Responsibility Accounting and Performance Measures Paper 2

1

In a highly decentralized organization, the best option for measuring the performance of subunits is the establishment of






2

A segment of an organization is referred to as a profit center if it has






3

A segment of an organization is referred to as an investment center if it has






4

The Stonebrook Company uses a performance reporting system that reflects the company’s decentralization of decision making. The departmental performance reports show actual costs incurred during the period against budgeted costs. Any variances from the budget are assigned to the individual department manager who controls the costs. Stonebrook is using a type of system called






5

Digital Tech uses an accounting system that charges costs to the manager who has the authority to make decisions incurring the costs. For example, if a sales manager authorizes a rush order that results in additional manufacturing costs, these additional costs are charged to the sales manager. This type of accounting system is known as






6

If a manufacturing company uses responsibility accounting, which one of the following items is least likely to appear in a performance report for a manager of an assembly line?






7

Which of the following is not true of responsibility accounting?






8

A company plans to implement a bonus plan based on segment performance. In addition, the company plans to convert to a responsibility accounting system for segment reporting. The following costs, which have been included in the segment performance reports that have been prepared under the current system, are being reviewed to determine if they should be included in the responsibility accounting segment reports:
I. Corporate administrative costs allocated on the basis of net segment sales.
II. Personnel costs assigned on the basis of the number of employees in each segment.
III. Fixed computer facility costs divided equally among each segment.
IV. Variable computer operational costs charged to each segment based on actual hours used times a predetermined standard rate; any variable cost efficiency or inefficiency remains in the computer department.
Of these four cost items, the only item that could logically be included in the segment performance reports prepared on a responsibility accounting basis would be the






9

In a responsibility accounting system, managers are accountable for






10

Which of the following types of responsibility centers include controllable revenues in their performance reports?
Cost Centers
Investment Centers
Profit Centers






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