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22-21
48.
Refer to the above information. The responsibility margin of the local branch is:
Dalton Co. follows a policy of allocating all common costs equally among its profit centers.
A partial responsibility income statement for a typical month is shown below:
After evaluating these data, Dalton Co. decides to close Profit Center 3. This action
eliminates all revenue, variable costs, and fixed costs traceable to Center 3, but eliminates
only $35,000 in common fixed costs. Closing Profit Center 3 has no effect upon the
responsibility margins of Centers 1 and 2.
49.
Refer to the information above. Closing Profit Center 3 should cause Dalton's monthly
operating income to:
50.
Refer to the information above. After the closing of Profit Center 3, the monthly income
from operations for Profit Center 1, as measured by Dalton Co. should be approximately:
51.
The contribution margin is calculated by:
52.
The responsibility margin is calculated by:
53.
Responsibility margin is equal to:
54.
Traceable fixed costs that the manager of a department cannot change are called:
55.
Parker's newly hired director of accounting services feels that the property taxes on the
Cairo factory should be allocated to the fabricating, assembly, and finishing departments
based upon the square footage they occupy. Of the following, which is
not
a valid reason to
reject this recommendation?
56.
Sloan Sporting Goods has stores in four geographic regions. Each region has at least 20
stores. In the company's responsibility accounting system, sales are recorded separately
for each sales department within each store. The total sales for a particular region are
determined by:
57.
Depreciation on the factory would be an example of a:
58.
The concept of contribution margin applies:
59.
In a responsibility income statement, the term common fixed costs describes fixed costs
that:
60.
Refer to the information above. Of the following, which should be classified as a common
fixed cost?
61.
Refer to the information above. The company's CEO must decide which of the three
factories to expand in order to increase productive capacity. She should be most interested
in the:
62.
Refer to the information above. The Akron factory employs two quality control inspectors at
an annual salary of $70,000 each. These salaries should be classified as:
63.
Refer to the information above. All of the following costs are traceable to a specific factory
except
:
Patterson's Department Store prepares monthly income statements by sales departments.
These income statements are organized to show contribution margin, performance margin,
and responsibility margin for each sales department, as well as operating income for the
store as a whole.
64.
Refer to the information above. The monthly salaries of the employees of the store's
Accounting Department should be classified as a:
65.
Refer to the information above. Depreciation of the fixtures and equipment used
exclusively in a particular sales department should be classified as a:
66.
Refer to the information above. All of the following costs are traceable to specific sales
departments
except
:
67.
Refer to the information above. The cost of heating and air conditioning the store should
be:
68.
Refer to the information above. In deciding how the store will benefit most from increasing
the sales of selected departments, the store manager should be most interested in the:
69.
Many companies view performance margin as a more useful tool than responsibility margin
for evaluating segment managers. This is because:
70.
If a company wanted to evaluate the manager's ability to control costs, the company would
probably look at the:
71.
In the short run, the greatest increase in profitability will result from increasing sales in
those profit centers with the:
72.
The dollar amount used by one division which supplies a good or a service to another
division within a company is called a:
73.
The most common value used for transfer pricing is:
74.
Company MHF operates subsidiaries in two countries. One of the subsidiaries consumes
the output of the other in the production of a good for sale to the public. The company
could increase cash flows by:
75.
Division managers at Colonial Company are paid a bonus based on the responsibility
margin of their respective responsibility centers. Division A sells goods to Division B and to
outside customers. The manager of Division B would most likely prefer that transfer prices
be based on:
76.
Division X supplies partially completed units of product to division Y. The divisions'
negotiated price is $30 per unit. Assuming Division X completed and transferred 3,000 units
to division Y, the total transfer price on this transaction is:
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77.
Division X supplies partially completed units of product to division Y. The divisions'
negotiated price is $30 plus 20% per unit. Assuming Division X completed and transferred
5,000 units to division Y, the total transfer price on this transaction is:
Essay Questions
