Question :
31. Melissa plant manager for Diversified Industries. She and the managers : 1208319
31. Melissa 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 Melissa. Select the incorrect statement regarding the preparation of responsibility reports.
A. Melissa’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 four rows of information for Melissa’s plant.
C. Melissa’s administrative costs should not be included on the reports of her three department managers.
D. Melissa’s responsibility report should contain only summary information about the operations of the three departments in her chain of command.
32. Jason is a department manager who recently instituted a new recognition program for his employees. He budgeted the cost of the new program at $10 per employee, but actual costs were $15 per employee. The cost associated with the recognition program would be considered which of the following kinds of cost?
A. Fixed cost
B. Opportunity cost
C. Controllable cost
D. Product cost
33. Select the incorrect statement concerning the application of the controllability concept to responsibility accounting.
A. As a practical matter, control of costs or revenues may be shared rather than absolute.
B. The concept of control is crucial to an effective responsibility accounting system.
C. Each manager should be evaluated on the costs but not the revenues that are under his or her control.
D. Managers lose motivation when they are rewarded or punished for actions that are beyond their scope of control.
34. Sandra’s responsibility report includes the salary and benefits of her secretary. Although Sandra prepares a performance evaluation for the secretary each year, Sandra’s superior determines how much the secretary will be paid. This example is an illustration of the fact that:
A. Responsibility reporting systems are not perfect.
B. Managers sometimes are held responsible for items over which they have only limited control.
C. Control may be shared.
D. All of the other answers are correct.
35. The concept of control is important in a responsibility accounting system. Select the best explanation of why this is a true statement.
A. Without control, total chaos occurs.
B. Managers need control to fuel their egos.
C. Managers enjoy being in control of their own little kingdoms.
D. Managers lose motivation when they are rewarded or punished for events or outcomes that are beyond their scope of control.
36. Which of the following statements about return on investment (ROI) is false?
A. ROI is used to measure the performance of investment centers.
B. ROI = margin divided by investment turnover.
C. Seeking to maximize ROI can result in a conflict between the interest of a particular manager and the interest of the business as a whole.
D. The book value of operating assets is frequently used as the investment base for calculating return on investment.
37. Howard Company reported the following information for 2012:
The company’s return on investment for 2012 was:
A. 8%.
B. 12.8%.
C. 16%.
D. Not able to be calculated from the information provided.
38. Kramer Candy Corporation desires a 14% return on investment (ROI) on all operations. The following information was available for the company in 2012:
What is the corporation’s ROI?
A. 28.6%
B. 12%
C. 57%
D. 14.3%
39. Jamison Company has an investment in assets of $900,000, income that is 10% of sales, and an ROI of 18%. From this information the amount of income would be:
A. $162,000.
B. $12,000,000.
C. $5,000,000.
D. Impossible to determine from the information given.
40. The Fairway Restaurant chain had a 12% return on a $60,000 investment in new ovens. The investment resulted in increased sales and an increase in income that was 4% of the increase in sales. The increase in sales was:
A. $7,200.
B. $60,000.
C. $180,000.
D. $500,000.
