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multiple choice questions 23 a responsibility accounting system measures the perform 4298283



Multiple Choice Questions

23. A responsibility accounting system measures the performance of each of the following centers except: 
A. Profit center.
B. Investment center.
C. Control center.
D. Cost center.



24. Fixed costs that the manager of a department cannot change are called: 
A. Controllable.
B. Committed.
C. Traceable.
D. Common.



25. If a company wanted to evaluate the manager's ability to control costs, the company would probably look at the: 
A. Performance margin.
B. Responsibility margin.
C. Contribution margin.
D. None of the above.



26. The dollar amount used by one division which supplies a good or a service to another division within a company is called a: 
A. Market price.
B. Transfer price.
C. Fair price.
D. Agreed-upon price.



27. The part of a business a particular manager is held responsible for is called a: 
A. Cost center.
B. Profit center.
C. Investment center.
D. Responsibility center.



28. An example of a revenue center is: 
A. The accounting department in a manufacturing company.
B. The maintenance department of a university.
C. The furniture department of a retail department store.
D. The human resources department in a hospital.



29. Which of the following is not a valid reason for developing responsibility center information? 
A. Responsibility center information is useful in deciding how to allocate resources among segments of the business.
B. Separately measuring the revenue and expenses of each responsibility center is a necessary step in developing financial statements for the business entity viewed as a whole.
C. Responsibility center information is useful in evaluating the performance of segment managers.
D. Responsibility center information helps management to quickly identify sections of the business that are performing poorly.



30. The term responsibility center reflects the idea that the “centers” of a business usually are defined in a manner such that each center is: 
A. Responsible for earning a specified amount of profit.
B. Responsible for all business operations in a specific region.
C. Under the control of a specified center manager.
D. Approximately the same size.



31. The primary difference between profit centers and cost centers is that: 
A. Profit centers generate revenue.
B. Cost centers incur costs.
C. Profit centers are evaluated using return on investment criteria.
D. Profit centers provide services to other centers in the organization.



32. An investment center: 
A. Is a profit center for which management is able to objectively measure the cost of the assets used in the center's operations.
B. Is a cost center for which management is able to identify the original amount invested.
C. May be either a cost center or a profit center.
D. Is a subunit of the organization that provides services to other centers within the organization.




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