ACCT 212 Read & Interact Wild & Shaw Chapter 9 Responsibility Accounting solutions complete answers

ACCT 212 Read & Interact Wild & Shaw Chapter 9 Responsibility Accounting solutions complete answers 

 

The  _ conversion cycle measures the average time it takes to convert cash outflows into cash inflows.

 

Transfer pricing can use the following approaches:

 

The formula to figure out the profit margin of a company is   (Net income/Accounts receivable/Net sales) divided by   (Net income/Cash/Net sales).

 

The cash conversion cycle is computed as:

 

Transfer prices: (Check all that apply.)

 

Some disadvantages of relying solely on financial measures include that: (Check all that apply.)

 

Given the following information for Mouse Inc., calculate its profit margin for the year 2018.

$ in thousands
2018
2019
Net income
$ 500
$ 450
Net sales
3500
3650
Accounts receivable
2150
1500
 

A manufacturing division has an average assets of $1,800,000 and income of $720,000. The division's return on investment is  %.

 

A departmental contribution to overhead report is based on:

 

Evaluating manager's performance based solely on financial measures has limitations. Therefore, companies should consider using   measures to help evaluate manager performance.

 

Which of the following statements correctly define(s) a profit margin? (Check all that apply.)

 

If a company has $2,000,000 in average assets, and desires to earn a return on investment of 30%, the company will need to earn income of $ .

 

Which report is more effective in evaluating the performance of profit centers?

 

Decisions related to allocating expenses include: (Check all that apply).

 

Reports to ______ managers are usually less detailed because they need to concentrate on the key issues.

 

A cost that a manager can determine or influence is called a(n)   cost.

 

The accounting department of a manufacturing company is a(n):

 

Profit centers commonly use _____ to report profit center performance:

 

A responsibility accounting performance report contains which of the following items? (Check all that apply.)

 

An example of a cost that a department manager would not control is:

 

A department that incurs costs without generating revenues is considered a(n):

 

A(n)       accounting system provides information that management can use to evaluate a department's manager.

 

A _____-based transfer price is used when there is no excess capacity.

 

Costs which are incurred to produce two or more products at the same time are called _____ costs:

 

Desktop Computer Company would like to calculate their cash conversion cycle. What factors are included in computing this metric?

 

A _____-based transfer price is used when there is excess capacity.

 

The cash conversion cycle formula is

 

Division A reports the following data: Sales = $180,000; Net income = $18,000; Average assets = $72,000. Division B reports the following data: Sales = $60,000; Net income = $9,600; Average assets = $48,000. Which division is operating more efficiently?

 

Determine if the following costs would be considered direct or indirect for a division which manufactures bicycles.

 

Challenges that involve allocating expenses include:

 

Responsibility accounting provides relevant information to the manager who does all of the following except:

 

Match the four perspectives of the balanced scorecard with questions managers are trying to answer.

 

The balanced scorecard is a unique system of performance measures in that it: (Check all that apply.)

 

Departmental income statements include:

 

Transfer prices should be set at: (Check all that apply.) 

 

Costs readily traced to a department because they are incurred for that department's sole benefit are called        expenses.

 

Company A has a profit margin of 12% and investment turnover of 3.2. Company B has a profit margin of 15% and investment turnover of 2.4. Company        has a better return on investment.

 

A manufacturing division has an average of $1,800,000 invested in assets and earned income of $720,000. The division's return on investment is       %.

 

A company incurs advertising costs of $10,000. The company's three selling departments have the following sales: Department 1—$10,000; Department 2—$30,000; Department 3—$40,000. Advertising is allocated based on percent of sales. The amount of advertising allocated to Department 3 will be $      .

 

List the steps in allocating costs to operating departments and preparing departmental income statements, with the first step on top.

 

The best data to use to measure a department manager's performance is found on a:

 

A cost that a manager has the power to determine or at least significantly affect is called a(n)        cost.

 

If a company has $2,000,000 invested in buildings, equipment, and other assets and desires to earn a return on investment of 30%, the company will need to earn a net income of $      .

 

Julie works in the production department. Julie's wages are an example of ______ expenses for the production department.

 

A responsibility accounting system recognizes that control over costs and expenses belong to:

 

A retail store has 10,000 square feet of space and incurs rent costs of $5,000 per month. If Department A uses 2,000 square feet of space, the amount of rent allocated to the department will be $      .

