Survey of Accounting (Accounting I)
8th Edition
ISBN: 9781305961883
Author: Carl Warren
Publisher: Cengage Learning
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Textbook Question
Chapter 14, Problem 1SEQ
When the manager has the responsibility and authority to make decisions that affect Costs and revenues but no responsibility for or authority over assets invested in the department, the department is called:
A. A cost center
B. A profit center
C. An investment center
D. A service department
Expert Solution & Answer
To determine
Concept Introduction:
Cost center:
Cost center incurs costs and does not generate the revenue directlyInvestment Center:
Investment center takes care of revenue, cost and investment
Profit Center:
Profit center generate revenue and incur expenses
To choose:
The correct option for the center
Answer to Problem 1SEQ
B. A Profit Center
Explanation of Solution
Explanation for correct answer:
Profit center generate revenue and incur expenses and its decisions affect costs and revenues. Hence the correct option is B.
Explanation for incorrect answers:
A. Profit center generate revenue and incur expenses and its decisions affect costs and revenues. Hence this option is incorrect.
C. Profit center generate revenue and incur expenses and its decisions affect costs and revenues. Hence this option is incorrect.
D. Profit center generate revenue and incur expenses and its decisions affect costs and revenues. Hence this option is incorrect.
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Students have asked these similar questions
A responsibility center in which the department manager has responsibility for and authority over costs and revenues is called a(n) _____ center.
a.investment
b.cost
c.profit
d.volume
In which of the following
responsibility centers does the
manager have responsibility for
and authority over the unit's costs,
but not its revenues or investment
decisions?
Group of answer choices
a- Cost Center
b- Profit Center
c- Investment Center
d- Liability Center
For each of the following, select its best description.
A. Provides information used to evaluate the performance of a department.
B. Performs an organization's main functions, like manufacturing and selling.
C. Costs incurred for the joint benefit of more than one department.
D. Holds manager responsible for revenues, costs and major investing decisions.
E. Costs that can be readily traced to a department.
F. Costs not within a manager's control or influence.
1. Investment center
2. Responsibility accounting system
3. Uncontrollable costs
|4. Operating department
5. Direct expenses
6. Indirect expenses
Chapter 14 Solutions
Survey of Accounting (Accounting I)
Ch. 14 - When the manager has the responsibility and...Ch. 14 - The Accounts Payable Department has expenses of...Ch. 14 - Division A of Kern Co. has sales of $350,000, cost...Ch. 14 - Division L of Liddy Co. has a return on investment...Ch. 14 - Which approach to transfer pricing uses the price...Ch. 14 - Prob. 1CDQCh. 14 - Prob. 2CDQCh. 14 - Prob. 3CDQCh. 14 - Prob. 4CDQCh. 14 - Weyerhaeuser developed a system that assigns...
Ch. 14 - What is the major shortcoming of using operating...Ch. 14 - Prob. 7CDQCh. 14 - In a decentralized company in which the divisions...Ch. 14 - Prob. 9CDQCh. 14 - Prob. 10CDQCh. 14 - Prob. 11CDQCh. 14 - Prob. 12CDQCh. 14 - Why would standard cost be a more appropriate...Ch. 14 - Prob. 14CDQCh. 14 - Budget performance reports for cost centers...Ch. 14 - Divisional income statements The following data...Ch. 14 - Prob. 14.3ECh. 14 - Prob. 14.4ECh. 14 - Service department charges In divisional income...Ch. 14 - Service department charges and activity bases...Ch. 14 - Divisional income statements with service...Ch. 14 - Corrections to service department charges Panda...Ch. 14 - Profit center responsibility reporting On-Demand...Ch. 14 - Prob. 14.10ECh. 14 - Prob. 14.11ECh. 14 - Prob. 14.12ECh. 14 - Profit margin, investment turnover, and return on...Ch. 14 - Prob. 14.14ECh. 14 - Determining missing items in return on investment...Ch. 14 - Prob. 14.16ECh. 14 - Prob. 14.17ECh. 14 - Prob. 14.18ECh. 14 - Budget performance report for a cost center Sneed...Ch. 14 - Budget performance report for a cost center Sneed...Ch. 14 - Profit center responsibility reporting A-One...Ch. 14 - Profit center responsibility reporting A-One...Ch. 14 - Profit center responsibility reporting A-One...Ch. 14 - Prob. 14.3.1PCh. 14 - Divisional income statements and return on...Ch. 14 - Prob. 14.3.3PCh. 14 - Prob. 14.4.1PCh. 14 - Prob. 14.4.2PCh. 14 - Prob. 14.4.3PCh. 14 - Effect of proposals on divisional performance A...Ch. 14 - Prob. 14.4.5PCh. 14 - Prob. 14.5.1PCh. 14 - Prob. 14.5.2PCh. 14 - Prob. 14.5.3PCh. 14 - Prob. 14.5.4PCh. 14 - Prob. 14.6.1PCh. 14 - Prob. 14.6.2PCh. 14 - Prob. 14.6.3PCh. 14 - Prob. 14.6.4PCh. 14 - Prob. 14.6.5PCh. 14 - Balanced scorecard American Express Company (AXP)...Ch. 14 - Balanced scorecard Several years ago. United...Ch. 14 - Balanced scorecard Delta Air Lines, Inc. (DAL)...Ch. 14 - Balanced scorecard Costco Wholesale Corporation...Ch. 14 - Prob. 14.5MBACh. 14 - Prob. 14.1CCh. 14 - Prob. 14.2CCh. 14 - Prob. 14.3.1CCh. 14 - Prob. 14.3.2CCh. 14 - Prob. 14.3.3CCh. 14 - Prob. 14.3.4CCh. 14 - Prob. 14.4.1CCh. 14 - Prob. 14.4.2CCh. 14 - Prob. 14.4.3CCh. 14 - Prob. 14.4.4CCh. 14 - Prob. 14.5.1CCh. 14 - Prob. 14.5.2CCh. 14 - Prob. 14.5.3CCh. 14 - Prob. 14.5.4CCh. 14 - Prob. 14.5.5CCh. 14 - Prob. 14.5.6C
