Which of the following is not an example of a responsibility center?
a. Revenue center.
b. Investment center.
c. Cost center.
d. Contribution center.
e. Profit center.
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Which service department cost allocation method considers all interrelationships of the departments and reflects these relationships in equations?
a. step method
b. direct method
c. indirect method
d. algebraic method
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All of the following actions will increase ROI except:
a. an increase in sales revenues.
b. a decrease in a company's invested capital.
c. an improvement in manufacturing efficiency.
d. a decrease in the number of units sold.
e. a decrease in operating expenses.
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The fixed costs of service departments should be allocated to production departments based on
a. actual short-run units based on actual rates.
b. actual short-run utilization based on predetermined rates.
c. the service department's actual costs based on actual utilization of services.
d. the service department's expected costs based on expected long-run use of capacity.
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Sunrise Corporation has a return on investment of 15%. A Sunrise division, which currently has a 13% ROI and $750,000 of residual income, is contemplating a massive new investment that will (1) reduce divisional ROI and (2) produce $120,000 of residual income. If Sunrise strives for goal congruence, the investment:
a. should be acquired because it produces $120,000 of residual income for the division.
b. should not be acquired because it produces $120,000 of residual income.
c. should be acquired because after the acquisition, the division's ROI and residual income are both positive numbers.
d. should not be acquired because it reduces divisional ROI.
e. should not be acquired because the division's ROI is less than the corporate ROI before the investment is considered.
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A service department provides specific functional tasks for other internal units. Which of the following activities would not be engaged in by a service department?
a. distributing
b. manufacturing
c. purchasing
d. warehousing
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For a company that uses responsibility accounting, which of the following costs is least likely to appear on a performance report of an assembly-line supervisor?
a. Assembly-line labor.
b. Departmental supplies.
c. Repairs and maintenance.
d. Direct materials used.
e. Assembly-line facilities depreciation.
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