11.Select the
false
statement regarding responsibility accounting (RA).
A. It calls for the preparation of reports containing detailed information regarding the performance of a responsibility center.
B. It is most effective in a decentralized business structure where many managers exert control over various segments of a company's operations.
C. It calls for the preparation of responsibility reports listing the budgeted and actual revenue and/or expense items over which the manager has control.
D. It requires top management to prepare a plan of expected performance for the entire company and communicate that plan to lower levels of management.
12.Which of the following is
not
a characteristic of an effective responsibility accounting system?
A. Reports that highlight areas that need corrective action
B. Reports that show revenue and/or expense items under a manager's control
C. Reports that show budgeted and actual amounts of controllable revenue and expense items
D. Reports that set goals for long-term strategic performance
13.Management recently instituted a new training program for upper level managers. They budgeted the cost of the new program at $1,000 per employee trained but actual costs were $1,250 per employee trained. The difference between the budgeted cost for training and the actual cost of training is called a:
A. Period cost.
B. Loss.
C. Variance.
D. Controllable cost.
14.Responsibility reports are prepared:
A. for each manager who controls a responsibility center.
B. only at the end of the accounting period.
C. to identify and punish managers who fail to control their costs.
D. for senior level managers only.
15.A responsibility report provided to a manager typically includes:
A. A list of all the items under the manager's control.
B. The budgeted amount for each item on the report.
C. The differences between the budgeted and actual amounts for each item on the report.
D. All of these.
16.Prentiss Company is decentralized with three divisions. While all three division managers have responsibility for costs, only the Division Three manager has responsibility for generating revenues. Select the correct statement from the following.
A. Prentiss Company is not large enough to benefit from preparing responsibility reports.
B. Responsibility reports should be prepared for Division Three only.
C. Responsibility reports should be prepared for all three divisions.
D. Responsibility reports should be prepared for Divisions One and Two only.
17.The manager of the production department for Romulus Manufacturing has responsibility for all stages of the production process and does not have time to review all the operational details of his department. He has found it to be more productive to focus on the significant deviations from budget. This kind of management is called:
A. Management by exception.
B. Crisis management.
C. Controllable management.
D. Decentralized management.
18.Select the
incorrect
statement concerning responsibility reports.
A. The reports should be stated in simple terms.
B. The reports should show clearly the budgeted and actual amounts of controllable revenues and expenses.
C. At the corporate level, responsibility reports generally include year-to-date contribution format income statements.
D. The reports become more specific for higher levels within the organization.
19.Which of the following formats is typically used in year-to-date income statements prepared for internal use under a responsibility accounting system?
A. Sales - Cost of Goods Sold = Gross Margin; Gross Margin - Operating Expenses = Net Income
B. Sales - Manufacturing Costs = Manufacturing Margin; Manufacturing Margin - Selling and Administrative Costs = Net Income
C. Sales - Variable Costs = Contribution Margin; Contribution Margin - Fixed Costs = Net Income
D. None of these.
20.Marcy is plant manager for Diversified Industries. She and the managers of four other plants report to the vice president in charge of manufacturing operations. Three department managers report to Marcy. Select the
incorrect
statement regarding the preparation of responsibility reports.
A. Marcy's responsibility report should include a detailed account of the individual items for which she is personally responsible.
B. The vice president's responsibility report would contain information for Marcy's plant rolled together with that of the other four plants.
C. Marcy's administrative costs should be included on the reports of her three department managers.
D. Marcy's responsibility report should contain only summary information about the operations of the three departments in her chain of command.