Which of the following items is LEAST likely to appear on the performance report of the manager
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Chapter 17 Show
MULTIPLE CHOICE 1. Internal reports prepared under the responsibility accounting approach should highlight: C 2. A company has three producing departments and one service department. Due to a ignored A 3. The control of service department costs at the source level is accomplished by means of: B 4. The rate used to distribute service hours to recipient departments is denoted by all of the 237 238 Chapter 17 E 5. The cost item least likely to appear in a performance report based on
responsibility accounting B. D 6. Responsibility reports should possess all of the following characteristics except: D 7. Controllable costs are: A. D 8. An accounting system in which the operations of the business are broken down into cost E. C 9. In a responsibility accounting system, costs are classified into categories on the basis of: C 10. When used for performance evaluation, periodic internal reports based on a responsibility include allocated fixed overhead Responsibility Accounting and Reporting 239 D 11. The most
desirable measure of departmental performance for evaluating the departmental D 12. Internal reports prepared under the responsibility accounting approach should be limited to B 13. Of most relevance in deciding how or which costs should be assigned to the responsibility E. C 14. A
company's only service department provides the following data: Monthly Service Hours Actual It serves three producing departments that show the following budgeted and actual cost and Department
No. The sold-hour rate for the carpenter shop is: Estimated Actual Carpenter Shop Carpenter Shop 240 Chapter 17 A company's only service department provides the following data: Monthly Service Hours Actual It serves three producing departments that show the following budgeted and actual cost and Department No. Estimated Actual Carpenter Shop Carpenter Shop The spending variance for the carpenter shop, assuming that
80% of the budgeted expense is Actual factory overhead......................................................................... 16. $ 47,800 $ 42,000 The primary difference between a fixed (static) budget and a variable (flexible) budget is that is concerned only with future acquisitions of fixed assets; while a variable budget is Responsibility Accounting and Reporting 241 C 17. A flexible budget is: B 18. A flexible budget is appropriate for a: A. Direct Labor Marketing C 19. If a company wishes to establish a factory overhead budget system in which estimated costs discretionary budget C 20. Flexible budgeting is a reporting system wherein the: B 21. Flintstone Company uses flexible
budgeting for cost control. Flintstone produced 10,800 units 242 Chapter 17 B 22. A company uses a two-way analysis for overhead variances: spending and idle capacity. The variable overhead application rate B 23. In analyzing factory overhead
variances, an idle capacity variance is the difference between B 24. The spending variance for variable overhead based on direct labor hours is the difference C 25. In the traditional view of responsibility accounting where individuals are evaluated rather that can be achieved D 26. All of the following are reasons why responsibility reports are of limited use to managers in Responsibility Accounting and Reporting 243 PROBLEMS Budgeted fixed overhead................................ Building Services General Plant Required: 675,000 244 Chapter 17 PROBLEM departments at a predetermined rate based on variable costs at capacity. Present relevant data are: Power consumption (based on kilowatt-hours this month)................................. Producing Departments Budgeted fixed cost (this month)............................................................................... Utilities Department Required: Compute the rate per kwh used to distribute variable cost. who is responsible for the variance. SOLUTION Budgeted variable cost at capacity/Capacity provided = $10,000/(40,000 kwh + 60,000 kwh) = $.10 Fixed cost distribution: $10,000 5,600 Responsibility Accounting and Reporting 245 (3) $8,550 9,100 Because all of the fixed cost was billed to user departments on the basis of maximum capacity available, Budgeted distributed costs from other departments: $ 26,000 8 per call to 11,000 Required: Determine the departmental over- or underdistributed cost. 246 Chapter 17 SOLUTION $14,500 (2) Overhead incurred in Room Service Division........................ $40,500 Overhead expected at 11,000 calls: 1 87,000 $ 43,600 (3,100) fav. (1,500) fav. 45,100 (4,600) fav. $ 39,000 Responsibility Accounting and Reporting 247 PROBLEM Actual Budgeted $ 20,000 $ 18,500 6,400 Administration cost allocable to Division Y............................................................. $ 17,000 $ 14,500 8,000 9,500 2,000 1,900 3,250 $ $ Section A costs: Potash................................................................................................................. 7,000 4,400 7,500 4,350 Required: Prepare a responsibility report for the month of May in a format suitable for evaluating the 248 Chapter 17 SOLUTION Petro Products Actual 20,000 Over- UnderBudgeted Cost (3,050) U PROBLEM $ 30 Fixed expenses are $150,000 for indirect labor, $175,000 for repairs and maintenance, and $80,000 for general factory. Responsibility Accounting and Reporting 249 SOLUTION 70% 9,000 Total variable cost....................................... $ 1,050,000 150,000 80% $ 240,000 $ 150,000 90% $ $ 270,000 $ 150,000 100% $ $ 300,000 $ 150,000 PROBLEM Variable departmental overhead: Power and
light................................................................................................................ Budgeted Actual $ 4,000 $ $ $ 1,600 3,400 250 Chapter 17 Required: Prepare a departmental report for the supervisor of Department 711 that shows the Capacity
hours..................................................... Original Budget Allowance $ 4,000 $ $ $ 1,600 3,400 $
(200) 1,600 (80) $ 3,600 2,160 Actual Actual factory overhead..................................... $ 21,880 Spending
variance............................................... $ (440) $ Spending $ (440) Which of the following items is least likely to appear on the performance report of the manager of a product line *?Which one of the following items is least likely to appear in a performance report for a manager of one of the assembly lines? Depreciation on the manufacturing facility. A company uses a performance reporting system that reflects the company's decentralization of decision making.
Which of the following is not appropriate in management responsibility accounting?Accounting centre is not a part of responsibility accounting.
Which of the following is not true of responsibility accounting?Thus , the statement that every factor is ultimately controllable by someone is not a premise of responsibility accounting . Answer ( D ) is incorrect .
Which of the following is not an example of manufacturing overhead cost?Manufacturing overhead does not include any of the selling or administrative functions of a business. Thus, the costs of such items as corporate salaries, audit and legal fees, and bad debts are not included in manufacturing overhead.
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