ACCT 212 - Read & Interact Chapter 9

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Central Piedmont Community College *

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212

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Accounting

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Apr 3, 2024

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1. The accounting department of a manufacturing company is a(n): cost center 2. A cost that a manager can determine or influence is called a(n) _______ cost. controllable 3. A responsibility accounting performance report contains which of the following items? (Check all that apply.) - Actual amounts - Budgeted amounts - The difference between actual and budgeted amounts - A list of all controllable direct costs - A list of all controllable costs 4. Profit centers commonly use _____ to report profit center performance: departmental income statements 5. True or false: Controllable costs are the same as direct costs. False 6. A department that incurs costs without generating revenues is considered a(n): cost center 7. 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 $_______. 1000 8. An example of a cost that a department manager would not control is: the manager's own salary 9. List the steps in allocating costs to operating departments and preparing departmental income statements, with the first step on top. 1. Accumulate sales, direct expenses, indirect expenses by department. 2. Allocate indirect expenses to service and operating departments.

3. Allocate service department expenses to operating departments. 10. Reports to ______ managers are usually less detailed because they need to concentrate on the key issues. upper-level 11. Decisions related to allocating expenses include: (Check all that apply). - how to allocate service department expenses - how to allocate indirect expenses 12. Which report is more effective in evaluating the performance of profit centers? Departmental contribution to overhead reports 13. Determine if the following costs would be considered direct or indirect for a division which manufactures bicycles. Property insurance  indirect Depreciation on manufacturing equipment  Direct 14. A manufacturing division has an average assets of $1,800,000 and income of $720,000. The division's return on investment is _________% 40 15. 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 $___________. 5000 16. Given the following information for Mouse Inc., calculate its profit margin for the year 20x1. $ in thousands 20x1 20x2

Net Income $500 $450 Net Sales 3500 3650 Accounts Receivable 2150 1500 14.29% Reason: Net income/net sales. $500/3,500=14.29% 17. Departmental income statements include: direct and indirect expenses 18. A responsibility accounting performance report contains which of the following items? (Check all that apply.) - Budgeted amounts - The difference between actual and budgeted amounts - A list of all controllable costs - Actual amounts - A list of all controllable direct costs 19. A departmental contribution to overhead report is based on: controllable costs 20. Evaluating manager's performance based solely on financial measures has limitations. Therefore, companies should consider using ____________ measures to help evaluate manager performance. non financial 21. 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 $ 600,000 22. The balanced scorecard is a unique system of performance measures in that it: (Check all that apply.) - has a focus on customer satisfaction. - has multiple perspectives. - has financial and nonfinancial measures.

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