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Choose the best answer.
1. When managers of subunits throughout an organization strive to achieve the goals set by top management, the result is:
A) goal congruence.
B) planning and control.
C) responsibility accounting.
D) delegation of decision making.
E) strategic control.
2. Which of the following is not an example of a responsibility center?
A) Cost center.
B) Revenue center.
C) Profit center.
D) Investment center.
E) Contribution center.
3. If the head of computer consulting services (CCS) within an organization is held accountable for revenues and costs, then CCS is considered a(n):
A) cost center.
B) revenue center.
C) profit center.
D) investment center.
E) contribution center.
4. An allocation base for a cost pool should ideally be:
A) machine hours.
B) a cost object.
C) a common cost.
D) a cost driver.
E) direct labor, either cost or hours.
5. Which of the following is an appropriate base to distribute the cost of building depreciation to responsibility centers?
A) Number of employees in the responsibility centers.
B) Budgeted sales dollars of the responsibility centers.
C) Square feet occupied by the responsibility centers.
D) Budgeted net income of the responsibility centers.
E) Total budgeted direct operating costs of the responsibility centers.
6. Controllable costs, as used in a responsibility accounting system, consist of:
A) only fixed costs.
B) only direct materials and direct labor.
C) those costs that a manager can influence in the time period under review.
D) those costs about which a manager has some knowledge.
E) those costs that are influenced by parties external to the organization.
7. Harris 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)?
A) The cost is charged to the departments.
B) The cost is not charged to the departments because, although easily traceable to the departments, it is not controllable at the departmental level.
C) The cost is not charged to the departments because, although controllable at the departmental level, it is not easily traceable to the departments.
D) The cost is not charged to the departments because it is both easily traceable to the departments and controllable by the departments.
E) The cost is not charged to the departments because it is neither easily traceable to the departments nor controllable by the departments.
8. Quality of conformance refers to:
A) the extent to which a product meets the specifications of its design.
B) the extent to which a product has a high-quality design.
C) the extent to which a product is designed for its intended use.
D) the extent to which a product minimizes non-value-added activities in the production process.
E) a cost control that is achievable.
9. The cost of servicing a unit under a warranty agreement is known as a(n):
A) external failure cost.
B) internal failure cost.
C) production inefficiency cost.
D) prevention cost.
E) appraisal cost.
10. A common cost is:
A) not easily related to a segment's activities.
B) easily related to a segment's activities.
E) applicable only to manufacturing organizations.
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