.

Accepted Answer

The balanced scorecard includes both financial and nonfinancial performance measures to provide a comprehensive view of an organization's performance.

Question 9

A company-owned restaurant in a fast-food chain is considered an investment center.

Accepted Answer

The answer of A company-owned restaurant in a fast-food chain...

Question 10

The concepts and tools used to measure the performance of people and departments are known as:

Accepted Answer

Responsibility accounting is a system that measures the results of each responsibility center and compares them with some measure of expected or budgeted outcome. It is designed to collect and report financial and non-financial information relating to the responsibilities of individual managers. This allows for evaluating the performance of different parts of an organization, such as departments or individuals, based on the areas they directly control.

Question 11

When managers of subunits throughout an organization strive to achieve the goals set by top management, the result is:

Accepted Answer

Goal congruence occurs when the goals of the organization's subunits and managers align with the goals set by top management, ensuring that everyone is working towards the same objectives.

Question 12

A manufacturer's raw-material purchasing department would likely be classified as a:

Accepted Answer

A cost center is a department that incurs costs but does not directly generate revenues. A manufacturer's raw-material purchasing department incurs costs through the acquisition of materials needed for production but does not directly sell products or services, making it a cost center.

Question 13

Responsibility accounting refers to the various concepts and tools used by managers to measure the performance of people and departments in order to foster goal congruence.

Accepted Answer

Responsibility accounting is indeed a system that measures the results of each responsibility center (such as departments, divisions, or managers) and compares them with the goals or budgets for those units, aiming to ensure that all parts of the organization are working towards the overall goals, thereby fostering goal congruence.

Question 14

A collection of costs to be assigned is called a cost pool.

Accepted Answer

A cost pool is a collection of indirect costs grouped together based on similar characteristics, making it easier to assign those costs to products, services, or departments.

Question 15

Common costs are charged to a company's operating segments when preparing a segmented income statement.

Accepted Answer

Common costs are not directly traceable to any specific segment and are not charged to operating segments in a segmented income statement.

Question 16

Each department, responsible for different processes, should have goals different from the company as a whole.

Accepted Answer

Each department should have goals that align with the overall goals of the company to ensure cohesive progress and success.

Question 17

Which of the following is not an example of a responsibility center?

Accepted Answer

Contribution center is not a commonly recognized type of responsibility center in management accounting. The typical responsibility centers include cost centers, revenue centers, profit centers, and investment centers, each with specific financial responsibilities and performance metrics.

Question 18

An allocation base for a cost pool should ideally be a cost object.

Accepted Answer

An allocation base for a cost pool should ideally be a driver that has a strong causal relationship with the costs in the pool, not a cost object. Cost objects are items for which costs are measured and assigned (e.g., products, services), whereas allocation bases are used to distribute costs among those objects.

Question 19

A company's balanced scorecard should focus on the performance measurements that are most important to its key competitor.

Accepted Answer

A company's balanced scorecard should focus on its own strategic objectives and performance measurements that are critical to its success, not primarily on those of its key competitor.

Question 20

Performance reports help managers use management by exception and effectively control operations.

Accepted Answer

Performance reports compare actual results to budgeted or planned activity levels, allowing managers to focus on significant variances and apply management by exception principles to address areas needing attention.

Quiz 12: Responsibility Accounting, Operational Performance Measures, and the Balanced Scorecard