When used for performance evaluation,periodic internal reports based on a responsibility accounting system should not
A)be related to the organization chart.
B)include allocated fixed overhead.
C)include variances between actual and budgeted controllable costs.
D)distinguish between controllable and noncontrollable costs.

Question

Quizplus · Accepted Answer

Allocated fixed overhead should not be included in periodic internal reports based on a responsibility accounting system for performance evaluation because these costs are not controllable by the manager being evaluated. Responsibility accounting focuses on providing information related to costs and revenues that are directly under the control of a specific manager. Including allocated fixed overhead can distort the evaluation of a manager's performance since these costs are not influenced by the manager's decisions.

When Used for Performance Evaluation,periodic Internal Reports Based on a Responsibility