Question 1

The following information was taken from the segmented income statement of Restin, Inc., and the company's three divisions:  In addition, the company incurred common ﬁxed costs of $18,000. Which of the following amounts should be used to evaluate whether Restin, Inc., should continue to invest company resources in the Los Angeles division?

Accepted Answer

To evaluate whether Restin, Inc., should continue to invest in the Los Angeles division, we need to look at the segment margin of that division. The segment margin is calculated by taking the segment's revenue minus its direct expenses. In this case, the Los Angeles division's segment margin is $10,000 ($40,000 revenue minus $30,000 direct expenses). Since we are only concerned with the Los Angeles division, we can ignore the other division's information and the common fixed costs.

Question 2

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)?

Accepted Answer

The compensation cost for key executives is typically not charged to departments because it is neither easily traceable to specific departments nor controllable by them.

Question 3

For a company that uses responsibility accounting, which of the following costs is least ely to appear on a performance report of an assembly-line supervisor?

Accepted Answer

Assembly-line facilities depreciation is a fixed cost that is not directly controllable by an assembly-line supervisor.

Question 4

The difference between the proﬁt margin controllable by a segment manager and the segment proﬁt margin is caused by:

Accepted Answer

The difference arises from fixed expenses that are traceable to the segment but are controlled by others, not the segment manager.

Question 5

Controllable costs, as used in a responsibility accounting system, consist of:

Accepted Answer

Controllable costs are costs that can be managed or influenced by a particular manager in the time period under review. These costs may include direct materials, direct labor, variable overhead expenses, supplies, and maintenance. They are also known as variable costs, as they can vary based on the level of activity.

Question 6

Responsibility accounting systems strive to:

Accepted Answer

Responsibility accounting systems are designed to provide relevant information to managers to help them make informed decisions and manage their areas of responsibility effectively.

Question 7

A segment contribution margin would reﬂect the impact of:

Accepted Answer

A segment contribution margin reflects the impact of variable operating expenses, which are expenses that vary in proportion to changes in activity levels. This means that the contribution margin will only reflect the costs that are directly associated with producing and selling products or services, and not any fixed costs that are not directly related to the segment's operations. Therefore, options B, C, and D are incorrect.

Question 8

Thurmon Retail has three stores in West Virginia.Which of the following costs would likely be included when computing the proﬁt margin controllable by store no s manager?

Accepted Answer

Hourly labor costs incurred by personnel at store no s would be directly controllable by the store manager, and would therefore be included when computing the profit margin controllable by the manager. The other costs listed would either be allocated from a central source (A), not directly related to the individual store (B and C), or be an expense that affects the overall profitability of the company, rather than just one store (D).

Question 9

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?

Accepted Answer

General GCE corporate overhead is not specific to the Georgia division and would not appear on Georgia's segmented income statement.

Question 10

Distinguishing between controllable and noncontrollable costs on a performance report may result in:

Accepted Answer

Distinguishing between controllable and noncontrollable costs on a performance report can improve the effectiveness of a cost management system by helping managers identify areas where they can improve their performance. It can also increase the quality of performance information by providing more accurate and relevant data. Therefore, the best choice is E, as it correctly identifies the potential benefits of distinguishing between controllable and noncontrollable costs.

Question 11

The following information was taken from the segmented income statement of Restin, Inc., and the company's three divisions:  In addition, the company incurred common ﬁxed costs of $18,000. Bay Area's segment proﬁt margin is:

Accepted Answer

The answer of The following information was taken from the...

Question 12

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?

Accepted Answer

Profit margin controllable by the segment manager is the best choice for a performance evaluation as it focuses solely on the profitability of the segment that the manager is responsible for and takes into account the manager's ability to control costs and maximize profits. Segment sales revenue and net income can be affected by factors outside of the manager's control, while segment contribution margin and profit margin may not fully capture the manager's performance in terms of cost control.

Question 13

Sandy Shores Corporation operates two stores: J and K.The following information relates to J:  J's segment contribution margin is:

Accepted Answer

The answer of Sandy Shores Corporation operates two stores: J...

Question 14

The following data relate to Department no.3 of Winslett Corporation:  On the basis of this information, Department no s variable operating expenses are:

Accepted Answer

The answer of The following data relate to Department no.3...

Question 15

The following information was taken from the segmented income statement of Restin, Inc., and the company's three divisions:  In addition, the company incurred common ﬁxed costs of $18,000. The proﬁt margin controllable by the Central Valley segment manager is:

Accepted Answer

The answer of The following information was taken from the...

Question 16

On a segmented income statement, common ﬁxed expenses will have an effect on a company's:

Accepted Answer

The answer of On a segmented income statement, common ﬁxed...

Question 17

The following information was taken from the segmented income statement of Restin, Inc., and the company's three divisions:  In addition, the company incurred common ﬁxed costs of $18,000. 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?

Accepted Answer

The answer of The following information was taken from the...

Question 18

Common costs:

Accepted Answer

The answer of Common costs:
...

Question 19

The proﬁt margin controllable by the segment manager would not include:

Accepted Answer

A share of the company's common fixed expenses and income tax expense are not controllable by the segment manager.

Question 20

The following data relate to Department no.2 of Velma Corporation:  On the basis of this information, ﬁxed costs traceable to Department no.2 but controllable by others are:

Accepted Answer

The answer of The following data relate to Department no.2...

Quiz 12: Responsibility Accounting, Operational Performance Measures, and the Balanced Scorecard

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) ?

For a company that uses responsibility accounting, which of the following costs is least ely to appear on a performance report of an assembly-line supervisor?

The difference between the proﬁt margin controllable by a segment manager and the segment proﬁt margin is caused by:

Controllable costs, as used in a responsibility accounting system, consist of:

Responsibility accounting systems strive to:

A segment contribution margin would reﬂect the impact of:

Thurmon Retail has three stores in West Virginia.Which of the following costs would likely be included when computing the proﬁt margin controllable by store no s manager?

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?

Distinguishing between controllable and noncontrollable costs on a performance report may result in:

The following information was taken from the segmented income statement of Restin, Inc., and the company's three divisions: In addition, the company incurred common ﬁxed costs of $18,000. Bay Area's segment proﬁt margin is:

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?

Sandy Shores Corporation operates two stores: J and K.The following information relates to J: J's segment contribution margin is:

The following data relate to Department no.3 of Winslett Corporation: On the basis of this information, Department no s variable operating expenses are:

The following information was taken from the segmented income statement of Restin, Inc., and the company's three divisions: In addition, the company incurred common ﬁxed costs of $18,000. The proﬁt margin controllable by the Central Valley segment manager is:

On a segmented income statement, common ﬁxed expenses will have an effect on a company's:

Common costs:

The proﬁt margin controllable by the segment manager would not include:

The following data relate to Department no.2 of Velma Corporation: On the basis of this information, ﬁxed costs traceable to Department no.2 but controllable by others are: