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Exam 24: Performance Measurement and Responsibility Accounting

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Question 31

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An expense that is readily traced to a department because it is incurred for that department's sole benefit is a(n) :

A) Common expense.
B) Indirect expense.
C) Direct expense.
D) Administrative expense.
E) Recurring expense.

F) B) and C)
G) B) and E)

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Question 32

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The Dark Chocolate Division of Yummy Snacks,Inc.had the following operating results last year: Dark Chocolate expects identical operating results this year.The Dark Chocolate Division has the ability to produce and sell 200,000 pounds of chocolate annually.Assume that the Peanut Butter Division of Yummy Snacks wants to purchase an additional 20,000 pounds of chocolate from the Dark Chocolate Division.Assume that the Dark Chocolate Division is currently operating at its capacity of 200,000 pounds of chocolate.Also assume again that the Peanut Butter Division wants to purchase an additional 20,000 pounds of chocolate from Dark Chocolate.Under these conditions,what amount per pound of chocolate would Dark Chocolate have to charge Peanut Butter in order to maintain its current profit?

A) $0.40 per pound
B) $0.08 per pound
C) $0.15 per pound
D) $0.25 per pound
E) $0.30 per pound

F) A) and B)
G) A) and C)

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Question 33

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Departmental contribution to overhead is the amount of sales for that department less its direct expenses.

The process of preparing departmental income statements begins with allocating service department expenses.

A company rents a building with a total of 50,000 square feet,which are evenly divided between two floors.The company allocates the rent for space on the first floor at twice the rate of space on the second floor.The total monthly rent for the building is $30,000.How much of the monthly rental expense should be allocated to a department that occupies 10,000 square feet on the first floor?

Departmental information is usually distributed to the public as part of the company's annual report and footnotes.

A __________________________ helps control costs and expenses and evaluates managers' performance by assigning costs and expenses to the managers responsible for controlling them.

Marks Corporation has two operating departments,Drilling and Grinding,and an office.The three categories of office expenses are allocated to the two departments using different allocation bases.The following information is available for the current period: The amount of the total office expenses that should be allocated to Grinding for the current period is:

Costs that the manager does not have the power to determine or at least significantly affect are:

___________________ are costs incurred to produce or purchase two or more products at the same time.

A ______________________ incurs costs without directly generating revenues.

A _______________________ generates revenues and incurs costs.

The concepts of direct expenses and controllable costs are essentially the same;also,indirect expenses and uncontrollable costs are essentially the same.

Ultimo Co.operates three production departments as profit centers.The following information is available for its most recent year.Department 1's contribution to overhead as a percent of sales is:

Canfield Technical School allocates administrative costs to its respective departments based on the number of students enrolled,while maintenance and utilities are allocated per square feet of the classrooms.Based on the information below,what is the total amount of administrative cost to the Accounting Department (rounded to the nearest dollar) if administrative costs for the school were $50,000,maintenance fees were $12,000,and utilities were $6,000?

The investment center return on investment is ________________ divided by ________. answers must appear in this order

A college uses advisors who work with all students in all divisions of the college.The most useful allocation basis for the salaries of these employees would likely be:

A granary allocates the cost of unprocessed wheat to the production of feed,flour,and starch.For the current period,unprocessed wheat was purchased for $240,000,and the following quantities of product and sales revenues were produced. How much of the $240,000 cost should be allocated to feed?

The following is a partially completed lower section of a departmental expense allocation spreadsheet for Brickland.It reports the total amounts of direct and indirect expenses for the four departments.Purchasing department expenses are allocated to the operating departments on the basis of purchase orders.Maintenance department expenses are allocated based on square footage.Compute the amount of Maintenance department expense to be allocated to Fabrication.

Profit margin for an investment center measures: