Chapter 12 – Responsibility Accounting, Operational Performance Measures, and the Balanced Scorecard
43. 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?
Center
Budgeted
Revenue
Actual
Revenue
Budgeted
Direct
Costs
Actual
Direct
Costs
Downtown
$320,000
20%
$340,200
21%
$300,000
20%
$300,000
Irvine
560,000
35%
534,600
33%
510,000
34%
440,000
H. Beach
720,000
45%
745,200
46%
690,000
46%
740,000
Totals
$1,600,000
$1,620,000
$1,500,000
$1,480,000
44. Responsibility accounting systems strive to:
45. Controllable costs, as used in a responsibility accounting system, consist of:
46. Distinguishing between controllable and noncontrollable costs on a performance report
may result in:
47. 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?
48. Common costs:
49. 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)?
50. 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?
51. The difference between the profit margin controllable by a segment manager and the
segment profit margin is caused by:
52. The profit margin controllable by the segment manager would not include:
53. A segment contribution margin would reflect the impact of:
54. 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?
55. On a segmented income statement, common fixed expenses will have an effect on a
company’s:
56. Which of the following measures would reflect the variable costs incurred by a business
segment?
Segment Profit Margin Segment
Contribution Controllable by Profit
Margin Segment Manager Margin
57. Which of the following measures would reflect the fixed costs controllable by a segment
manager?
Segment Profit Margin Segment
Contribution Controllable by Profit
Margin Segment Manager Margin
58. 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?
59. Sandy Shores Corporation operates two stores: J and K. The following information relates
to J:
Sales revenue
$1,300,000
Variable operating expenses
600,000
Fixed expenses:
Traceable to J and controllable by J
275,000
Traceable to J and controllable by others
80,000
J’s segment contribution margin is:
60. Miracle Green Corporation operates two garden supply stores: A and B. The following
information relates to store A:
Sales revenue
$900,000
Variable operating expenses
400,000
Fixed expenses:
Traceable to A and controllable by A
275,000
Traceable to A and controllable by others
120,000
A’s segment profit margin is:
61. The following data relate to Department no. 3 of Winslett Corporation:
Segment contribution margin
$540,000
Profit margin controllable by the segment manager
310,000
Segment profit margin
150,000
On the basis of this information, Department no. 3’s variable operating expenses are:
62. The following data relate to Department no. 2 of Velma Corporation:
Segment contribution margin
$540,000
Profit margin controllable by the segment manager
320,000
Segment profit margin
60,000
On the basis of this information, fixed costs traceable to Department no. 2 but controllable by
others are:
Chapter 12 – Responsibility Accounting, Operational Performance Measures, and the Balanced Scorecard
Use the following information to answer Questions 63-67.
The following information was taken from the segmented income statement of Restin, Inc.,
and the company’s three divisions:
Restin
Inc.
Los Angeles
Division
Bay Area
Division
Central Valley
Division
Revenues
$750,000
$200,000
$235,000
$325,000
Variable operating expenses
410,000
110,000
120,000
180,000
Controllable fixed expenses
210,000
65,000
75,000
70,000
Noncontrollable fixed expenses
60,000
15,000
20,000
25,000
In addition, the company incurred common fixed costs of $18,000.
63. Bay Area’s segment profit margin is:
64. The profit margin controllable by the Central Valley segment manager is:
65. Assuming use of a responsibility accounting system, which of the following amounts
should be used to evaluate the performance of the Los Angeles division manager?
66. Which of the following amounts should be used to evaluate whether Restin, Inc., should
continue to invest company resources in the Los Angeles division?
67. Assume that the Los Angeles division increases its promotion expense, a controllable
fixed cost, by $10,000. As a result, revenues increased by $50,000. If variable expenses are
tied directly to revenues, the new Los Angeles segment contribution margin is:
68. An increasingly popular approach that integrates financial and customer performance
measures with measures in the areas of internal operations and learning and growth is known
as:
69. The typical balanced scorecard is best described as containing:
70. Norwegian Resort Tours (NRT), which operates in a very competitive marketplace, is
considering four categories of performance measures: (1) profitability measures, (2)
customer-satisfaction measures, (3) efficiency and quality measures, and (4) learning and
growth measures. The company assigns one manager to each tour resort to oversee the
resort’s general operations. If NRT desired to adopt a balanced-scorecard approach, which
measures should the firm use in the evaluation of its managers?
71. Lead indicators guide management to:
72. When using a balanced scorecard, a company’s market share is typically classified as an
element of the firm’s:
73. When using a balanced scorecard, which of the following is typically classified as an
internal-operations performance measure?
74. Which of the following balanced-scorecard perspectives is influenced by a company’s
vision and strategy?
75. Which of the following would not be considered a proper financial perspective measure?