Vacation Properties Limited owns six hotels in the province of Quebec, collectively known as the Eastern Townships Division. The various hotels, including the Richelieu Hotel, have operating departments (such as Maintenance, Housekeeping, and Food and Beverage) that are evaluated as either cost centres or profit centres. The Food and Beverage Department, for example, is a profit centre, with activities divided into three segments: Banquets and Catering, Restaurants, and Kitchen. If Vacation Properties Limited uses a performance-reporting system that is based on responsibility accounting, which of the following disclosures is likely to occur?

Question

Quizplus · Accepted Answer

Based on responsibility accounting, the profit or loss of each division, in this case, the Richelieu Hotel, is likely to be disclosed on the overall performance report of the Eastern Townships Division. Therefore, option C is the correct choice. Option A is incorrect because the performance report will not show the detailed operating costs of a single department, but rather the overall performance of each cost or profit center. Option B is incorrect because the Food and Beverage Department's profit will appear on its own performance report and not on Kitchen's performance report. Option D is incorrect because the performance report of Vacation Properties Limited will only show the overall performance of the company as a whole and not the performance of its individual hotels or departments. Option E is incorrect because the profit of the Richelieu Hotel will not appear on the Food and Beverage Department's performance report, but rather on the Eastern Townships Division's performance report.

Vacation Properties Limited Owns Six Hotels in the Province of Quebec