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21 a tool that is often used to depict the lines of authority and responsibility wit 4301434


21. A tool that is often used to depict the lines of authority and responsibility within a firm is: 
A. A variance report.
B. A responsibility report.
C. A master budget.
D. An organization chart.

22. Select the false statement regarding responsibility accounting (RA). 
A. It calls for the preparation of reports containing detailed information regarding the performance of a responsibility center.
B. It is most effective in a centralized business structure where a few top managers control the whole company's operations.
C. It calls for the preparation of responsibility reports listing the budgeted and actual revenue and/or expense items over which the manager has control.
D. It requires each manager to prepare a plan of expected performance for the responsibility level over which he or she has control.

23. Which 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 action

24. Management recently instituted a new training program for upper level managers. They budgeted the cost of the new program at $1,000 per employee trained but actual costs were $1,250 per employee trained. The difference between the budgeted cost for training and the actual cost of training is called a: 
A. Period cost.
B. Variance.
C. Loss.
D. Controllable cost.

25. Responsibility reports are prepared: 
A. For senior level managers only.
B. Only at the end of the accounting period.
C. To identify and punish managers who fail to control their costs.
D. For each manager who has control over revenue and expense items.

26. A responsibility report provided to a manager typically includes: 
A. A list of all the items under the manager's control.
B. The budgeted amount for each item on the report.
C. The differences between the budgeted and actual amounts for each item on the report.
D. All of the other answers are correct.

27. Jones Company is decentralized with three divisions. While all three division managers have responsibility for costs, only the Division Three manager has responsibility for generating revenues. Select the correct statement from the following. 
A. Jones Company is not large enough to benefit from preparing responsibility reports.
B. Responsibility reports should be prepared for Division Three only.
C. Responsibility reports should be prepared for Divisions One and Two only.
D. Responsibility reports should be prepared for all three divisions.

28. The manager of the production department for Romulus Manufacturing has responsibility for all stages of the production process and does not have time to review all the operational details of his department. He has found it to be more productive to focus on the significant deviations from budget. This kind of management is called: 
A. Deviation management.
B. Management by exception.
C. Controllable management.
D. Decentralized management.

29. Select the incorrect statement concerning responsibility reports. 
A. The reports should be stated in simple terms.
B. The reports should show clearly the budgeted and actual amounts of controllable revenues and expenses.
C. The utility of the reports increases with the passage of time.
D. The reports must be prepared in a timely manner.

30. Which of the following formats is typically used in year-to-date income statements prepared for internal use under a responsibility accounting system? 
A. Sales – Cost of Goods Sold = Gross Margin; Gross Margin – Operating Expenses = Net Income
B. Sales – Variable Costs = Contribution Margin; Contribution Margin – Fixed Costs = Net Income
C. Sales – Manufacturing Costs = Manufacturing Margin; Manufacturing Margin – Selling and Administrative Costs = Net Income
D. None of the other answers are correct.



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