1. Relative performance evaluations (RPE) are not designed to
A. compare managers to other comparable managers.
B. compare divisions with other comparable divisions.
C. remove the effect of environmental factors that are beyond a manager’s control.
D. restate departmental goals so meaningful comparisons can be made.
2. Which of the following statements is (are) false regarding the effective use of management control systems.
A. In general, cost allocations should not be used in management control systems because clear control over the cost being allocated cannot be determined.
B. The primary reason to use a dual rate allocation system is to focus a manager’s performance evaluation on factors under the manager’s direct control.
A. Only A is false.
B. Only B is false.
C. Both A and B are false.
D. Neither A nor B is false.
3. The method of accounting for joint product costs that will produce the same gross margin for all products is the
A. replacement method.
B. physical quantities method.
C. net realizable value method.
D. units produced method.
4. Which of the following activities is most likely to be classified as value-added for a manufacturing company?
5. The controllability concept states that managers should be held responsible for
A. all items over which they have decision-making authority
B. costs and revenues, but not investments in assets used in their division.
C. only items that are allocated to their divisions on a per-unit basis.
D. fixed compensation items, but not contingent compensation items.
6. Which of the following budgets is not required in a wholesale organization?
D. cost of goods sold
marketing and administrative expenses
7. The amount of resources used in an activity-based costing (ABC) system for a specific activity is computed by multiplying the:
A. cost driver rate and the actual cost driver volume.
B.cost driver rate and the planned cost driver volume.
C.overhead rate and the actual cost driver volume.
D. overhead rate and the planned cost driver volume.
8. Assets invested in a responsibility center are included in a performance report of:
A. Cost Center
B. Profit Center
only A is true.
Both A and B are true.
Neither A nor B is true.
only B is true.
9. The unused resource capacity is the difference between the resources supplied and the resources
D. on hand
10. Pardee Company makes 30% of its sales for cash and 70% on account. 60% of the account sales are collected in the month of sale, 25% in the month following sale, and 12% in the second month following sale. The remainder is uncollectible. The following information has been gathered for Pardee’s first year of operations.
Total cash receipts in Month 3 will be: