Deck 9: Management Control Systems and Responsibility Accounting

Question 1

are characteristics or attributes that managers must achieve to drive the organization toward its goals.

A) Specific performance measures
B) Key success factors
C) Goals
D) Targets

Answer 1

B

Question 2

A(n) is the responsibility center for which costs are accumulated.

A) accounting center
B) cost center
C) investment center
D) profit center

Answer 2

B

Question 3

A management control system can be designed to emphasize all of the following simultaneously except:

A) controllability
B) cost behavior
C) customer satisfaction
D) manager performance

Answer 3

C

Question 4

An effective management control system reports on all of the following except:

A) effects of uncontrollable events
B) the manager's influence on those results
C) effects of controllable events
D) the results of activities

Question 5

All of the following are nonfinancial objectives of responsibility centers except:

A) quality
B) productivity
C) customer satisfaction
D) operations budgets

Question 6

The following information pertains to the South Territory of Sammy Company: $$\begin{array} { l l } \text { Net Sales } & \$ 5,000 \\\text { Variable costs: } & \\\text { Cost of merchandise sold } & 1,200 \\\text { Operating exp enses } & 450 \\\text { Fixed costs: } & \\\text { Controllable by segment manager } & 600 \\\text { Controllable by others } & 250 \\\text { Unalloc ated costs } & 150\end{array}$$ The contribution by segment is:

A) $2,750
B) $2,350
C) $3,350
D) $2,500

Question 7

To create a management control system that meets the organization's needs, designers must consider all of the following except:

A) internal controls
B) existing constraints
C) external reporting requirements
D) costs versus benefits

Question 8

Employee turnover rate is a measure of:

A) organizational learning
B) business process improvement
C) financial strength
D) customer satisfaction

Question 9

Identify which of the following is not a characteristic of a management control system.

A) A management control system motivates individuals throughout the organization to act in concert.
B) A management control system coordinates forecasting sales and cost- driver activities, budgeting, and measuring and evaluating performance.
C) A management control system aids and coordinates the process of making decisions.
D) A management control system encourages short- term profitability.

Question 10

Revenue growth in segments is a measure of:

A) business process improvement
B) organizational learning
C) financial strength
D) customer satisfaction

Question 11

Uncontrollable costs:

A) provide evidence about a manager's performance
B) are influenced by a manager's decisions and actions
C) are also referred to as opportunity costs
D) should be ignored in evaluating the responsibility center manager

Question 12

Retention of target customers is a measure of:

A) organizational learning
B) customer satisfaction
C) financial strength
D) business process improvement

Question 13

is the effort to insure that products and services perform to customer requirements.

A) Quality control
B) Managerial effort
C) Productivity
D) Cycle time

Question 14

Profit centers are responsible for:

A) revenues and costs
B) costs and invested capital
C) costs only
D) invested capital and revenues

Question 15

is a report that displays the financial impact of quality.

A) Cost of quality report
B) Cycle time report
C) Financial report
D) Productivity report

Question 16

Decreasing cycle time:

A) requires smooth- running processes
B) creates reduced flexibility and slower reactions to customer needs
C) requires a low- quality product or service
D) results in bringing products or services less quickly to customers

Question 17

Managers on all levels are asked to explain the total segment contribution but are held responsible only for the:

A) variable costs
B) fixed costs
C) unallocated costs
D) controllable contribution

Question 18

Identify which of the following statements is true.

A) Goal congruence can exist without effort.
B) Rewards are necessary to achieve goal congruence and managerial effort.
C) Managerial effort can exist without goal congruence.
D) All of these answers are correct.

Question 19

The following information is available for Learning R' Us and its two divisions-Books and Periodicals: $\begin{array}{llll}&\text { Company as } & \text { Books } & \text { Periodicals } \\&\text { a whole } & \text { Division } & \text { Division }\\\hline\text { Net sales }&\$100,000&\$60,000&\$40,000\\\text { Fixed costs: }\\\text { Controllable by }\\\text { division man ager } & 16,500 & 12,500 & 4,000 \\\text { Controllable by others } & 8,000 & 5,000 & 3,000 \\\text { Variable costs: } & & &\\\text { Cost of merch andise sold } & 24,500 & 17,500 & 7,000 \\\text { Operating expenses } & 16,400 & 10,000 & 6,400 \\\text { Unalloc ated costs } & 1,000 & &\end{array}$ is the net income for the Learning R' Us.

