Tranquil Beaches owns six hotels in Hawaii, collectively known as the Hawaiian Division.The various hotels, including the Surf & Sun, have operating departments (such as Maintenance, Housekeeping, and Food and Beverage) that are evaluated as either cost centers or proﬁt centers.The Food and Beverage Department, for example, is a proﬁt center, with activities divided into three segments: Banquets and Catering, Restaurants, and Kitchen.If Tranquil Beaches uses a performance-reporting system that is based on responsibility accounting, which of the following disclosures is likely to occur?
A)The detailed operating costs of the Surf & Sun's Kitchen Department will appear on the Hawaiian Division's performance report.
B)The Food and Beverage Department's proﬁt will appear on Kitchen's performance report.
C)The proﬁt of the Surf & Sun hotel will appear on the Hawaiian Division's performance report.
D)The Food and Beverage proﬁt at the Surf & Sun will appear on Tranquil Beaches' performance report.
E)The proﬁt of the Surf & Sun hotel will appear on Food and Beverage's performance report.

Question

Quizplus · Accepted Answer

The performance-reporting system based on responsibility accounting would likely show the profit of the Surf & Sun hotel on the Hawaiian Division's performance report. This is because the hotels are evaluated collectively as a division, and the profit of each individual hotel would be attributed to the division as a whole. The detailed operating costs of the Kitchen Department would not be shown on the Hawaiian Division's performance report, as it is only one segment of the Food and Beverage Department. The profit of the Food and Beverage Department would not be shown on the Kitchen Department's performance report, as it is the department responsible for generating the profit. The profit of the Surf & Sun hotel would not be shown on Tranquil Beaches' performance report, as this report would likely show the performance of the company as a whole rather than individual hotels. Finally, the profit of the Surf & Sun hotel would not be shown on the Food and Beverage Department's performance report, as this report would only encompass the activities of that department.

Tranquil Beaches Owns Six Hotels in Hawaii, Collectively Known as the Hawaiian