_____ Controllable costs, as used in a responsibility accounting system, consist

Question

_____ Controllable costs, as used in a responsibility accounting system, consist of:
A. only fixed costs.
B. only direct materials and direct labor.
C. those costs that a manager can influence in the time period under review.
D. those costs about which a manager has some knowledge.
E. those costs that are influenced by parties external to the organization.

_____ If the head of a hotel's food and beverage operation is held accountable for revenues and costs, the food and beverage operation would be considered a(n):
A. cost center.
B. revenue center.
C. profit center.
D. investment center.
E. contribution center.

_____ Which of the following is not a typical quality-cost classification?
A. External failure cost.
B. Internal failure cost.
C. Production inefficiency cost.
D. Prevention cost.
E. Appraisal cost.

_____ The cost of servicing a unit under a warranty agreement is known as a(n):
A. external failure cost.
B. internal failure cost.
C. production inefficiency cost.
D. prevention cost.
E. appraisal cost.

_____ Tunley Corporation has excess capacity. If the firm desires to implement the general transfer-pricing rule, opportunity cost would be equal to:
A. zero.
B. the direct expenses incurred in producing the goods.
C. the total difference in the cost of production between two divisions.
D. the contribution margin forgone from the lost external sale.
E. the summation of variable cost plus fixed cost.

_____ Which of the following transfer-pricing methods can lead to dysfunctional decision-making behavior by managers?
A. Variable cost.
B. Full cost.
C. External market price.
D. A professionally negotiated, amicable settlement between the buying and selling divisions.
E. None of these.

Explanation / Answer

Question 1:

C. those costs that a manager can influence in the time period under review.

The time period controllable cost would be responsible towards the accounting system to reduce the loss of the business.

Question 2:

C. profit center.

When the hotel food and beverages focus on the revenues and cost it determines on the profit of the organization.

Question 3:

C. Production inefficiency cost.

The wastages on the production will not be added into quality cost classification and that is said to be production inefficiency cost.

Question 4:

A. external failure cost

When the company provides on warranty it should focus more on the external environment of clients and customers, so the cost of serving would be under the external failure cost.

Question 5:

A. zero.

When there is excess capacity the opportunity cost would be equal to zero, as there is control on the production process.

Question 6:

B. Full cost

The full cost derived from the fixed and variable cost, as where the manager can decide according through the pricing methods.

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