ACC 201C - Chapter 24 Quiz Score 100%
Discipline: Accounting
Type of Paper: Question-Answer
Academic Level: High school
Paper Format: APA
Question
A profit center generates revenue,
incurs costs, and has the authority to make significant investing decisions.
True
False
A department's direct expenses are
usually considered uncontrollable costs.
True
False
No standard rule identifies the best
basis of allocating expenses across departments, so it is impossible to
allocate costs in a manner that will be perceived as fair.
True
False
A joint cost of producing two
products can be allocated between those products on the basis of the relative
physical quantities of each product produced.
True
False
If a company reports profit margin
of 31.6% and investment turnover of 1.30 for one of its investment centers, the
return on investment must be:
32.9%.
4.11%.
41.1%.
30.3%.
24.3%.
Kragle Corporation reported the
following financial data for one of its divisions for the year; average
invested assets of $470,000; sales of $930,000; and income of $105,000. The
investment center profit margin is:
197.9%.
50.5%.
447.6%.
11.3%.
22.3%.
The salaries of employees who spend
all their time working in one department are:
Variable expenses.
Responsibility expenses.
Unavoidable expenses.
Direct expenses.
Indirect expenses.
Differential Chemical produced
10,000 gallons of Preon and 20,000 gallons of Paron. Joint costs incurred in
producing the two products totaled $7,500. At the split-off point, Preon has a
market value of $6.00 per gallon and Paron $2.00 per gallon. Compute the
portion of the joint costs to be allocated to Preon if the value basis is
used.
$3,000.
$4,500.
$5,625.
$2,500.
$1,500.
The amount by which a department's
sales exceed its direct expenses is:
Departmental profit.
Departmental contribution to
overhead.
Contribution margin.
Net sales.
Gross profit.
Advertising expense can be
reasonably allocated to departments on the basis of each department's
proportion of sales.
True
False
Part 7B costs the Midwest Division
of Frackle Corporation $30 to make, of which $21 is variable. Midwest Division
sells Part 7B to other companies for $47. The Northern Division of Frackle
Corporation can use Part 7B in one of its products. The Midwest Division has
enough idle capacity to produce all of the units of Part 7B that the Northern
Division would require. What is the lowest transfer price at which the Midwest
Division should be willing to sell Part 7B to the Northern Division?
$30
$20
$17
$47
$21
The type of department that
generates revenues and incurs costs, and its manager is responsible for the
investments made in operating assets is called a:
Profit center
Cost center
Service department
Investment center
Responsibility center
Indirect expenses are allocated to
departments based upon the benefits received by each department.
True
False
Profit margin for an investment
center measures:
How efficiently an investment center
generates sales from its invested assets.
Investment center income earned per
dollar of sales.
Investment center income compared to
target investment center income.
Departmental contribution to
overhead.
Investment center income generated
from its invested assets.
Direct expenses require allocation
across departments because they cannot be readily traced to one department.
True
False
A department can never be considered
to be a profit center.
True
False
Part AR3 costs the Southwestern
Division of Luxon Corporation $26 to make-direct materials are $10, direct
labor is $4, variable manufacturing overhead is $9, and fixed manufacturing
overhead is $3. Southwestern Division sells Part AR3 to other companies for
$30. The Northeastern Division of Luxon Corporation can use Part AR3 in one of
its products. The Southwestern Division has enough idle capacity to produce all
of the units of Part AR3 that the Northeastern Division would require. What is
the lowest transfer price at which the Southwestern Division should be willing
to sell Part AR3 to the Northeastern Division?
$26
$27
$30
$21
$23
A responsibility accounting
performance report usually compares actual costs to budgeted costs amounts by
management level.
True
False
Joint costs can be allocated either
using a physical basis or a value basis.
True
False
Regardless of the system used in
departmental cost analysis:
Neither direct nor indirect costs
are allocated.
Indirect costs are allocated, direct
costs are not.
Total departmental costs will always
be the same.
Both direct and indirect costs are
allocated.
Direct costs are allocated, indirect costs are not.