 

True or false: Controllable costs are the same as direct costs.

 

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

 

Profit centers commonly use the following statement to report profit center performance:

 

A department that is evaluated on their success in generating income is a(n):

 

A department that incurs costs, generates revenues, and is responsible for effectively using department assets is considered a(n):

 

In responsibility accounting, unit managers are evaluated on:

 

Each of the following are a type of center in responsibility accounting:

 

A _____ center manager is evaluated on their success in generating income.

 

A(n) _____ cost is not within the manager's control or influence.

 

The manager of a certain division at Alpha Manufacturing is evaluated on how efficiently the division uses equipment, buildings, and other assets to generate profits. This division is considered a(n):

 

Match the center on the left with the center's method of evaluation.

 

A cost that is not within a manager's control or influence is called a(n) ____ cost.

 

When comparing responsibility accounting performance reports for upper-level management to those of lower-level management, responsibility and control ________ for upper-level management; therefore, their reports contain ________ detail.

 

Upper-level management uses responsibility accounting ______ to evaluate the effectiveness of lower-level managers in controlling costs and expenses and keeping within budgeted amounts.

 

A good responsibility accounting system makes every effort to provide: (Check all that apply.)

 

The purpose of a responsibility accounting system is to provide information to: (Check all that apply.)

 

Costs that are incurred for the joint benefit of more than one department and cannot be readily traced to only one department are called ____ expenses.

 

In the general model for cost allocation, total allocated cost equals

 

Match each indirect expense to the most likely allocation base.

 

Which service department is most likely to use square feet of floor space occupied as the allocation base to assign its costs to operating departments?

 

Jane works in the maintenance department, which supports the production department and the research department. Jane's wages are an example of which type expenses? (Check all that apply.)

 

The general model for cost allocation is Allocated cost =

 

True or false: Standard rules exist to help managers identify appropriate allocation bases.

 

Personnel expenses would most likely be allocated to operating departments using which allocation base?

 

A ____ center is evaluated based on control of costs so a performance report is prepared instead of an income statement.

 

List the sections of a departmental expense allocation spreadsheet with the first section on top.

 

A departmental contribution to overhead report shows indirect expenses:

 

Operating department income statements are used to evaluate the performance of ______ centers.

 

A departmental expense allocation spreadsheet is used to allocate expenses:

 

Potential effects of departmental performance reports on employee behavior include all of the following except:

 

Behavioral aspects of departmental performance reports include

 

Division ABC has $750,000 invested in assets and earned $200,000 in income. Division XYZ has $800,000 invested in assets and earned $210,000 in income. Which of the following statements is true?

 

A manufacturing division has $1,800,000 invested in assets and earned income of $720,000. The company's hurdle (target) rate is 8%. The division's residual income is $ ____.

 

A division of a manufacturing company has a return on investment of 24%. The division has an opportunity to accept a project that is expected to earn a return on investment of 22%. The company's target return on investment rate is 20%. Which of the following statements is true?

 

Company A has a return on investment of 20% and Company B has a return on investment of 24%. Assuming both companies have the same investment center average invested assets, which of the following statements is true?

 

A division has residual income of $350,000. If the division has net income of $600,000 and $2,500,000 invested in assets, what is the target income %?

 

Division ABC has $750,000 invested in assets and earned $200,000 in income. Division XYZ has $800,000 invested in assets and earned $210,000 in income. The company's target rate is 10%. Which division has the highest residual income?

 

A division reports the following figures: Sales = $20,000; Net income = $4,000; Average assets = $30,000. The division's profit margin is ____%.

 

Evaluating manager's performance on financial measures only has limitations. Therefore, companies should consider ____ measures to help evaluate manager performance.

 

Responsibility accounting performance reports:

 

Performance evaluations are best done using:

 

Costs that are not within a manager's control or influence are:

 

A cost center is a unit of a business that incurs costs without directly generating revenues. All of the following are considered cost centers except:

 

The type of department that generates revenues, incurs costs, and whose manager is responsible for major investing decisions is called a(n):

 

A department that incurs costs without generating revenues is a:

 

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

 

Regardless of the system used in departmental cost analysis: