Which departmental report is not suitable for use for responsibility accounting purposes?
A) A report where a share of all the businesses expenses have been allocated to departments.
B) A report that the department manager has not participated in preparing.
C) A report that shows no significant variances.
D) A report that only includes costs controllable by the manager.

Question

Quizplus · Accepted Answer

A report where a share of all the business's expenses has been allocated to departments is not suitable for responsibility accounting purposes because responsibility accounting focuses on providing information about the financial performance of different parts of the organization to the managers who are directly responsible for those parts. Allocating a share of all business expenses to departments may include costs that are not controllable by the department managers, making it difficult to assess their performance accurately.

Which Departmental Report Is Not Suitable for Use for Responsibility