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- A responsibility center in which managers are held accountable for both revenues and expenses is called a ______. A. discretionary cost center B. revenue center C. cost center D. profit centerarrow_forwardThe actions listed next are associated with either an activity-based operational control system or a traditional operational control system: a. Budgeted costs for the maintenance department are compared with the actual costs of the maintenance department. b. The maintenance department manager receives a bonus for beating budget. c. The costs of resources are traced to activities and then to products. d. The purchasing department is set up as a responsibility center. e. Activities are identified and listed. f. Activities are categorized as adding or not adding value to the organization. g. A standard for a products material usage cost is set and compared against the products actual materials usage cost. h. The cost of performing an activity is tracked over time. i. The distance between moves is identified as the cause of materials handling cost. j. A purchasing agent is rewarded for buying parts below the standard price set by the company. k. The cost of the materials handling activity is reduced dramatically by redesigning the plant layout. l. An investigation is undertaken to find out why the actual labor cost for the production of 1,000 units is greater than the labor standard allowed. m. The percentage of defective units is calculated and tracked over time. n. Engineering has been given the charge to find a way to reduce setup time by 75 percent. o. The manager of the receiving department lays off two receiving clerks so that the fourth-quarter budget can be met. Required: Classify the preceding actions as belonging to either an activity-based operational control system or a traditional control system. Explain why you classified each action as you did.arrow_forwardComponents of the organization that are demotivating for purposes of performance management are known as ______. A. business goals B. strategic plans C. uncontrollable factors D. incentivesarrow_forward
- Discuss the concept of controllable and uncontrollable costs and how they affect the evaluation of the responsibility centers financial performance.arrow_forwardIn a decentralized accounting system, a company that gives a manager responsibility over revenues, costs, and investment in assets is organized as what type of responsibility center? Group of answer choices cost center profit center investment center none of thesearrow_forwardWhich of the following is the least practical reason for allocating service department costs to user departments? a) to evaluate performance of managers and divisions b) to make operating departments aware that services are costly and must be used efficiently c) to determine profitability of operating departments d) to determine profitability of support departmentsarrow_forward
- In a profit center, the manager has responsibility and authority for making decisions that affect a.assets b.investments c.long-term liabilities d.revenuesarrow_forwardInstructions: Designate the best answer for each of the following questions. 1.Which of the following is a responsibility center that incurs expenses, generates revenues, and is responsible for generating a return on assets? a. Cost center b. Revenue center c. Profit center d. Investment center 2.Which one of the following is the most useful measure for evaluating a manager's performance in controlling revenues and costs in a profit center? a. Contribution margin b. Contribution net income c. Contribution gross profit d. Controllable margin 3.Hanover Corporation desires to earn target net income of $42,000. The selling price per unit is $18, unit variable cost is $5.60, and total fixed costs are $123,912. How many units must the company sell to earn its target net income? a. 13,380 b. 9,993 c. 3,387 d. 9,217 4.Remark…arrow_forwardWhich of the following is not a characteristic of an effective responsibility accounting system? a) Reports that set goals for long-term strategic performance 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 highlight areas that need corrective actionarrow_forward
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