A) $33,600
B) $15,000
C) $34,600
D) $29,600

Question 20

A responsibility center for which a separate measure of revenues and/or costs is obtained is called a(n):

A) quality control center
B) segment
C) accounting center
D) contribution center

Question 21

The following information pertains to the Northwest Territory of McDonald Company: $$\begin{array} { l l } \text { Net Sales } & \$ 5,000 \\\text { Variable costs: } & \\\text { Cost of merchandis e sold } & 1,200 \\\text { Operating exp enses } & 450 \\\text { Fixed costs: } & \\\text { Controll able by segment manager } & 600 \\\text { Controllable by others } & 250 \\\text { Unallocated costs } & 150\end{array}$$ The contribution margin is:

A) $3,650
B) $2,500
C) $2,750
D) $3,350

Question 22

Eye Of The Beholder Company had the following results: $\begin{array}{ll}\text { Rolls of film processed } & 360,000 \\\text { Sales revenue } & \$ 1,170,000 \\\text { Direct-labor hours worked } & 4,580 \\\text { Direct labor cost } & \$ 43,281\end{array}$ If productivity is computed using financial measures, productivity is:

A) 78.6 rolls per hour
B) $3.25 per roll
C) $255.46 per labor hour
D) 2703% of labor cost

Question 23

is (are) concerned with quality control.

A) Privately owned companies and nonprofit organizations
B) Nonprofit organizations and government organizations
C) Privately owned companies, nonprofit, and government organizations
D) Government organizations and privately owned companies

Question 24

When preparing segment income statements, unallocated costs:

A) are controllable costs
B) might include central corporate costs
C) do not exist
D) are uncontrollable costs or sunk costs

Question 25

All of the following are categories of quality costs except:

A) development
B) prevention
C) internal failure
D) appraisal

Question 26

Groucho Corporation and Harpo Company are movie companies. Comparative data for 20X4 and 20X5 are given below. $\begin{array}{llll}&&\text { Groucho } & \text { Harpo } \\&&\text { Corporation } & \text { Company }\\\text { Sales revenue } & 20 \times 4 & \$ 8,400,000 & \$ 4,400,000 \\& 20 \times 5 & 9,600,000 & 6,200,000 \\\\\text { Number of employees } & 20 \times 4 & 8,000 & 5,500 \\& 20 \times 5 & 9,000 & 7,000\end{array}$ Assume that each 20X4 dollar is equivalent to 1.50 of the 20X5 dollars, due to inflation. is Harpo Company's 20X4 revenue per employee in terms of 20X5 dollars.

A) $800.00
B) $1,328.57
C) $885.71
D) $1,200.00

Question 27

Responsibility accounting includes:

A) creating reports
B) identifying what parts of the organization have primary responsibility for each objective
C) developing measures of achievement and objectives
D) All of these answers are correct.

Question 28

Inspection costs are a form of:

A) internal failure cost
B) prevention cost
C) appraisal cost
D) external failure cost

Question 29

Effective management control systems allow top managers to delegate:

A) decision making
B) control
C) planning
D) All of these answers are correct.

Question 30

is an outcome of organizational learning.

A) Increased customer satisfaction
B) Continuous process improvement
C) Financial strength
D) All of these answers are correct.

Question 31

The following information is available for Learning R' Us and its two divisions-Books and Periodicals: $\begin{array}{llll}&\text { Company as } & \text { Books } & \text { Periodicals } \\&\text { a whole } & \text { Division } & \text { Division }\\\hline\text { Net sales }&\$100,000&\$60,000&\$40,000\\\text { Fixed costs: }\\\text { Controllable by }\\\text { division man ager } & 16,500 & 12,500 & 4,000 \\\text { Controllable by others } & 8,000 & 5,000 & 3,000 \\\text { Variable costs: } & & &\\\text { Cost of merch andise sold } & 24,500 & 17,500 & 7,000 \\\text { Operating expenses } & 16,400 & 10,000 & 6,400 \\\text { Unalloc ated costs } & 1,000 & &\end{array}$ is the contribution margin for the Books Division.

A) $20,000
B) $42,500
C) $15,000
D) $32,500

Question 32

The following information is available for Learning R' Us and its two divisions-Books and Periodicals: $\begin{array}{llll}&\text { Company as } & \text { Books } & \text { Periodicals } \\&\text { a whole } & \text { Division } & \text { Division }\\\hline\text { Net sales }&\$100,000&\$50,000&\$50,000\\\text { Fixed costs: }\\\text { Controllable by }\\\text { division man ager } & 16,500 & 12,500 & 4,000 \\\text { Controllable by others } & 8,000 & 5,000 & 3,000 \\\text { Variable costs: } & & &\\\text { Cost of merch andise sold } & 24,500 & 17,500 & 7,000 \\\text { Operating expenses } & 16,400 & 10,000 & 6,400 \\\text { Unalloc ated costs } & 1,000 & &\end{array}$ is the contribution controllable by the manager of the Periodicals Division.

A) $29,600
B) $36,000
C) $36,600
D) $32,600

Question 33

describes the segment contribution that is controllable by segment managers.

A) Segment contribution less controllable cost
B) Segment contribution less segment margin
C) Segment contribution less uncontrollable costs
D) Segment contribution less discretionary fixed cost

Question 34

Control systems in nonprofit organizations probably will never be as highly developed as in profit- seeking firms because in nonprofit organizations:

A) organizational goals and objectives are clearer
B) motivation and incentives of individuals may differ from those of for- profit organizations
C) the activities of professional employees cannot be evaluated effectively
D) measurements are less difficult to make

Question 35

Fred Corporation and Ginger Company are dance companies. Comparative data for 20X3 and 20X6 are given below. $\begin{array}{llll}&&\text { Fred Corporation }&\text { Ginger Corporation }\\\text { Sales revenue } & 20 \times 3 & \$ 6,300,000 & \$ 4,500,000 \\& 20 \times 6 & 7,500,000 & 6,000,000 \\\\\text { Number of employees } & 20 \times 3 & 3,000 & 2,250 \\& 20 \times 6 & 3,500 & 3,250\end{array}$ Assume that each 20X3 dollar is equivalent to 1.60 of the 20X6 dollars, due to inflation. is Fred Corporation's 20X3 revenue per employee in terms of 20X6 dollars.

A) $1,800.00
B) $2,100.00
C) $2,142.86
D) $3,360.00

Question 36

An uncontrollable cost:

A) is influenced by a manager's decisions and actions
B) tells a great deal about a manager's decision- making abilities
C) should be ignored in evaluating the responsibility center manager's performance
D) is the same as a sunk cost

Question 37

The following information is available for Learning R' Us and its two divisions-Books and Periodicals: $\begin{array}{llll}&\text { Company as } & \text { Books } & \text { Periodicals } \\&\text { a whole } & \text { Division } & \text { Division }\\\hline\text { Net sales }&\$100,000&\$60,000&\$40,000\\\text { Fixed costs: }\\\text { Controllable by }\\\text { division man ager } & 16,500 & 12,500 & 4,000 \\\text { Controllable by others } & 8,000 & 5,000 & 3,000 \\\text { Variable costs: } & & &\\\text { Cost of merch andise sold } & 24,500 & 17,500 & 7,000 \\\text { Operating expenses } & 16,400 & 10,000 & 6,400 \\\text { Unalloc ated costs } & 1,000 & &\end{array}$ is the contribution margin for the Periodicals Division.

A) $32,600
B) $43,000
C) $36,600
D) $29,600

Question 38

Total quality management:

A) involves keeping the responsibility for quality control with the management
B) has significant implications for organization goals, structure, and management control systems
C) is used by all U.S. companies
D) is the application of quality principles in the quality control department

Question 39

The following information pertains to the Lower Division of Venus Company: $$\begin{array} { l l } \text { Net Sales } & \$ 21,000 \\\text { Variable costs: } & \\\text { Cost of merchandise sold } & 7,200 \\\text { Operating expenses } & 2,700 \\\text { Fixed costs: } & \\\text { Controllable by segment manager } & 2,400 \\\text { Controllable by others } & 1,000 \\\text { Unalloc ated costs } & 600\end{array}$$ The contribution controllable by a segment manager is:

A) $11,100
B) $7,100
C) $7,700
D) $8,700

Question 40

External failure costs include:

A) returns
B) warranty expenses
C) field repairs
D) rework

Question 41

Groucho Corporation and Harpo Company are movie companies. Comparative data for 20X0 and 20X1 are given below. $\begin{array}{llll}&&\text { Groucho } & \text { Harpo } \\&&\text { Corporation } & \text { Company }\\\text { Sales revenue } & 20 \times 0 & \$ 8,000,000 & \$ 4,400,000 \\& 20 \times 1 & 9,600,000 & 6,175,000 \\\text { Number of employees } & 20 \times 0 & 8,000 & 5,500 \\& 20 \times 1 & 9,000 & 6,500\end{array}$ Assume that each 20X0 dollar is equivalent to 1.60 of the 20X1 dollars, due to inflation. is Groucho Corporation's 20X0 revenues per employee in terms of 20X1 dollars.

A) $1,600.00
B) $1,083.08
C) $1,422.22
D) $1,280.00

Question 42

A management control system must to achieve maximum benefits at minimum cost.

A) be the same as the financial accounting system
B) foster goal congruence and managerial effort
C) look at the short term only
D) motivate managers with quarterly bonuses based on performance

Question 43

is not a step in the design of a successful management control system.

A) Identifying responsibility centers
B) Specifying organizational goals, subgoals, and objectives
C) Developing measures of performance for motivation and goal congruence
D) Measuring and reporting financial performance but not nonfinancial performance

Question 44

is not a type of responsibility center.

A) A cost center
B) A budget center
C) A profit center
D) An investment center

Question 45

Identify which of the following statements is true.

A) Inputs and outputs are difficult to measure.
B) The fewer inputs needed to produce a given output, the more productive the organization.
C) Productivity is a measure of outputs divided by inputs.
D) All of these answers are correct.

Question 46

A management control system includes the techniques to gather and control information to:

A) motivate employees
B) make decisions
C) evaluate performance
D) All of these answers are correct.

Question 47

Material handling cost per unit volume is a measure of:

A) customer satisfaction
B) organizational learning
C) business process improvement
D) financial strength

Question 48

The following information pertains to the Southwest Territory of Boomer Company: $\begin{array}{ll}\text { Net Sales }&\$5,000\\\text { Variable costs: }\\\text { Cost of merchandise sold } & 1,200 \\\text { Operating expenses } & 450 \\\text { Fixed costs: } & \\\text { Controllable by segment manager } & 600 \\\text { Controllable by others } & 250 \\\text { Unalloc ated costs } & 150\end{array}$ The contribution controllable by a segment manager is:

A) $2,750
B) $3,350
C) $2,500
D) $2,350

Question 49

Groucho Corporation and Harpo Company are movie companies. Comparative data for 20X4 and 20X5 are given below. $\begin{array}{llll}&&\text { Groucho } & \text { Harpo } \\&&\text { Corporation } & \text { Company }\\\text { Sales revenue } & 20 \times 4 & \$ 8,400,000 & \$ 4,400,000 \\& 20 \times 5 & 9,900,000 & 6,175,000 \\\text { Number of employees } & 20 \times 4 & 8,000 & 5,500 \\& 20 \times 5 & 9,000 & 6,500\end{array}$ Assume that each 20X4 dollar is equivalent to 1.75 of the 20X5 dollars, due to inflation. is Groucho Corporation's 20X5 productivity measure in terms of revenue per employee.

A) $1,925.00
B) $1,100.00
C) $950.00
D) $1,050.00

Question 50

are specific tangible achievements that can be observed on a short- term basis.

A) Objectives
B) Performance measures
C) Key success factors
D) Guidelines

Question 51

Identify which of the following statements regarding responsibility centers is false.

A) Responsibility centers are usually classified according to their financial responsibility.
B) Responsibility centers usually have one objective.
C) Management control systems monitor responsibility center objectives.
D) Cost centers, profit centers, and investments centers are all examples of responsibility centers.

Question 52

A balanced scorecard for a responsibility center:

A) may reflect only one component of organizational success
B) looks the same as those of other responsibility centers
C) includes all performance measures for the center
D) All of these answers are correct.

Question 53

Identify which term below refers to the set of activities assigned to a manager or a group of managers or other employees.

A) total quality control system
B) management control system
C) responsibility center
D) internal control system

Question 54

is (are) the most basic component of a management control system.

A) Top management's preferences
B) The organization's long- range budget
C) The stockholder's preferences
D) The organization's goals

Question 55

is (are) not a financial objective of responsibility centers.

A) Profit targets
B) Operations budgets
C) Customer satisfaction
D) Return on investment

Question 56

Identify which of the following statements should guide the design of management control systems.

A) Always expect that individuals will act selflessly.
B) Consider both financial performance and nonfinancial performance.
C) Concentrate performance measures at the most critical points in the value chain.
D) Design incentives so that individuals who pursue their own self- interest are also achieving the organization's objectives.

Question 57

is the first step in designing a management control system.

A) Establishing organizational goals
B) Preparing financial statements
C) Distinguishing between profit centers and cost centers
D) Evaluating management's performance

Question 58

Improvements in the production process are examples of:

A) appraisal cost
B) internal failure cost
C) external failure cost
D) prevention cost

Question 59

is the logical integration of management accounting tools to gather and report data and to evaluate performance.

A) An internal control system
B) A financial reporting system
C) A management control system
D) A quality control system

Question 60

The following information is available for Learning R' Us and its two divisions-Books and Periodicals: $\begin{array}{llll}&\text { Company as } & \text { Books } & \text { Periodicals } \\&\text { a whole } & \text { Division } & \text { Division }\\\hline\text { Net sales }&\$100,000&\$60,000&\$40,000\\\text { Fixed costs: }\\\text { Controllable by }\\\text { division man ager } & 16,500 & 12,500 & 4,000 \\\text { Controllable by others } & 8,000 & 5,000 & 3,000 \\\text { Variable costs: } & & &\\\text { Cost of merch andise sold } & 24,500 & 17,500 & 7,000 \\\text { Operating expenses } & 16,400 & 10,000 & 6,400 \\\text { Unalloc ated costs } & 1,000 & &\end{array}$ _ is the contribution by segment for the Periodicals Division.

A) $32,600
B) $28,600
C) $29,600
D) $36,600

Question 61

Eye Of The Beholder Company had the following results: $\begin{array}{ll}\text { Rolls of film processed } & 350,000 \\\text { Sales revenue } & \$ 1,200,000 \\\text { Direct-labor hours worked } & 4,600 \\\text { Direct labor cost } & \$ 47,000\end{array}$ If productivity is computed using a physical measure, productivity is:

A) 2,553% of direct labor cost
B) $3.43 per roll
C) 76.09 rolls per direct labor hour
D) $260.87 per direct labor hour

Question 62

To achieve maximum benefits at minimum cost, a management control system must foster:

A) managerial effort and goal congruence
B) motivation and responsibility accounting
C) goal congruence and employee motivation
D) responsibility accounting and managerial effort

Question 63

The purpose of a quality- control chart is:

A) to graphically represent the quality control program
B) to track the financial cost of quality
C) to detect process deviation before the process generates defects
D) to determine the effectiveness of the quality control program

Question 64

The following information is available for Learning R' Us and its two divisions-Books and Periodicals: $\begin{array}{llll}&\text { Company as } & \text { Books } & \text { Periodicals } \\&\text { a whole } & \text { Division } & \text { Division }\\\hline\text { Net sales }&\$100,000&\$60,000&\$40,000\\\text { Fixed costs: }\\\text { Controllable by }\\\text { division man ager } & 16,500 & 12,500 & 4,000 \\\text { Controllable by others } & 8,000 & 5,000 & 3,000 \\\text { Variable costs: } & & &\\\text { Cost of merch andise sold } & 24,500 & 17,500 & 7,000 \\\text { Operating expenses } & 16,400 & 10,000 & 6,400 \\\text { Unalloc ated costs } & 1,000 & &\end{array}$ is the contribution by segment for the Books Division.

A) $42,500
B) $20,000
C) $32,500
D) $15,000

Question 65

would not be appraisal costs.

A) Warranty costs
B) Product quality audit costs
C) Testing costs
D) Inspection costs

Question 66

The following information pertains to the Upper Division of Mars Company: $$\begin{array} { l l } \text { Net Sales } & \$ 21,000 \\\text { Variable costs: } & \\\text { Cost of merchandise sold } & 7,200 \\\text { Operating expenses } & 2,700 \\\text { Fixed costs: } & \\\text { Controllable by segment manager } & 2,400 \\\text { Controllable by others } & 1,000 \\\text { Unalloc ated costs } & 600\end{array}$$ The contribution by segment is:

A) $8,700
B) $7,100
C) $7,700
D) $11,100

Question 67

Fred Corporation and Ginger Company are dance companies. Comparative data for 20X3 and 20X6 are given below. $\begin{array}{llll}&&\text { Fred Corporation }&\text { Ginger Corporation }\\\text { Sales revenue } & 20 \times 3 & \$ 6,300,000 & \$ 4,500,000 \\& 20 \times 6 & 7,500,000 & 6,000,000 \\\\\text { Number of employees } & 20 \times 3 & 3,000 & 2,250 \\& 20 \times 6 & 3,500 & 3,250\end{array}$ Assume that each 20X3 dollar is equivalent to 1.60 of the 20X6 dollars, due to inflation. is Fred Corporation's 20X6 productivity measure in terms of revenue per employee.

