Question 1

The profit margin controllable by the segment manager would not include:
A) variable operating expenses.
B) fixed expenses controllable by the segment manager.
C) a share of the company's common fixed expenses.
D) income tax expense.
E) a share of the company's common fixed expenses and income tax expense.

Accepted Answer

A share of the company's common fixed expenses and income tax expense are not controllable by the segment manager and therefore would not be included in the profit margin controllable by the segment manager.

Question 2

The following data relate to Department no. 3 of Winslett Corporation:

On the basis of this information, Department no. 3's variable operating expenses are:
A) $80,000.
B) $160,000.
C) $230,000.
D) $390,000.
E) Not determinable.

Accepted Answer

The answer of The following data relate to Department no....

Question 3

Which of the following would be the best measure on which to base a segment manager's performance evaluation for purposes of granting a bonus?
A) Segment sales revenue.
B) Segment contribution margin.
C) Profit margin controllable by the segment manager.
D) Segment profit margin.
E) Segment net income.

Accepted Answer

Profit margin controllable by the segment manager is the best measure for evaluating a segment manager's performance for bonus purposes because it focuses on the financial outcomes directly influenced by the manager's decisions and actions, excluding factors outside their control.

Question 4

Common costs:
A) are not easily related to a segment's activities.
B) are easily related to a segment's activities.
C) are charged to a company's operating segments when preparing a segmented income statement.
D) are not charged to a company's operating segments when preparing a segmented income statement.
E) are not easily related to a segment's activities and also are not charged to a company's operating segments when preparing a segmented income statement.

Accepted Answer

Common costs are not easily related to a specific segment's activities because they benefit multiple segments or the entire company, and they are not charged to a company's operating segments when preparing a segmented income statement to avoid distorting the financial performance of individual segments.

Question 5

The difference between the profit margin controllable by a segment manager and the segment profit margin is caused by:
A) variable operating expenses.
B) allocated common expenses.
C) fixed expenses controllable by the segment manager.
D) fixed expenses traceable to the segment but controllable by others.
E) sales revenue.

Accepted Answer

The difference arises because the segment profit margin includes all costs traceable to the segment, including fixed expenses traceable to the segment but controllable by others, which the segment manager cannot control.

Question 6

For a company that uses responsibility accounting, which of the following costs is least likely to appear on a performance report of an assembly-line supervisor?
A) Direct materials used.
B) Departmental supplies.
C) Assembly-line labor.
D) Repairs and maintenance.
E) Assembly-line facilities depreciation.

Accepted Answer

Assembly-line facilities depreciation is least likely to appear on a performance report of an assembly-line supervisor because it is a fixed cost that is not directly controllable by the supervisor on a short-term basis. Responsibility accounting focuses on providing information on costs that are directly controllable by a manager or supervisor.

Question 7

Distinguishing between controllable and noncontrollable costs on a performance report may result in:
A) an increase in the effectiveness of a cost management system.
B) a decrease in goal congruent behavior by managers.
C) an increase in the quality of performance information.
D) an increase in feelings of blame by managers.
E) an increase in the effectiveness of a cost management system and an increase in the quality of performance information.

Accepted Answer

Distinguishing between controllable and noncontrollable costs helps managers focus on what they can influence, improving the cost management system's effectiveness (A) and enhancing the relevance and usefulness of performance information (C), thereby increasing its quality.

Question 8

Cost pools should be charged to responsibility centers by using:
A) budgeted amounts of allocation bases because the cost allocation to one responsibility center should influence the allocations to others.
B) budgeted amounts of allocation bases because the cost allocation to one responsibility center should not influence the allocations to others.
C) actual amounts of allocation bases because the cost allocation to one responsibility center should influence the allocations to others.
D) actual amounts of allocation bases because the cost allocation to one responsibility center should not influence the allocations to others.
E) some other approach.

Accepted Answer

Using budgeted amounts for allocation bases ensures that the allocation to one responsibility center does not affect the allocations to others, promoting fairness and predictability in the allocation process.

Question 9

Which of the following measures would reflect the variable costs incurred by a business segment?

Accepted Answer

The answer of Which of the following measures would reflect...

Question 10

A segment contribution margin would reflect the impact of:
A) variable operating expenses.
B) fixed expenses controllable by the segment manager.
C) fixed expenses traceable to the segment but controllable by others.
D) common fixed expenses.
E) All answers except common fixed expenses are correct.

Accepted Answer

The answer of A segment contribution margin would reflect the...

Question 11

Controllable costs, as used in a responsibility accounting system, consist of:
A) only fixed costs.
B) only direct materials and direct labor.
C) those costs that a manager can influence in the time period under review.
D) those costs about which a manager has some knowledge.
E) those costs that are influenced by parties external to the organization.

Accepted Answer

Controllable costs are those costs that a manager has the power to influence or control in the short term. This includes a variety of cost types, not limited to fixed costs, direct materials, or direct labor, and is not restricted to costs known to the manager or influenced by external parties.

Question 12

Which of the following measures would reflect the fixed costs controllable by a segment manager?

Accepted Answer

The answer of Which of the following measures would reflect...

Question 13

Gulf Coast Enterprises (GCE) operates 87 stores and has three divisions: Florida, Georgia, and Alabama. Which of the following costs would not appear on Georgia's portion of GCE's segmented income statement?
A) Costs related to statewide advertising contracts, negotiated by Georgia's divisional manager.
B) Variable sales commissions paid to Georgia's salespeople.
C) Compensation paid to Georgia's chief operating officer, as determined by GCE's management.
D) Georgia's allocated share of general GCE corporate overhead.
E) Compensation paid to Georgia's chief operating officer, as determined by GCE's management and Georgia's allocated share of general GCE corporate overhead.

Accepted Answer

General GCE corporate overhead is not specific to the Georgia division and would not appear on Georgia's segmented income statement as it is a corporate-level cost.

Question 14

On a segmented income statement, common fixed expenses will have an effect on a company's:
A) segment contribution margin.
B) profit margin controllable by the segment manager.
C) segment profit margin.
D) segment contribution margin and segment profit margin.
E) None of the answers is correct.

Accepted Answer

The answer of On a segmented income statement, common fixed...

Question 15

Sandy Shores Corporation operates two stores: J and K. The following information relates to J:

J's segment contribution margin is:
A) $345,000.
B) $425,000.
C) $620,000.
D) $700,000.
E) $745,000.

Accepted Answer

The answer of Sandy Shores Corporation operates two stores: J...

Question 16

Thurmon Retail has three stores in West Virginia. Which of the following costs would likely be excluded when computing the profit margin controllable by store no. 3's manager?
A) Hourly labor costs incurred by personnel at store no. 3.
B) Property taxes attributable to store no. 3.
C) The salary of Thurmon's president.
D) The salary of store no. 3's manager.
E) All answers except hourly labor costs incurred by personnel at store no. 3 are correct.

Accepted Answer

The salary of Thurmon's president would likely be excluded from the profit margin controllable by store no. 3's manager because it is a corporate-level expense, not directly controllable at the store level. Hourly labor costs, property taxes attributable to the store, and the salary of the store's manager are all costs that the store manager can influence through management decisions.

Question 17

Responsibility accounting systems strive to:
A) place blame on guilty individuals.
B) provide information to managers.
C) hold managers accountable for both controllable and noncontrollable costs.
D) identify unfavorable variances.
E) provide information so that managers can make decisions that are in the best interest of their individual centers rather than in the best interests of the firm as a whole.

Accepted Answer

Responsibility accounting systems are designed to provide relevant information to managers to help them make informed decisions and manage their areas of responsibility effectively.

Question 18

Use the following information to answer the following Questions
Management of Wee Ones (WO), an operator of day-care facilities, wants the company's profit to be subdivided by center. The firm's accountant has provided the following data:

WO's advertising, which is handled by the home office, is not reflected in the preceding figures and amounted to $60,000.
-If advertising expense were allocated to centers based on actual center profitability, the amount of advertising expense allocated to the Irvine center would be closest to:
A) $19,800.
B) $21,000.
C) $30,000.
D) $40,543.
E) None of the answers is correct.

Accepted Answer

The answer of Use the following information to answer the...

Question 19

Use the following information to answer the following Questions
Management of Wee Ones (WO), an operator of day-care facilities, wants the company's profit to be subdivided by center. The firm's accountant has provided the following data:

WO's advertising, which is handled by the home office, is not reflected in the preceding figures and amounted to $60,000.
-Assume that management used the allocation base that is most influenced by advertising effort and consistent with sound managerial accounting practices. How much advertising would be allocated to the Irvine center?
A) $17,838.
B) $19,800.
C) $20,000.
D) $20,400.
E) $21,000.

Accepted Answer

The answer of Use the following information to answer the...

Question 20

Pride Company is preparing a segmented income statement, subdivided into departments (billing, purchasing, and telemarketing). Which of the following choices correctly describes the accounting treatment of the firm's compensation cost for key executives (president and vice-presidents)?
A) The cost is charged to the departments.
B) The cost is not charged to the departments because, although easily traceable to the departments, it is not controllable at the departmental level.
C) The cost is not charged to the departments because, although controllable at the departmental level, it is not easily traceable to the departments.
D) The cost is not charged to the departments because it is both easily traceable to the departments and controllable by the departments.
E) The cost is not charged to the departments because it is neither easily traceable to the departments nor controllable by the departments.

Accepted Answer

The cost of compensation for key executives like the president and vice-presidents is not charged to individual departments because it is neither easily traceable to specific departments nor controllable at the departmental level. These costs are typically considered corporate overhead and are managed at a higher organizational level.

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

The profit margin controllable by the segment manager would not include:

The following data relate to Department no. 3 of Winslett Corporation: On the basis of this information, Department no. 3's variable operating expenses are:

Which of the following would be the best measure on which to base a segment manager's performance evaluation for purposes of granting a bonus?

Common costs:

The difference between the profit margin controllable by a segment manager and the segment profit margin is caused by:

For a company that uses responsibility accounting, which of the following costs is least likely to appear on a performance report of an assembly-line supervisor?

Distinguishing between controllable and noncontrollable costs on a performance report may result in:

Cost pools should be charged to responsibility centers by using:

Which of the following measures would reflect the variable costs incurred by a business segment?

A segment contribution margin would reflect the impact of:

Controllable costs, as used in a responsibility accounting system, consist of:

Which of the following measures would reflect the fixed costs controllable by a segment manager?

Gulf Coast Enterprises (GCE) operates 87 stores and has three divisions: Florida, Georgia, and Alabama. Which of the following costs would not appear on Georgia's portion of GCE's segmented income statement?

On a segmented income statement, common fixed expenses will have an effect on a company's:

Sandy Shores Corporation operates two stores: J and K. The following information relates to J: J's segment contribution margin is:

Thurmon Retail has three stores in West Virginia. Which of the following costs would likely be excluded when computing the profit margin controllable by store no. 3's manager?

Responsibility accounting systems strive to:

Pride Company is preparing a segmented income statement, subdivided into departments (billing, purchasing, and telemarketing) . Which of the following choices correctly describes the accounting treatment of the firm's compensation cost for key executives (president and vice-presidents) ?