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Exam 9: Performance Measurement and Responsibility Accounting

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Question 41

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Cost center managers are evaluated on their success in controlling costs compared to budgeted costs.

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Question 42

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Ultimo Co. operates three production departments as profit centers. The following information is available for its most recent year. Department 2's contribution to overhead in dollars is:

A) $210,000.
B) $350,000.
C) $10,000.
D) $260,000.
E) $150,000.

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Question 43

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The amount by which a department's sales exceed its direct expenses is:

Division X makes a part that it sells to customers outside of the company. Data concerning this part appear below: Division Y of the same company would like to use the part manufactured by Division X in one of its products. Division Y currently purchases a similar part made by an outside company for $49 per unit and would substitute the part made by Division X. Division Y requires 5,000 units of the part each period. Division X has ample excess capacity to handle all of Division Y's needs without any increase in fixed costs and without cutting into outside sales. What is the lowest transfer price Division X will accept?

Which of the following is not one of the perspectives used to analyze performance using the balanced scorecard?

Which of the following represents the correct formula for calculating the cash conversion cycle?

Kragle Corporation reported the following financial data for one of its divisions for the year; average invested assets of $470,000; sales of $930,000; and income of $105,000. The investment turnover is:

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 $120,000, and the following quantities of product and sales revenues were produced. $\begin{array} { l c c } \text { Product } & \text { Pounds } & \text { Price per pound } \\\text { Feed } & 100,000 & \$ 0.70 \\\text { Flour } & 50,000 & 2.20 \\\text { Starch } & 20,000 & 1.00\end{array}$ How much of the $120,000 cost should be allocated to flour if the value basis is used?

The ________ measures the average time it takes to convert cash outflows into cash inflows from customers.

Ultimo Co. operates three production departments as profit centers. The following information is available for its most recent year. Which department has the greatest departmental contribution to overhead (in dollars) and what is the amount contributed?

Holo Company reported the following financial numbers for one of its divisions for the year; average total assets of $5,800,000; sales of $5,375,000; cost of goods sold of $3,225,000; and operating expenses of $1,147,000. Compute the division's return on investment:

Two investment centers at Marshman Corporation have the following current-year income and asset data: The return on investment (ROI) for Investment Center A is:

Departmental contribution to overhead is the same as gross profit generated by that department.

Jarrett Department Store operates three departments (A, B and C). If total costs of $4,500 are to be allocated on the basis of square feet of space (Dept. A = 1,500 Sq. Ft.; Dept. B = 900 Sq. Ft.; Dept. C = 600 Sq. Ft.) then Dept. A's share (in percent) of the $4,500 cost would be ________%; Dept. B would be ______%, and Dept. C would be ________%. The amount of cost allocated to Dept. C would be $________.

Pleasant Hills Properties is developing a golf course subdivision that includes 250 home lots; 100 lots are golf course lots and will sell for $95,000 each; 150 are street frontage lots and will sell for $65,000. The developer acquired the land for $1,800,000 and spent another $1,400,000 on street and utilities improvement. Compute the amount of joint cost to be allocated to the golf course lots using value basis. (Round your intermediate percentages to 2 decimal places.)

The first three steps in preparing a departmental income statement are: (1) accumulate ________ of the department, (2) allocate ________ to the department, and (3) allocate ________ to the operating departments.

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

A company has two departments, Y and Z that incur delivery expenses. An analysis of the total delivery expense of $9,000 indicates that Dept. Y had a direct expense of $1,000 for deliveries and Dept. Z had no direct expense. The indirect expenses are $8,000. The analysis also indicates that 40% of regular delivery requests originate in Dept. Y and 60% originate in Dept. Z. Departmental delivery expenses for Dept. Y and Dept. Z, respectively, are:

A cost center does not directly generate revenues.

A joint cost of producing two products can be allocated between those products on the basis of the relative physical quantities of each product produced.