A) $1,800.00
B) $3,360.00
C) $2,100.00
D) $2,142.86

Question 68

is an alternate term for cycle time.

A) Completion time
B) Throughput time
C) Manufacturing time
D) Production time

Question 69

Groucho Corporation and Harpo Company are movie companies. Comparative data for 20X4 and 20X5 are given below. $\begin{array}{llll}&&\text { Groucho } & \text { Harpo } \\&&\text { Corporation } & \text { Company }\\\text { Sales revenue } & 20 \times 4 & \$ 8,400,000 & \$ 4,400,000 \\& 20 \times 5 & 9,600,000 & 6,200,000 \\\text { Number of employees } & 20 \times 4 & 8,000 & 5,500 \\& 20 \times 5 & 9,000 & 7,000\end{array}$ Assume that each 20X4 dollar is equivalent to 1.50 of the 20X5 dollars, due to inflation. is Harpo Company's 20X5 productivity measure in terms of revenue per employee.

A) $800.00
B) $1,200.00
C) $885.71
D) $1,328.57

Question 70

Goal congruence exists when:

A) short- run goals reflect long- run goals
B) individuals and groups aim at the same organizational goals
C) performance reports are used constructively
D) the budget reflects the organization's goals

Question 71

Warranty costs are a form of:

A) external failure cost
B) appraisal cost
C) internal failure cost
D) prevention cost

Question 72

is any cost that cannot be affected by the management of a responsibility center within a given time span.

A) Controllable cost
B) Opportunity cost
C) Quality cost
D) Uncontrollable cost

Question 73

Rework costs are a form of:

A) appraisal cost
B) prevention cost
C) internal failure cost
D) external failure cost

Question 74

is the drive for some selected goal that creates effort and action toward that goal.

A) Goal congruence
B) Motivation
C) Managerial effort
D) Apathy

Question 75

The following information pertains to the West Division of Jupiter Company: $\begin{array}{ll}\text { Net Sales } & \$ 21,000 \\\text { Variable costs: } & \\\text { Cost of merch andise sold } & 7,200 \\\text { Operating expenses } & 2,700 \\\text { Fixed costs: } & \\\text { Controllable by segment manager } & 2,400 \\\text { Controllable by others } & 1,000 \\\text { Unallocated costs } & 600\end{array}$ The contribution margin is:

A) $8,700
B) $11,100
C) $7,700
D) $7,100

Question 76

The is the statistical plot of measures of various product dimensions or attributes.

A) cycle- time chart
B) quality- control chart
C) conventional chart
D) productivity chart

Question 77

is not a measure of organizational learning.

A) Employee turnover
B) Staff satisfaction
C) Management performance
D) Training time

Question 78

Good performance measures will be all of the following except:

A) used consistently
B) readily understood
C) used in evaluating and rewarding employees
D) unaffected by the actions of managers

Question 79

The following information is available for Learning R' Us and its two divisions-Books and Periodicals: $\begin{array}{llll}&\text { Company as } & \text { Books } & \text { Periodicals } \\&\text { a whole } & \text { Division } & \text { Division }\\\hline\text { Net sales }&\$100,000&\$60,000&\$40,000\\\text { Fixed costs: }\\\text { Controllable by }\\\text { division man ager } & 16,500 & 12,500 & 4,000 \\\text { Controllable by others } & 8,000 & 5,000 & 3,000 \\\text { Variable costs: } & & &\\\text { Cost of merch andise sold } & 24,500 & 17,500 & 7,000 \\\text { Operating expenses } & 16,400 & 10,000 & 6,400 \\\text { Unalloc ated costs } & 1,000 & &\end{array}$ is the contribution controllable by the manager of the Books Division.

A) $42,500
B) $20,000
C) $32,500
D) $35,000

Question 80

A(n) is the responsibility center whose success is measured not only by its income, but also by relating that income to its invested capital.

A) profit center
B) investment center
C) cost center
D) accounting center