ch12
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ch12

Course Number: ECON 1001, Spring 2011

College/University: Virginia Tech

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ch12 Student: ___________________________________________________________________________ 1. The design and use of management control systems affects how an individual makes and implements decisions. True 2. In general, there is a direct relationship between the quality of the information provided to managers and the quality of decisions made using that information. True 3. False Properly developed and...

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___________________________________________________________________________ 1. The ch12 Student: design and use of management control systems affects how an individual makes and implements decisions. True 2. In general, there is a direct relationship between the quality of the information provided to managers and the quality of decisions made using that information. True 3. False Properly developed and implemented management control systems influence subordinates to act in the organization's best interest. True 9. False One advantage of centralization is better use of top management's time on strategic decisions. True 8. False One advantage of decentralization is faster response time to changes in the organization's environment by local managers. True 7. False In general, organizations are more centralized in the early stages of their existence and more decentralized as they grow. True 6. False Decentralization is the delegation of the authority to make decisions in the organization's name to subordinates. True 5. False Rational managers will always make decisions that are in the best interest of the organization employing them. True 4. False False Delegated decision authority is the specification of what decisions a subordinate can make in the organization. True False 10. It is important to not consider an organization's compensation and reward system when designing its performance evaluation system. True False 11. Managers in a cost center are held responsible for both the costs and volumes of inputs used to produce a product or provide a service. True False 12. In general, profit centers are found at higher levels in an organization than investment centers. True False 13. Properly designed management control systems can totally eliminate the inherent conflict between individual behavior and organizational goals. True False 14. There is no single accounting measure that can fully measure the performance of a profit or investment center. True False 15. Fixed compensation is generally not linked to measured performance; i.e., it is independent of measured performance. True False 16. Properly designed management control systems have both fixed compensation and contingent compensation. True False 17. Cost allocations based on dual rates assume that a common cost can be separated into a fixed and variable component. True False 18. 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. True False 19. It is possible for performance evaluation systems and/or management control systems to contribute to unethical or fraudulent behavior. True False 20. Properly designed management control systems will eliminate fraudulent behavior by maximizing goal congruence within the organization. True False 21. Which of the following statements is (are) true regarding managerial decisions? (A) The design and use of management control systems affects how an individual makes and implements decisions. (B) Rational managers will always make decisions that are in the best interest of the organization employing them. A. B. C. D. Only A is true. Only B is true. Both A and B are true. Neither A nor B is true. 22. Decentralization refers to the delegation of decision-making authority to A. B. C. D. top management. superiors. board of directors. subordinates. 23. Which of the following is not a characteristic of a decentralized organization? A. B. C. D. better use of local knowledge better use of top management's time reduced response time to environmental changes more decisions made by relatively few individuals 24. Which of the following statements is false? A. B. C. D. The U.S. military is a good example of an organization that is highly decentralized. The degree of decentralization depends on how many decisions principals delegate to agents. Management control systems are used to measure the performance of an agent's decisions. Most organizations have some operating units that are centralized and some that are decentralized. 25. Which of the following elements is not part of a management control system? A. B. C. D. delegated decision authority performance evaluation system knowledge of local conditions compensation and reward system 26. An operating unit of an organization is called a cost center if it is responsible A. B. C. D. only for costs. only for revenues. for costs and revenues. for investments in assets. 27. An operating unit of an organization is called an investment center if it is responsible A. B. C. D. only for costs. only for revenues. for costs and revenues. for investments in assets. 28. An operating unit of an organization is called a revenue center if it is responsible A. B. C. D. only for costs. only for revenues. for costs and revenues. for investments in assets. 29. An operating unit of an organization is called a profit center if it is responsible A. B. C. D. only for costs. only for revenues. for costs and revenues. for investments in assets. 30. An operating unit that is responsible for revenues and costs is commonly referred to as a(n) A. B. C. D. expense center. revenue center. profit center. asset center. 31. An operating unit that is responsible for revenues only is commonly referred to as a(n) A. B. C. D. expense center. revenue center. profit center. asset center. 32. An operating unit that is responsible for only costs is commonly referred to as a(n) A. B. C. D. cost center. revenue center. profit center. asset center. 33. When managers are held responsible for costs but the input-output relationship is not well specified, a(n) ________________________ is established. A. B. C. D. standard cost center revenue center discretionary cost center asset center 34. When managers are held responsible for costs and the input-output relationship is well specified, a(n) ________________________ is established. A. B. C. D. standard cost center revenue center discretionary cost center asset center 35. Decentralized organizations can delegate authority and still maintain control and monitor managers' performance by designing appropriate management control systems. Which of the following responsibility centers would be evaluated similar to an independent business? A. B. C. D. profit center revenue center investment center discretionary cost center 36. Controllable revenue is included in a performance report of a A. B. C. D. a b c d 37. Controllable revenue is included in a performance report of a A. B. C. D. a b c d 38. Controllable revenue is included in a performance report of a A. B. C. D. a b c d 39. Assets invested in a responsibility center are included in a performance report of A. B. C. D. a b c d 40. Assets invested in a responsibility center are included in a performance report of A. B. C. D. a b c d 41. A manager makes a decision that is beneficial for a specific investment center but not for the entire organization. From the organization's perspective, this decision results in A. B. C. D. goal congruence. decentralization. contingent compensation. fixed compensation. 42. The controllability concept states that managers should be held responsible for A. B. C. D. all items over which they have decision-making authority. costs and revenues, but not investments in assets used in their division. only items that are allocated to their divisions on a per-unit basis. fixed compensation items, but not contingent compensation items. 43. Relative performance evaluations (RPE) are not designed to A. B. C. D. compare managers to other comparable managers. compare divisions with other comparable divisions. remove the effect of environmental factors that are beyond a manager's control. restate departmental goals so meaningful comparisons can be made. 44. Which of the following items would be classified as a fixed compensation item? A. B. C. D. Administrative salaries Sales commissions Stock options Piece rates 45. Which of the following items would not be classified as a contingent compensation item? A. B. C. D. Administrative salaries Sales commissions Stock options Piece rates 46. Which of the following statements is (are) true regarding compensation? (A) Fixed compensation is generally not linked to measured performance; i.e., it is independent of measured performance. (B) Properly designed management control systems have contingent compensation items but not fixed compensation items. A. B. C. D. Only A is true. Only B is true. Both A and B are true. Neither A nor B is true. 47. The use of dual rates in a cost allocation system assumes that common costs can be A. B. C. D. separated into their fixed and variable components. traced directly to a specific division or manager. allocated based on a physical quantities measure. assigned to an investment responsibility center. 48. Which of the following statements is (are) false regarding the effective use of management control systems? (A) In general, single rate 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. B. C. D. Only A is false. Only B is false. Both A and B are false. Neither A nor B is false. 49. Examples of pressures that can lead to financial fraud do not include A. B. C. D. unrealistic budgets. inappropriate bonus plans. overemphasis on long-term results. overemphasis on short-term results. 50. The Sarbanes-Oxley Act of 2002 requires that management of publicly traded companies A. B. C. D. use investment centers to evaluate top managers. report on the adequacy of the company's internal controls over financial reporting. compensate managers with fixed compensation plans only. eliminate stock options for managerial compensation. 51. Which of the following is not an internal control? A. B. C. D. rotating personnel among tasks. separation of duties. setting limits on the amount of expenditures. using absolute performance standards. 52. Internal controls include all of the following except: A. B. C. D. using contingent compensation plans. requiring management authorization for the use of a company's assets. reconciling various sets of books. requiring employees to take vacations. Boxes-2-Go has two divisions, large and small, that share the common costs of the company's communications network. The annual common costs are $4,500,000. You have been provided with the following information for the upcoming year: 53. What is the allocation rate for the upcoming year assuming Boxes-2-Go uses the single-rate method and allocates common costs based on the number of calls? A. B. C. D. $10.00 $15.00 $20.00 $25.00 54. What is the allocation rate for the upcoming year assuming Boxes-2-Go uses the single-rate method and allocates common costs based on the time on the network? A. B. C. D. $10.98 $10.00 $8.00 $7.14 55. The cost accountant determined $2,700,000 of the communication network's costs were fixed and should be allocated based on the number of calls. The remaining costs should be allocated based on the time on the network. What is the total communication network costs allocated to the Large Box Division assuming the company uses dual-rates to allocate common costs? A. B. C. D. $2,700,000 $2,520,000 $1,980,000 $1,500,000 56. The cost accountant determined $2,700,000 of the communication network's costs were fixed and should be allocated based on the number of calls. The remaining costs should be allocated based on the time on the network. What is total communication network costs allocated to the Small Box Division assuming the company uses dual-rates to allocate common costs? A. B. C. D. $2,520,000 $1,800,000 $1,320,000 $1,200,000 The Copy Department in the College of Business at State University provides photocopying service for both the Marketing and Economics Department. The following budget has been prepared for the year. 57. If the Copy Department uses a dual rate for allocating its costs based on usage, how much cost will be allocated to the Marketing Department? A. B. C. D. $85,000 $90,000 $150,000 $170,000 58. If the Copy Department uses a dual rate for allocating its costs based on usage, how much cost will be allocated to the Economics Department? A. B. C. D. $85,000 $90,000 $105,000 $120,000 59. If the Copy Department uses a dual-rate for allocating its costs, how much cost will be allocated to the Economics Department, assuming the Economics Department actually made 2,100,000 copies during the year? A. B. C. D. $85,000 $92,500 $132,500 $112,500 60. If the Copy Department uses a dual-rate for allocating its costs, how much cost will be allocated to the Marketing Department, assuming the Marketing Department actually made 3,000,000 copies during the year? A. B. C. D. $135,000 $150,000 $155,000 $170,000 61. If the Copy Department uses a dual-rate for allocating its costs, how much cost will be allocated to the Economics Department, assuming the Economics Department actually made 1,500,000 copies during the year? A. B. C. D. $77,500 $92,500 $132,500 $112,500 62. If the Copy Department uses a dual-rate for allocating its costs, how much cost will be allocated to the Marketing Department, assuming the Marketing Department actually made 3,800,000 copies during the year? A. B. C. D. $135,000 $150,000 $155,000 $175,000 Fenway Telcom has three divisions, commercial, retail and consumer, that share the common costs of the company's computer server network. The annual common costs are $2,400,000. You have been provided with the following information for the upcoming year: 63. What is the allocation rate for the upcoming year assuming Fenway Telcom uses the single-rate method and allocates common costs based on the number of connections? A. B. C. D. $10.00 $15.00 $20.00 $40.00 64. Fenway Telcom uses the single rate method and allocates common costs based on the number of connections. What is the total computer server network cost allocated to the Commercial Division? A. B. C. D. $480,000 $514,286 $600,000 $1,200,000 65. What is the allocation rate for the upcoming year assuming Fenway Telcom uses the single-rate method and allocates common costs based on the time on the network? A. B. C. D. $20.00 $16.00 $4.00 $2.86 66. Fenway Telcom uses the single rate method and allocates common costs based on the time on the network. What is the total computer server network cost allocated to the Retail Division? A. B. C. D. $429,000 $600,000 $657,800 $3,000,000 67. The cost accountant determined $1,700,000 of the server network's costs were fixed and should be allocated based on the number of connections. The remaining costs should be allocated based on the time on the network. What is the total server network costs allocated to the Commercial Division assuming the company uses dual-rates to allocate common costs? A. B. C. D. $514,286 $480,000 $600,000 $565,000 68. The cost accountant determined $1,700,000 of the server network's costs were fixed and should be allocated based on the number of connections. The remaining costs should be allocated based on the time on the network. What is total server network costs allocated to the Retail Division assuming the company uses dual-rates to allocate common costs? A. B. C. D. $741,667 $657,143 $425,000 $211,765 69. The cost accountant determined $1,700,000 of the server network's costs were fixed and should be allocated based on the number of connections. The remaining costs should be allocated based on the time on the network. What is total server network costs allocated to the Consumer Division assuming the company uses dual-rates to allocate common costs? A. B. C. D. $1,200,000 $1,093,333 $954,896 $750,000 The Document Creation Center (DCC) for Alegis Corp. provides photocopying and document services for three departments in the St. Paul office. The following budget has been prepared for the year. 70. If DCC uses a dual rate for allocating its costs based on usage, how much cost will be allocated to the Software Development Department? A. B. C. D. $98,000 $104,000 $112,000 $118,857 71. If DCC uses a dual rate for allocating its costs based on usage, how much cost will be allocated to the Training Department? A. B. C. D. $183,750 $210,000 $195,000 $222,857 72. If DCC uses a dual rate for allocating its costs based on usage, how much cost will be allocated to the Management Department? A. B. C. D. $168,000 $156,000 $178,286 $147,000 73. If DCC uses a dual-rate for allocating its costs, how much cost will be allocated to the Management Department, assuming the Management Department actually made 2,100,000 copies during the year? A. B. C. D. $147,000 $136,500 $159,000 $150,761 74. If DCC uses a dual-rate for allocating its costs, how much cost will be allocated to the Management Department, assuming the Management Department actually made 2,950,000 copies during the year? A. B. C. D. $184,500 $191,750 $211,783 $206,500 75. If DCC uses a dual-rate for allocating its costs, how much cost will be allocated to the Training Department, assuming the Training Department actually made 3,250,000 copies during the year? A. B. C. D. $227,500 $211,250 $217,500 $223,017 76. If DCC uses a dual-rate for allocating its costs, how much cost will be allocated to the Training Department, assuming the Training Department actually made 2,770,000 copies during the year? A. B. C. D. $180,050 $190,079 $193,900 $203,100 77. If DCC uses a dual-rate for allocating its costs, how much cost will be allocated to the Software Development Department, assuming the Software Development Department actually made 1,160,000 copies during the year? A. B. C. D. $75,400 $98,800 $81,200 $84,312 78. If DCC uses a dual-rate for allocating its costs, how much cost will be allocated to the Software Development Department, assuming the Software Development Department actually made 1,780,000 copies during the year? A. B. C. D. $117,400 $115,700 $124,600 $129,376 79. In responsibility accounting, a center's performance is measured by those costs which are controllable. Controllable costs are best described as including (CMA adapted) A. direct materials and direct labor only. B. only those costs that the manager can influence in the current period. C. only discretionary costs. D. those costs about which the manager is knowledgeable and informed. E. incremental and fixed costs. 80. Rockford Manufacturing Corporation uses a responsibility accounting system in its operations. Which one of the following items is least likely to appear in a performance report for a manager of one of Rockford's assembly lines? (CMA adapted) A. direct labor B. materials C. repairs and maintenance D. depreciation on the manufacturing facility E. supervisory salaries 81. Responsibility accounting defines an operating center that is responsible for revenue and costs as a(n) (CMA adapted) A. profit center. B. revenue center. C. division. D. operating unit. E. investment center. 82. When comparing performance report information for top management with that of lower-level management, (CMA adapted) A. top management reports are more detailed. B. lower-level management reports are typically for longer time periods. C. top management reports show control over fewer costs. D. lower-level management reports are likely to contain more quantitative data and less financial data. E. top management reports are usually not of the exception type but present a complete analysis of all variances. 83. The least complex segment or area of responsibility for which costs are allocated is a(n) (CMA adapted) A. profit center. B. investment center. C. contribution center. D. cost center. E. hybrid center. 84. Which one of the following will not occur in an organization that gives managers throughout the organization maximum freedom to make decisions? (CMA adapted) A. more effective solutions to operational problems B. individual managers regarding the managers of other segments as they do external parties C. two divisions of the organization having competing models that aim for the same market segments D. delays in securing approval for the introduction of new products E. greater knowledge of the marketplace and improved service to customers 85. Which one of the following firms is likely to experience dysfunctional motivation on the part of its managers due to its allocation methods? (CMA adapted) ATo allocate depreciation of forklifts used by workers at its central warehouse, Shahlimar Electronics uses . predetermined amounts calculated on the basis of the long term average use of the services provided by the warehouse to the various segments. BManhattan Electronics uses the sales revenue of its various divisions to allocate costs connected with the . upkeep of its headquarters building. It also uses ROI to evaluate the divisional performance. C. Rainier Industrial does not allow its service departments to pass on their cost overruns to production departments. D ashkent Auto's management information system (MIS) is operated out of headquarters and serves T . its various divisions. Tashkent's allocation of MIS-related costs to its divisions is limited to costs the divisions will incur if they were to outsource their MIS needs. E. Golkonda Refineries separately allocates fixed and variable costs incurred by its service departments to its production departments. 86. Atlantic Hotels operates a centralized call center for the reservation needs of its time-share units. Costs associated with use of the center are charged to the time-share group (Luxury, Resort, Standard, and Budget) where a reservation is made on the basis of time on a call. Idle time of the reservation agents, time spent on calls where no reservation is made, and the fixed cost of the equipment are allocated on the number of reservations made in each group. Due to recent increased competition in the time-share, the company has decided that it is necessary to more accurately allocate its costs to price its services competitively and profitably. During the current period, the use of the call center for each group was as follows (in thousands of seconds for time usage and in number of reservations): During this period, the cost of the computer center amounted to $2,410,000 for personnel and $1,240,000 for equipment and other costs. Required Determine the allocation to each of the divisions using (you may round all decimals to three places): a. A single rate based on time used. b. Multiple rates based on time used (for personnel costs) and number of reservations (for equipment and other cost). 87. Baltic Resorts operates a centralized call center for the reservation needs of its time-share units. Costs associated with use of the center are charged to the time-share group (Luxury, Standard, and Budget) where a reservation is made on the basis of time spent on a call. Due to recent increased competition in the timeshare, the company has decided that it is necessary to more accurately allocate its costs to price its services competitively and profitably. During the current period, the use of the call center for each group was as follows (in thousands of seconds for time usage and in number of reservations): During this period, the cost of the computer center amounted to $1,760,000 for personnel and $1,240,000 for equipment and other costs. Required Determine the allocation to each of the divisions using (round all decimals to three places): a. A single rate based on time used. b. Multiple rates based on time used (for personnel costs) and number of reservations (for equipment and other cost). 88. Caspian Resorts operates a centralized call center for the reservation needs of its time-share units. Costs associated with use of the center are charged to the time-share group (Luxury and Standard) where a reservation is made on the basis of time spent on a call. Due to recent increased competition in the timeshare, the company has decided that it is necessary to more accurately allocate its costs to price its services competitively and profitably. During the current period, the use of the call center for each group was as follows (in thousands of seconds for time usage and in number of reservations): During this period, the cost of the computer center amounted to $1,220,000 for personnel and $960,000 for equipment and other costs. Required Determine the allocation to each of the divisions using (round all decimals to three places): a. A single rate based on time used. b. Multiple rates based on time used (for personnel costs) and number of reservations (for equipment and other cost). 89. The Document Creation Center (DCC) for Aelerion Corp. provides document services for three departments in the Denver office. The following budget has been prepared for the month. Required (use three decimal places in your calculations): a. If DCC uses a dual rate for allocating its costs based on usage, how much cost will be allocated to the three user departments? 90. The legal department for Buffet Corp. provides legal services for four departments in the Omaha office. The following budget has been prepared for the month. Required (use three decimal places in your calculations): a. If Buffet uses a dual rate for allocating its costs based on usage, how much cost will be allocated to the four user departments? 91. The human resources department for Hammond Corp. provides personnel services for two departments in the Chicago office. The following budget has been prepared for the month. Required (use three decimal places in your calculations): a. If Hammond uses a dual rate for allocating its costs based on employees, how much cost will be allocated to the two departments? 92. The Document Creation Center (DCC) for Aelerion Corp. provides document services for three departments in the Denver office. The following budget has been prepared for the month. Required (use three decimal places in your calculations): a. If DCC uses a dual rate for allocating its costs; allocating fixed costs based on number of documents and variable costs based on number of pages, how much cost will be allocated to the three user departments? 93. The legal department for Buffet Corp. provides legal services for four departments in the Omaha office. The following budget has been prepared for the month. Required (use three decimal places in your calculations): a. If Buffet uses a dual rate for allocating its costs, allocating fixed costs based on number of contracts and variable costs based on number of pages reviewed, how much cost will be allocated to the four user departments? 94. Wrigley Services has three divisions, commercial, retail and consumer, that share the common costs of the company's computer server network. The annual common costs are $1,200,000. You have been provided with the following information for the upcoming year: Required (use three decimal places in your calculations): a. What is the allocation rate for the upcoming year assuming Wrigley uses the single-rate method and allocates common costs based on the number of connections? Calculate the allocated amount for each division. b. What is the allocation rate for the upcoming year assuming Wrigley uses the single-rate method and allocates common costs based on the time on network? Calculate the allocated amount for each division. c. The cost accountant determined $850,000 of the server network's costs were fixed and should be allocated based on the number of connections. The remaining costs should be allocated based on the time on the network. What is the total server network costs allocated to each division? 95. Comiskey has four divisions, commercial, retail, research and consumer, that share the common costs of the company's computer server network. The annual common costs are $2,400,000. You have been provided with the following information for the upcoming year: Required (use three decimal places in your calculations): a. What is the allocation rate for the upcoming year assuming Comiskey uses the single-rate method and allocates common costs based on the number of connections? Calculate the allocated amount for each division. b. What is the allocation rate for the upcoming year assuming Comiskey uses the single-rate method and allocates common costs based on the time on network? Calculate the allocated amount for each division. c. The cost accountant determined $1,700,000 of the server network's costs were fixed and should be allocated based on the number of connections. The remaining costs should be allocated based on the time on the network. What is the total server network costs allocated to each division? 96. Jacobs Corp. has three divisions, commercial, retail and consumer, that share the common costs of the company's computer server network. The annual common costs are $2,400,000. You have been provided with the following information for the upcoming year: Required (use three decimal places in your calculations): a. What is the allocation rate for the upcoming year assuming Jacobs uses the single-rate method and allocates common costs based on the number of connections? Calculate the allocated amount for each division. b. What is the allocation rate for the upcoming year assuming Jacobs uses the single-rate method and allocates common costs based on the time on network? Calculate the allocated amount for each division. 97. Marlin has three divisions, commercial, retail and consumer, that share the common costs of the company's computer server network. The annual common costs are $2,400,000. You have been provided with the following information for the upcoming year: Required (use three decimal places in your calculations): a. The cost accountant determined $1,800,000 of the server network's costs were fixed and should be allocated based on the number of connections. The remaining costs should be allocated based on the time on the network. What is the total server network costs allocated to each division? 98. Sanper Corp. has four divisions, commercial, retail, research, and consumer, that share the common costs of the company's computer server network. The annual common costs are $3,500,000. You have been provided with the following information for the upcoming year: Required (use three decimal places in your calculations): a. What is the allocation rate for the upcoming year assuming Sanper uses the single-rate method and allocates common costs based on the number of connections? b. What is the allocation rate for the upcoming year assuming Sanper uses the single-rate method and allocates common costs based on the time on network? Calculate the allocated amount for each division. 99. Charleston has four divisions, commercial, retail, research, and consumer, that share the common costs of the company's computer server network. The annual common costs are $3,600,000. You have been provided with the following information for the upcoming year: Required (use three decimal places in your calculations): a. The cost accountant determined $2,300,000 of the server network's costs were fixed and should be allocated based on the number of connections. The remaining costs should be allocated based on the time on the network. What is the total server network costs allocated to each division? 100. Redding has two divisions, Production and Support, that share the common costs of the company's communications network. The annual common costs are $4,500,000. You have been provided with the following information for the upcoming year: Required (use three decimal places in your calculations): a. What is the allocation rate for the upcoming year assuming Redding uses the single-rate method and allocates common costs based on the number of calls? Calculate the costs allocated to each division. b. What is the allocation rate for the upcoming year assuming Redding uses the single-rate method and allocates common costs based on the time on the network? Calculate the costs allocated to each division. c. The cost accountant determined $2,700,000 of the communication network's costs were fixed and should be allocated based on the number of calls. The remaining costs should be allocated based on the time on the network. What is the total communication network costs allocated to each division? 101. Salinas has two divisions, Marketing and Finance, that share the common costs of the company's communications network. The annual common costs are $2,250,000. You have been provided with the following information for the upcoming year: Required (use three decimal places in your calculations): a. What is the allocation rate for the upcoming year assuming Salinas uses the single-rate method and allocates common costs based on the number of calls? Calculate the costs allocated to each division. b. What is the allocation rate for the upcoming year assuming Salinas uses the single-rate method and allocates common costs based on the time on the network? Calculate the costs allocated to each division. 102. Tofte has two divisions, Research and Sales, that share the common costs of the company's communications network. The annual common costs are $2,250,000. You have been provided with the following information for the upcoming year: Required (use three decimal places in your calculations): a. The cost accountant determined $1,350,000 of the communication network's costs were fixed and should be allocated based on the number of calls. The remaining costs should be allocated based on the time on the network. What is the total communication network costs allocated to each division? 103. The Black Swan Company has three client-contact departments: Market Research, Branding, and Promotion. Each department requires the services of the Legal Department for the contracts that each undertakes. The size of the Legal Department was based on long-run estimates of contracts. Information on the Legal Department's budgeted and actual costs is as follows: The budget for the Legal Dept is $300,000 + $10/contract. The budgeted volume of contracts is as follows: The actual number of contracts for Market Research was 315, for Branding was 450, and for Promotion was 720. Required (use three decimal places in your calculations): a. If a single charging rate based on budgeted usage is used, how much of the cost of the Legal Department would be allocated to each of the producing departments? b. If a dual charging rate is used, how much of the cost of the Legal Department would be allocated to each of the producing departments 104. The Black Swan Company has three client-contact departments: Market Research, Branding, and Promotion. Each department requires the services of the Legal Department for the contracts that each undertakes. The size of the Legal Department was based on long-run estimates of contracts. Information on the Legal Department's budgeted and actual costs is as follows: The budget for the Legal Dept is $200,000 + $7.50/contract. The budgeted volume of contracts is as follows: The actual number of contracts for Market Research was 286, for Branding was 450, and for Promotion was 675. Required (use three decimal places in your calculations): a. If a single charging rate based on budgeted usage is used, how much of the cost of the Legal Department would be allocated to each of the producing departments? b. If a dual charging rate is used, how much of the cost of the Legal Department would be allocated to each of the producing departments 105. The Black Swan Company has three client-contact departments: Market Research, Branding, and Promotion. Each department requires the services of the Legal Department for the contracts that each undertakes. The size of the Legal Department was based on long-run estimates of contracts. Information on the Legal Department's budgeted and actual costs is as follows: The budget for the Legal Dept is $400,000 + $15/contract. The budgeted volume of contracts is as follows: The actual number of contracts for Market Research was 207, for Branding was 512, and for Promotion was 820. Required (use three decimal places in your calculations): a. If a single charging rate based on budgeted usage is used, how much of the cost of the Legal Department would be allocated to each of the producing departments? b. If a dual charging rate is used, how much of the cost of the Legal Department would be allocated to each of the producing departments 106. Describe five advantages of decentralization. 107. Describe two disadvantages of decentralization. 108. Describe the three main elements of a management control system. 109. Describe the five basic types of decentralized units in responsibility accounting. 110. Explain the difference between fixed compensation and contingent compensation. Give an example of each. ch12 Key 1. The design and use of management control systems affects how an individual makes and implements decisions. TRUE Control systems affect behavior. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Medium Lanen - Chapter 12 #1 Learning Objective: 1 Topic Area: Alignment of Managerial and Organizational Interests 2. In general, there is a direct relationship between the quality of the information provided to managers and the quality of decisions made using that information. TRUE Normally, the better the information, the higher the quality of the decision. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Medium Lanen - Chapter 12 #2 Learning Objective: 1 Topic Area: Why a Management Control System? 3. Rational managers will always make decisions that are in the best interest of the organization employing them. FALSE Rational managers will often make decisions that are in their best personal interest. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Easy Lanen - Chapter 12 #3 Learning Objective: 1 Topic Area: Why a Management Control System? 4. Decentralization is the delegation of the authority to make decisions in the organization's name to subordinates. TRUE This is the definition of decentralization. AACSB: Analytic AICPA: FN-Decision Making Blooms: Knowledge Difficulty: Easy Lanen - Chapter 12 #4 Learning Objective: 2 Topic Area: Decentralized organizations 5. In general, organizations are more centralized in the early stages of their existence and more decentralized as they grow. TRUE Decentralization normally is the result of growth. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Easy Lanen - Chapter 12 #5 Learning Objective: 2 Topic Area: Decentralized organizations 6. One advantage of decentralization is faster response time to changes in the organization's environment by local managers. TRUE Local managers have the authority to make decisions, so the response time is faster. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Easy Lanen - Chapter 12 #6 Learning Objective: 2 Topic Area: Advantages of Decentralization 7. One advantage of centralization is better use of top management's time on strategic decisions. FALSE In a centralized system top management is required to make many operating decisions, so there is less time for strategic decision making. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Easy Lanen - Chapter 12 #7 Learning Objective: 2 Topic Area: Disadvantages of Decentralization 8. Properly developed and implemented management control systems influence subordinates to act in the organization's best interest. TRUE A properly designed system will promote goal congruence. AACSB: Analytic AICPA: FN-Decision Making Blooms: Application Difficulty: Easy Lanen - Chapter 12 #8 Learning Objective: 3 Topic Area: Elements of a Management Control System 9. Delegated decision authority is the specification of what decisions a subordinate can make in the organization. TRUE Authority defines what a person can and cannot do. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Easy Lanen - Chapter 12 #9 Learning Objective: 3 Topic Area: Elements of a Management Control System 10. It is important to not consider an organization's compensation and reward system when designing its performance evaluation system. FALSE It is important to consider the system. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Medium Lanen - Chapter 12 #10 Learning Objective: 3 Topic Area: Elements of a Management Control System 11. Managers in a cost center are held responsible for both the costs and volumes of inputs used to produce a product or provide a service. TRUE The manager does not have control over the price of the output, nor authority over it. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Easy Lanen - Chapter 12 #11 Learning Objective: 4 Topic Area: Cost Centers 12. In general, profit centers are found at higher levels in an organization than investment centers. FALSE Investment centers are found at higher levels. AACSB: Analytic AICPA: FN-Decision Making Blooms: Knowledge Difficulty: Easy Lanen - Chapter 12 #12 Learning Objective: 4 Topic Area: Investment Centers 13. Properly designed management control systems can totally eliminate the inherent conflict between individual behavior and organizational goals. FALSE Conflict cannot be totally eliminated. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Hard Lanen - Chapter 12 #13 Learning Objective: 4 Topic Area: Responsibility Centers and Organization Structure 14. There is no single accounting measure that can fully measure the performance of a profit or investment center. TRUE There is no one single perfect measure. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Medium Lanen - Chapter 12 #14 Learning Objective: 4 Topic Area: Measuring Performance 15. Fixed compensation is generally not linked to measured performance; i.e., it is independent of measured performance. TRUE Contingent compensation is linked with performance. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Easy Lanen - Chapter 12 #15 Learning Objective: 5 Topic Area: Compensation Systems 16. Properly designed management control systems have both fixed compensation and contingent compensation. TRUE If contingent is too small there is not enough incentive, if the proportion of contingent is too high there is too much risk. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Easy Lanen - Chapter 12 #16 Learning Objective: 5 Topic Area: Compensation Systems 17. Cost allocations based on dual rates assume that a common cost can be separated into a fixed and variable component. TRUE The dual refers to fixed and variable. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Medium Lanen - Chapter 12 #17 Learning Objective: 6 Topic Area: Effective Corporate Cost Allocation System 18. 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. TRUE The allocation reflects the cost behavior. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Hard Lanen - Chapter 12 #18 Learning Objective: 6 Topic Area: Effective Corporate Cost Allocation System 19. It is possible for performance evaluation systems and/or management control systems to contribute to unethical or fraudulent behavior. TRUE Systems do not guarantee ethical behavior. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Medium Lanen - Chapter 12 #19 Learning Objective: 7 Topic Area: Do Performance Evaluation Systems Create Incentives to Commit Fraud? 20. Properly designed management control systems will eliminate fraudulent behavior by maximizing goal congruence within the organization. FALSE Fraud cannot be eliminated by control systems, it can only be reduced. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Medium Lanen - Chapter 12 #20 Learning Objective: 7 Topic Area: Do Performance Evaluation Systems Create Incentives to Commit Fraud? 21. Which of the following statements is (are) true regarding managerial decisions? (A) The design and use of management control systems affects how an individual makes and implements decisions. (B) Rational managers will always make decisions that are in the best interest of the organization employing them. A. B. C. D. Only A is true. Only B is true. Both A and B are true. Neither A nor B is true. Rational managers will not always make the best decisions for the organization. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Easy Lanen - Chapter 12 #21 Learning Objective: 1 Topic Area: Alignment of Managerial and Organizational Interests 22. Decentralization refers to the delegation of decision-making authority to A. B. C. D. top management. superiors. board of directors. subordinates. Delegation is to the subordinates; delegation is from the superiors/top management. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Easy Lanen - Chapter 12 #22 Learning Objective: 2 Topic Area: Decentralized organizations 23. Which of the following is not a characteristic of a decentralized organization? A. B. C. D. better use of local knowledge better use of top management's time reduced response time to environmental changes more decisions made by relatively few individuals Decisions are made by more individuals, not fewer, under decentralization. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Easy Lanen - Chapter 12 #23 Learning Objective: 2 Topic Area: Advantages of Decentralization 24. Which of the following statements is false? A. B. C. D. The U.S. military is a good example of an organization that is highly decentralized. The degree of decentralization depends on how many decisions principals delegate to agents. Management control systems are used to measure the performance of an agent's decisions. Most organizations have some operating units that are centralized and some that are decentralized. The U.S. military is a centralized organization. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Easy Lanen - Chapter 12 #24 Learning Objective: 2 Topic Area: Decentralized organizations 25. Which of the following elements is not part of a management control system? A. B. C. D. delegated decision authority performance evaluation system knowledge of local conditions compensation and reward system Knowledge of local conditions is an advantage of a decentralized organization, not an element of management control. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Easy Lanen - Chapter 12 #25 Learning Objective: 3 Topic Area: Elements of a Management Control System 26. An operating unit of an organization is called a cost center if it is responsible A. B. C. D. only for costs. only for revenues. for costs and revenues. for investments in assets. This is the definition of a cost center. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Easy Lanen - Chapter 12 #26 Learning Objective: 4 Topic Area: Delegated Decision Authority: Responsibility Accounting 27. An operating unit of an organization is called an investment center if it is responsible A. B. C. D. only for costs. only for revenues. for costs and revenues. for investments in assets. This is the definition of an investment center. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Easy Lanen - Chapter 12 #27 Learning Objective: 4 Topic Area: Delegated Decision Authority: Responsibility Accounting 28. An operating unit of an organization is called a revenue center if it is responsible A. B. C. D. only for costs. only for revenues. for costs and revenues. for investments in assets. This is the definition of a revenue center. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Easy Lanen - Chapter 12 #28 Learning Objective: 4 Topic Area: Delegated Decision Authority: Responsibility Accounting 29. An operating unit of an organization is called a profit center if it is responsible A. B. C. D. only for costs. only for revenues. for costs and revenues. for investments in assets. This is the definition of a profit center. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Easy Lanen - Chapter 12 #29 Learning Objective: 4 Topic Area: Delegated Decision Authority: Responsibility Accounting 30. An operating unit that is responsible for revenues and costs is commonly referred to as a(n) A. B. C. D. expense center. revenue center. profit center. asset center. Revenues - costs = profit. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Easy Lanen - Chapter 12 #30 Learning Objective: 4 Topic Area: Delegated Decision Authority: Responsibility Accounting 31. An operating unit that is responsible for revenues only is commonly referred to as a(n) A. B. C. D. expense center. revenue center. profit center. asset center. This is the definition of a revenue center. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Easy Lanen - Chapter 12 #31 Learning Objective: 4 Topic Area: Delegated Decision Authority: Responsibility Accounting 32. An operating unit that is responsible for only costs is commonly referred to as a(n) A. B. C. D. cost center. revenue center. profit center. asset center. This is the definition of a cost center. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Easy Lanen - Chapter 12 #32 Learning Objective: 4 Topic Area: Delegated Decision Authority: Responsibility Accounting 33. When managers are held responsible for costs but the input-output relationship is not well specified, a(n) ________________________ is established. A. B. C. D. standard cost center revenue center discretionary cost center asset center Key is input-output not well established. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Easy Lanen - Chapter 12 #33 Learning Objective: 4 Topic Area: Delegated Decision Authority: Responsibility Accounting 34. When managers are held responsible for costs and the input-output relationship is well specified, a(n) ________________________ is established. A. B. C. D. standard cost center revenue center discretionary cost center asset center Key is the well specified input-output. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Easy Lanen - Chapter 12 #34 Learning Objective: 4 Topic Area: Delegated Decision Authority: Responsibility Accounting 35. Decentralized organizations can delegate authority and still maintain control and monitor managers' performance by designing appropriate management control systems. Which of the following responsibility centers would be evaluated similar to an independent business? A. B. C. D. profit center revenue center investment center discretionary cost center An investment center has authority over profits and can make asset decisions, just like an independent business. The key is "asset decisions." AACSB: Analytic AICPA: FN-Decision Making Blooms: Application Difficulty: Easy Lanen - Chapter 12 #35 Learning Objective: 4 Topic Area: Delegated Decision Authority: Responsibility Accounting 36. Controllable revenue is included in a performance report of a A. B. C. D. a b c d Both are responsible for revenues and costs. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Easy Lanen - Chapter 12 #36 Learning Objective: 4 Topic Area: Delegated Decision Authority: Responsibility Accounting 37. Controllable revenue is included in a performance report of a A. B. C. D. a b c d Cost centers do not have authority over revenues. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Easy Lanen - Chapter 12 #37 Learning Objective: 4 Topic Area: Delegated Decision Authority: Responsibility Accounting 38. Controllable revenue is included in a performance report of a A. B. C. D. a b c d Profit centers have revenue authority, cost centers do not. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Easy Lanen - Chapter 12 #38 Learning Objective: 4 Topic Area: Delegated Decision Authority: Responsibility Accounting 39. Assets invested in a responsibility center are included in a performance report of A. B. C. D. a b c d Only investment centers have asset authority. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Medium Lanen - Chapter 12 #39 Learning Objective: 4 Topic Area: Delegated Decision Authority: Responsibility Accounting 40. Assets invested in a responsibility center are included in a performance report of A. B. C. D. a b c d Neither have asset authority. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Medium Lanen - Chapter 12 #40 Learning Objective: 4 Topic Area: Delegated Decision Authority: Responsibility Accounting 41. A manager makes a decision that is beneficial for a specific investment center but not for the entire organization. From the organization's perspective, this decision results in A. B. C. D. goal congruence. decentralization. contingent compensation. fixed is compensation. This a definition of goal congruence. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Medium Lanen - Chapter 12 #41 Learning Objective: 4 Topic Area: Measuring Performance 42. The controllability concept states that managers should be held responsible for A. B. C. D. all items over which they have decision-making authority. costs and revenues, but not investments in assets used in their division. only items that are allocated to their divisions on a per-unit basis. fixed compensation items, but not contingent compensation items. This is the definition of controllability. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Easy Lanen - Chapter 12 #42 Learning Objective: 5 Topic Area: Evaluating Performance 43. Relative performance evaluations (RPE) are not designed to A. B. C. D. compare managers to other comparable managers. compare divisions with other comparable divisions. remove the effect of environmental factors that are beyond a manager's control. restate departmental goals so meaningful comparisons can be made. Goals are not restated. RPE defines what is being compared against. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Easy Lanen - Chapter 12 #43 Learning Objective: 5 Topic Area: Evaluating Performance 44. Which of the following items would be classified as a fixed compensation item? A. B. C. D. Administrative salaries Sales commissions Stock options Piece rates Salaries are fixed amounts, the other three vary. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Easy Lanen - Chapter 12 #44 Learning Objective: 5 Topic Area: Compensation Systems 45. Which of the following items would not be classified as a contingent compensation item? A. B. C. D. Administrative salaries Sales commissions Stock options Piece rates Salaries are fixed amounts, the other three vary. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Easy Lanen - Chapter 12 #45 Learning Objective: 5 Topic Area: Compensation Systems 46. Which of the following statements is (are) true regarding compensation? (A) Fixed compensation is generally not linked to measured performance; i.e., it is independent of measured performance. (B) Properly designed management control systems have contingent compensation items but not fixed compensation items. A. B. C. D. Only A is true. Only B is true. Both A and B are true. Neither A nor B is true. Both fixed and contingent compensation should be included. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Easy Lanen - Chapter 12 #46 Learning Objective: 5 Topic Area: Compensation Systems 47. The use of dual rates in a cost allocation system assumes that common costs can be A. B. C. D. separated into their fixed and variable components. traced directly to a specific division or manager. allocated based on a physical quantities measure. assigned to an investment responsibility center. Dual allocation needs the fixed/variable breakdown. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Easy Lanen - Chapter 12 #47 Learning Objective: 6 Topic Area: Effective Corporate Cost Allocation System 48. Which of the following statements is (are) false regarding the effective use of management control systems? (A) In general, single rate 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. B. C. D. Only A is false. Only B is false. Both A and B are false. Neither A nor B is false. Both are true. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Easy Lanen - Chapter 12 #48 Learning Objective: 6 Topic Area: Effective Corporate Cost Allocation System 49. Examples of pressures that can lead to financial fraud do not include A. B. C. D. unrealistic budgets. inappropriate bonus plans. overemphasis on long-term results. overemphasis on short-term results. Fraud is almost always short-term. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Easy Lanen - Chapter 12 #49 Learning Objective: 7 Topic Area: Do Performance Evaluation Systems Create Incentives to Commit Fraud? 50. The Sarbanes-Oxley Act of 2002 requires that management of publicly traded companies A. B. C. D. use investment centers to evaluate top managers. report on the adequacy of the company's internal controls over financial reporting. compensate managers with fixed compensation plans only. eliminate stock options for managerial compensation. Sarbanes-Oxley does not reference stock options. AACSB: Analytic AICPA: FN-Risk Analysis Blooms: Comprehension Difficulty: Medium Lanen - Chapter 12 #50 Learning Objective: 8 Topic Area: Internal Controls to Protect Assets and Provide Quality Information 51. Which of the following is not an internal control? A. B. C. D. rotating personnel among tasks. separation of duties. setting limits on the amount of expenditures. using absolute performance standards. Absolute performance standards are not part of internal control. AACSB: Analytic AICPA: FN-Risk Analysis Blooms: Comprehension Difficulty: Medium Lanen - Chapter 12 #51 Learning Objective: 8 Topic Area: Internal Controls to Protect Assets and Provide Quality Information 52. Internal controls include all of the following except: A. B. C. D. using contingent compensation plans. requiring management authorization for the use of a company's assets. reconciling various sets of books. requiring employees to take vacations. Internal controls do not address contingent or fixed compensation. AACSB: Analytic AICPA: FN-Risk Analysis Blooms: Comprehension Difficulty: Medium Lanen - Chapter 12 #52 Learning Objective: 8 Topic Area: Internal Controls to Protect Assets and Provide Quality Information Boxes-2-Go has two divisions, large and small, that share the common costs of the company's communications network. The annual common costs are $4,500,000. You have been provided with the following information for the upcoming year: Lanen - Chapter 12 53. What is the allocation rate for the upcoming year assuming Boxes-2-Go uses the single-rate method and allocates common costs based on the number of calls? A. B. C. D. $10.00 $15.00 $20.00 $25.00 [$4,500,000/(100,000 + 80,000)] = $25.00 AACSB: Analytic AICPA: FN-Decision Making Blooms: Application Difficulty: Easy Lanen - Chapter 12 #53 Learning Objective: 6 Topic Area: Incentive Problems with Allocated Costs 54. What is the allocation rate for the upcoming year assuming Boxes-2-Go uses the single-rate method and allocates common costs based on the time on the network? A. B. C. D. $10.98 $10.00 $8.00 $7.14 [$4,500,000/(120,000 + 330,000)] = $10.00 AACSB: Analytic AICPA: FN-Decision Making Blooms: Application Difficulty: Easy Lanen - Chapter 12 #54 Learning Objective: 6 Topic Area: Incentive Problems with Allocated Costs 55. The cost accountant determined $2,700,000 of the communication network's costs were fixed and should be allocated based on the number of calls. The remaining costs should be allocated based on the time on the network. What is the total communication network costs allocated to the Large Box Division assuming the company uses dual-rates to allocate common costs? A. B. C. D. $2,700,000 $2,520,000 $1,980,000 $1,500,000 (100,000/180,000 $2,700,000) + (120,000/450,000 $1,800,000) = $1,980,000 AACSB: Analytic AICPA: FN-Decision Making Blooms: Application Difficulty: Easy Lanen - Chapter 12 #55 Learning Objective: 6 Topic Area: Effective Corporate Cost Allocation System 56. The cost accountant determined $2,700,000 of the communication network's costs were fixed and should be allocated based on the number of calls. The remaining costs should be allocated based on the time on the network. What is total communication network costs allocated to the Small Box Division assuming the company uses dual-rates to allocate common costs? A. B. C. D. $2,520,000 $1,800,000 $1,320,000 $1,200,000 (80,000/180,000 $2,700,000) + (330,000/450,000 $1,800,000) = $2,520,000 AACSB: Analytic AICPA: FN-Decision Making Blooms: Application Difficulty: Easy Lanen - Chapter 12 #56 Learning Objective: 6 Topic Area: Effective Corporate Cost Allocation System The Copy Department in the College of Business at State University provides photocopying service for both the Marketing and Economics Department. The following budget has been prepared for the year. Lanen - Chapter 12 57. If the Copy Department uses a dual rate for allocating its costs based on usage, how much cost will be allocated to the Marketing Department? A. B. C. D. $85,000 $90,000 $150,000 $170,000 (3,600,000/5,400,000 $120,000) + [$.025 3,600,000] = $170,000 AACSB: Analytic AICPA: FN-Decision Making Blooms: Application Difficulty: Easy Lanen - Chapter 12 #57 Learning Objective: 6 Topic Area: Effective Corporate Cost Allocation System 58. If the Copy Department uses a dual rate for allocating its costs based on usage, how much cost will be allocated to the Economics Department? A. B. C. D. $85,000 $90,000 $105,000 $120,000 (1,800,000/5,400,000 $120,000) + [$.025 1,800,000] = $85,000 AACSB: Analytic AICPA: FN-Decision Making Blooms: Application Difficulty: Easy Lanen - Chapter 12 #58 Learning Objective: 6 Topic Area: Effective Corporate Cost Allocation System 59. If the Copy Department uses a dual-rate for allocating its costs, how much cost will be allocated to the Economics Department, assuming the Economics Department actually made 2,100,000 copies during the year? A. B. C. D. $85,000 $92,500 $132,500 $112,500 (1,800,000/5,400,000 $120,000) + [$.025 2,100,000] = $92,500 AACSB: Analytic AICPA: FN-Decision Making Blooms: Application Difficulty: Easy Lanen - Chapter 12 #59 Learning Objective: 6 Topic Area: Effective Corporate Cost Allocation System 60. If the Copy Department uses a dual-rate for allocating its costs, how much cost will be allocated to the Marketing Department, assuming the Marketing Department actually made 3,000,000 copies during the year? A. B. C. D. $135,000 $150,000 $155,000 $170,000 (3,600,000/5,400,000 $120,000) + [$.025 3,000,000] = $155,000 AACSB: Analytic AICPA: FN-Decision Making Blooms: Application Difficulty: Easy Lanen - Chapter 12 #60 Learning Objective: 6 Topic Area: Effective Corporate Cost Allocation System 61. If the Copy Department uses a dual-rate for allocating its costs, how much cost will be allocated to the Economics Department, assuming the Economics Department actually made 1,500,000 copies during the year? A. B. C. D. $77,500 $92,500 $132,500 $112,500 (1,800,000/5,400,000 $120,000) + [$.025 1,500,000] = $77,500 AACSB: Analytic AICPA: FN-Decision Making Blooms: Application Difficulty: Easy Lanen - Chapter 12 #61 Learning Objective: 6 Topic Area: Effective Corporate Cost Allocation System 62. If the Copy Department uses a dual-rate for allocating its costs, how much cost will be allocated to the Marketing Department, assuming the Marketing Department actually made 3,800,000 copies during the year? A. B. C. D. $135,000 $150,000 $155,000 $175,000 (3,600,000/5,400,000 $120,000) + [$.025 3,800,000] = $175,000 AACSB: Analytic AICPA: FN-Decision Making Blooms: Application Difficulty: Easy Lanen - Chapter 12 #62 Learning Objective: 6 Topic Area: Effective Corporate Cost Allocation System Fenway Telcom has three divisions, commercial, retail and consumer, that share the common costs of the company's computer server network. The annual common costs are $2,400,000. You have been provided with the following information for the upcoming year: Lanen - Chapter 12 63. What is the allocation rate for the upcoming year assuming Fenway Telcom uses the single-rate method and allocates common costs based on the number of connections? A. B. C. D. $10.00 $15.00 $20.00 $40.00 [$2,400,000/(60,000 + 80,000 + 100,000)] = $10.00 AACSB: Analytic AICPA: FN-Decision Making Blooms: Application Difficulty: Easy Lanen - Chapter 12 #63 Learning Objective: 6 Topic Area: Incentive Problems with Allocated Costs 64. Fenway Telcom uses the single rate method and allocates common costs based on the number of connections. What is the total computer server network cost allocated to the Commercial Division? A. B. C. D. $480,000 $514,286 $600,000 $1,200,000 $10.00 60,000 = $600,000 AACSB: Analytic AICPA: FN-Decision Making Blooms: Application Difficulty: Easy Lanen - Chapter 12 #64 Learning Objective: 6 Topic Area: Incentive Problems with Allocated Costs 65. What is the allocation rate for the upcoming year assuming Fenway Telcom uses the single-rate method and allocates common costs based on the time on the network? A. B. C. D. $20.00 $16.00 $4.00 $2.86 [$2,400,000/(120,000 + 150,000 + 330,000)] = $4.00 AACSB: Analytic AICPA: FN-Decision Making Blooms: Application Difficulty: Easy Lanen - Chapter 12 #65 Learning Objective: 6 Topic Area: Incentive Problems with Allocated Costs 66. Fenway Telcom uses the single rate method and allocates common costs based on the time on the network. What is the total computer server network cost allocated to the Retail Division? A. B. C. D. $429,000 $600,000 $657,800 $3,000,000 $4.00 150,000 = $600,000 AACSB: Analytic AICPA: FN-Decision Making Blooms: Application Difficulty: Easy Lanen - Chapter 12 #66 Learning Objective: 6 Topic Area: Incentive Problems with Allocated Costs 67. The cost accountant determined $1,700,000 of the server network's costs were fixed and should be allocated based on the number of connections. The remaining costs should be allocated based on the time on the network. What is the total server network costs allocated to the Commercial Division assuming the company uses dual-rates to allocate common costs? A. B. C. D. $514,286 $480,000 $600,000 $565,000 (60,000/240,000 $1,700,000) + (120,000 ($700,000/600,000) = $565,000 AACSB: Analytic AICPA: FN-Decision Making Blooms: Application Difficulty: Medium Lanen - Chapter 12 #67 Learning Objective: 6 Topic Area: Effective Corporate Cost Allocation System 68. The cost accountant determined $1,700,000 of the server network's costs were fixed and should be allocated based on the number of connections. The remaining costs should be allocated based on the time on the network. What is total server network costs allocated to the Retail Division assuming the company uses dual-rates to allocate common costs? A. B. C. D. $741,667 $657,143 $425,000 $211,765 (80,000/240,000 $1,700,000) + (150,000 ($700,000/600,000)) = $741,667 AACSB: Analytic AICPA: FN-Decision Making Blooms: Application Difficulty: Medium Lanen - Chapter 12 #68 Learning Objective: 6 Topic Area: Effective Corporate Cost Allocation System 69. The cost accountant determined $1,700,000 of the server network's costs were fixed and should be allocated based on the number of connections. The remaining costs should be allocated based on the time on the network. What is total server network costs allocated to the Consumer Division assuming the company uses dual-rates to allocate common costs? A. B. C. D. $1,200,000 $1,093,333 $954,896 $750,000 (100,000/240,000 $1,700,000) + (330,000 ($700,000/600,000))= $1,093,333 AACSB: Analytic AICPA: FN-Decision Making Blooms: Application Difficulty: Medium Lanen - Chapter 12 #69 Learning Objective: 6 Topic Area: Effective Corporate Cost Allocation System The Document Creation Center (DCC) for Alegis Corp. provides photocopying and document services for three departments in the St. Paul office. The following budget has been prepared for the year. Lanen - Chapter 12 70. If DCC uses a dual rate for allocating its costs based on usage, how much cost will be allocated to the Software Development Department? A. B. C. D. $98,000 $104,000 $112,000 $118,857 (1,600,000/7,000,000 $280,000) + [$.03 1,600,000] = $112,000 AACSB: Analytic AICPA: FN-Decision Making Blooms: Application Difficulty: Easy Lanen - Chapter 12 #70 Learning Objective: 6 Topic Area: Effective Corporate Cost Allocation System 71. If DCC uses a dual rate for allocating its costs based on usage, how much cost will be allocated to the Training Department? A. B. C. D. $183,750 $210,000 $195,000 $222,857 (3,000,000/7,000,000 $280,000) + [$.03 3,000,000] = $210,000 AACSB: Analytic AICPA: FN-Decision Making Blooms: Application Difficulty: Easy Lanen - Chapter 12 #71 Learning Objective: 6 Topic Area: Effective Corporate Cost Allocation System 72. If DCC uses a dual rate for allocating its costs based on usage, how much cost will be allocated to the Management Department? A. B. C. D. $168,000 $156,000 $178,286 $147,000 (2,400,000/7,000,000 $280,000) + [$.03 2,400,000] = $168,000 AACSB: Analytic AICPA: FN-Decision Making Blooms: Application Difficulty: Easy Lanen - Chapter 12 #72 Learning Objective: 6 Topic Area: Effective Corporate Cost Allocation System 73. If DCC uses a dual-rate for allocating its costs, how much cost will be allocated to the Management Department, assuming the Management Department actually made 2,100,000 copies during the year? A. B. C. D. $147,000 $136,500 $159,000 $150,761 (2,400,000/7,000,000 $280,000) + [$.03 2,100,000] = $159,000 AACSB: Analytic AICPA: FN-Decision Making Blooms: Application Difficulty: Easy Lanen - Chapter 12 #73 Learning Objective: 6 Topic Area: Effective Corporate Cost Allocation System 74. If DCC uses a dual-rate for allocating its costs, how much cost will be allocated to the Management Department, assuming the Management Department actually made 2,950,000 copies during the year? A. B. C. D. $184,500 $191,750 $211,783 $206,500 (2,400,000/7,000,000 $280,000) + [$.03 2,950,000] = $184,500 AACSB: Analytic AICPA: FN-Decision Making Blooms: Application Difficulty: Easy Lanen - Chapter 12 #74 Learning Objective: 6 Topic Area: Effective Corporate Cost Allocation System 75. If DCC uses a dual-rate for allocating its costs, how much cost will be allocated to the Training Department, assuming the Training Department actually made 3,250,000 copies during the year? A. B. C. D. $227,500 $211,250 $217,500 $223,017 (3,000,000/7,000,000 $280,000) + [$.03 3,250,000] = $217,500 AACSB: Analytic AICPA: FN-Decision Making Blooms: Application Difficulty: Easy Lanen - Chapter 12 #75 Learning Objective: 6 Topic Area: Effective Corporate Cost Allocation System 76. If DCC uses a dual-rate for allocating its costs, how much cost will be allocated to the Training Department, assuming the Training Department actually made 2,770,000 copies during the year? A. B. C. D. $180,050 $190,079 $193,900 $203,100 (3,000,000/7,000,000 $280,000) + [$.03 2,770,000] = $203,100 AACSB: Analytic AICPA: FN-Decision Making Blooms: Application Difficulty: Easy Lanen - Chapter 12 #76 Learning Objective: 6 Topic Area: Effective Corporate Cost Allocation System 77. If DCC uses a dual-rate for allocating its costs, how much cost will be allocated to the Software Development Department, assuming the Software Development Department actually made 1,160,000 copies during the year? A. B. C. D. $75,400 $98,800 $81,200 $84,312 (1,600,000/7,000,000 $280,000) + [$.03 1,160,000] = $98,800 AACSB: Analytic AICPA: FN-Decision Making Blooms: Application Difficulty: Easy Lanen - Chapter 12 #77 Learning Objective: 6 Topic Area: Effective Corporate Cost Allocation System 78. If DCC uses a dual-rate for allocating its costs, how much cost will be allocated to the Software Development Department, assuming the Software Development Department actually made 1,780,000 copies during the year? A. B. C. D. $117,400 $115,700 $124,600 $129,376 (1,600,000/7,000,000 $280,000) + [$.03 1,780,000] = $117,400 AACSB: Analytic AICPA: FN-Decision Making Blooms: Application Difficulty: Easy Lanen - Chapter 12 #78 Learning Objective: 6 Topic Area: Effective Corporate Cost Allocation System 79. In responsibility accounting, a center's performance is measured by those costs which are controllable. Controllable costs are best described as including (CMA adapted) A. B. C. D. E. direct materials and direct labor only. only those costs that the manager can influence in the current period. only discretionary costs. those costs about which the manager is knowledgeable and informed. incremental and fixed costs. A controllable cost is one that can be influenced. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Easy Lanen - Chapter 12 #79 Learning Objective: 5 Topic Area: Evaluating Performance 80. Rockford Manufacturing Corporation uses a responsibility accounting system in its operations. Which one of the following items is least likely to appear in a performance report for a manager of one of Rockford's assembly lines? (CMA adapted) A. B. C. D. E. direct labor materials repairs and maintenance depreciation on the manufacturing facility supervisory salaries An assembly line would be a cost center with no control over assets. AACSB: Analytic AICPA: FN-Decision Making Blooms: Application Difficulty: Easy Lanen - Chapter 12 #80 Learning Objective: 5 Topic Area: Evaluating Performance 81. Responsibility accounting defines an operating center that is responsible for revenue and costs as a(n) (CMA adapted) A. B. C. D. E. profit center. revenue center. division. operating unit. investment center. Revenues and costs = profit center. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Easy Lanen - Chapter 12 #81 Learning Objective: 4 Topic Area: Profit Centers 82. When comparing performance report information for top management with that of lower-level management, (CMA adapted) A. top management reports are more detailed. B. lower-level management reports are typically for longer time periods. C. top management reports show control over fewer costs. D. lower-level management reports are likely to contain more quantitative data and less financial data. E. top management reports are usually not of the exception type but present a complete analysis of all variances. Top management reports are less detailed, long time period, and more financial oriented. Lower management is more detailed, shorter time, and more operational. AACSB: Analytic AICPA: FN-Decision Making Blooms: Application Difficulty: Medium Lanen - Chapter 12 #82 Learning Objective: 5 Topic Area: Evaluating Performance 83. The least complex segment or area of responsibility for which costs are allocated is a(n) (CMA adapted) A. B. C. D. E. profit center. investment center. contribution center. cost center. hybrid center. Less complex implies less responsibility. Cost centers have the least responsibility AACSB: Analytic AICPA: FN-Decision Making Blooms: Application Difficulty: Medium Lanen - Chapter 12 #83 Learning Objective: 4 Topic Area: Cost Centers 84. Which one of the following will not occur in an organization that gives managers throughout the organization maximum freedom to make decisions? (CMA adapted) A. B. C. D. E. more effective solutions to operational problems individual managers regarding the managers of other segments as they do external parties two divisions of the organization having competing models that aim for the same market segments delays in securing approval for the introduction of new products greater knowledge of the marketplace and improved service to customers Decentralization implies less approvals. AACSB: Analytic AICPA: FN-Decision Making Blooms: Application Difficulty: Easy Lanen - Chapter 12 #84 Learning Objective: 2 Topic Area: Decentralized organizations 85. Which one of the following firms is likely to experience dysfunctional motivation on the part of its managers due to its allocation methods? (CMA adapted) ATo allocate depreciation of forklifts used by workers at its central warehouse, Shahlimar Electronics . uses predetermined amounts calculated on the basis of the long term average use of the services provided by the warehouse to the various segments. BManhattan Electronics uses the sales revenue of its various divisions to allocate costs connected with . the upkeep of its headquarters building. It also uses ROI to evaluate the divisional performance. C. Rainier Industrial does not allow its service departments to pass on their cost overruns to production departments. D ashkent Auto's management information system (MIS) is operated out of headquarters and serves T . its various divisions. Tashkent's allocation of MIS-related costs to its divisions is limited to costs the divisions will incur if they were to outsource their MIS needs. E. Golkonda Refineries separately allocates fixed and variable costs incurred by its service departments to its production departments. Allocating on the basis of sales revenue often creates dysfunctional behavior. AACSB: Analytic AICPA: FN-Decision Making Blooms: Analysis Difficulty: Medium Lanen - Chapter 12 #85 Learning Objective: 7 Topic Area: Do Performance Evaluation Systems Create Incentives to Commit Fraud? 86. Atlantic Hotels operates a centralized call center for the reservation needs of its time-share units. Costs associated with use of the center are charged to the time-share group (Luxury, Resort, Standard, and Budget) where a reservation is made on the basis of time on a call. Idle time of the reservation agents, time spent on calls where no reservation is made, and the fixed cost of the equipment are allocated on the number of reservations made in each group. Due to recent increased competition in the time-share, the company has decided that it is necessary to more accurately allocate its costs to price its services competitively and profitably. During the current period, the use of the call center for each group was as follows (in thousands of seconds for time usage and in number of reservations): During this period, the cost of the computer center amounted to $2,410,000 for personnel and $1,240,000 for equipment and other costs. Required Determine the allocation to each of the divisions using (you may round all decimals to three places): a. A single rate based on time used. b. Multiple rates based on time used (for personnel costs) and number of reservations (for equipment and other cost). a. Luxury: $496,400; Resort: $828,550; Standard: $1,328,600; Budget: $996,450 b. Luxury: $415,800; Resort: $724,390; Standard: $1,409,200; Budget: $1,100,610 Feedback: Totals: Luxury: $327,760 + 88,040 = $415,800 Resort: $547,070 + 177,320 = $724,390 Standard: $877,240 + 531,960 = $1,409,200 Budget: $657,930 + 442,680 = $1,100,610 AACSB: Analytic AICPA: FN-Measurement Blooms: Analysis Difficulty: Hard Lanen - Chapter 12 #86 Learning Objective: 6 Topic Area: Effective Corporate Cost Allocation System 87. Baltic Resorts operates a centralized call center for the reservation needs of its time-share units. Costs associated with use of the center are charged to the time-share group (Luxury, Standard, and Budget) where a reservation is made on the basis of time spent on a call. Due to recent increased competition in the time-share, the company has decided that it is necessary to more accurately allocate its costs to price its services competitively and profitably. During the current period, the use of the call center for each group was as follows (in thousands of seconds for time usage and in number of reservations): During this period, the cost of the computer center amounted to $1,760,000 for personnel and $1,240,000 for equipment and other costs. Required Determine the allocation to each of the divisions using (round all decimals to three places): a. A single rate based on time used. b. Multiple rates based on time used (for personnel costs) and number of reservations (for equipment and other cost). a. Luxury: $375,000; Standard: $1,500,000; Budget: $1,125,000 b. Luxury: $322,920; Standard: $1,500,000; Budget: $1,177,080 Feedback: Totals: Luxury: $220,000 + 102,920 = $322,920 Standard: $880,000 + 620,000 = $1,500,000 Budget: $660,000 + 517,080 = $1,177,080 AACSB: Analytic AICPA: FN-Measurement Blooms: Analysis Difficulty: Hard Lanen - Chapter 12 #87 Learning Objective: 6 Topic Area: Effective Corporate Cost Allocation System 88. Caspian Resorts operates a centralized call center for the reservation needs of its time-share units. Costs associated with use of the center are charged to the time-share group (Luxury and Standard) where a reservation is made on the basis of time spent on a call. Due to recent increased competition in the time-share, the company has decided that it is necessary to more accurately allocate its costs to price its services competitively and profitably. During the current period, the use of the call center for each group was as follows (in thousands of seconds for time usage and in number of reservations): During this period, the cost of the computer center amounted to $1,220,000 for personnel and $960,000 for equipment and other costs. Required Determine the allocation to each of the divisions using (round all decimals to three places): a. A single rate based on time used. b. Multiple rates based on time used (for personnel costs) and number of reservations (for equipment and other cost). a. Luxury: $436,000; Standard: $1,744,000 b. Luxury: $381,280; Standard: $1,798,720 Feedback: Totals: Luxury: $244,000 + 137,280 = $381,280 Standard: $976,000 + 822,720 = $1,798,720 AACSB: Analytic AICPA: FN-Measurement Blooms: Analysis Difficulty: Hard Lanen - Chapter 12 #88 Learning Objective: 6 Topic Area: Effective Corporate Cost Allocation System 89. The Document Creation Center (DCC) for Aelerion Corp. provides document services for three departments in the Denver office. The following budget has been prepared for the month. Required (use three decimal places in your calculations): a. If DCC uses a dual rate for allocating its costs based on usage, how much cost will be allocated to the three user departments? Software Development: $11,000; Training: $20,625; Management: $23,375 Feedback: AACSB: Analytic AICPA: FN-Measurement Blooms: Analysis Difficulty: Medium Lanen - Chapter 12 #89 Learning Objective: 6 Topic Area: Effective Corporate Cost Allocation System 90. The legal department for Buffet Corp. provides legal services for four departments in the Omaha office. The following budget has been prepared for the month. Required (use three decimal places in your calculations): a. If Buffet uses a dual rate for allocating its costs based on usage, how much cost will be allocated to the four user departments? Purchasing: $34,800; Marketing: $43,500; Training: $65,250; Management: $73,950 Feedback: AACSB: Analytic AICPA: FN-Measurement Blooms: Analysis Difficulty: Medium Lanen - Chapter 12 #90 Learning Objective: 6 Topic Area: Effective Corporate Cost Allocation System 91. The human resources department for Hammond Corp. provides personnel services for two departments in the Chicago office. The following budget has been prepared for the month. Required (use three decimal places in your calculations): a. If Hammond uses a dual rate for allocating its costs based on employees, how much cost will be allocated to the two departments? Production: $57,190; Management: $9,310 Feedback: AACSB: Analytic AICPA: FN-Measurement Blooms: Analysis Difficulty: Medium Lanen - Chapter 12 #91 Learning Objective: 6 Topic Area: Effective Corporate Cost Allocation System 92. The Document Creation Center (DCC) for Aelerion Corp. provides document services for three departments in the Denver office. The following budget has been prepared for the month. Required (use three decimal places in your calculations): a. If DCC uses a dual rate for allocating its costs; allocating fixed costs based on number of documents and variable costs based on number of pages, how much cost will be allocated to the three user departments? Software Development: $19,277; Training: $39,759; Management: $39,027 Feedback: AACSB: Analytic AICPA: FN-Measurement Blooms: Analysis Difficulty: Medium Lanen - Chapter 12 #92 Learning Objective: 6 Topic Area: Effective Corporate Cost Allocation System 93. The legal department for Buffet Corp. provides legal services for four departments in the Omaha office. The following budget has been prepared for the month. Required (use three decimal places in your calculations): a. If Buffet uses a dual rate for allocating its costs, allocating fixed costs based on number of contracts and variable costs based on number of pages reviewed, how much cost will be allocated to the four user departments? Purchasing: $62,940; Marketing: $93,956; Training: $132,264; Management: $82,850 Feedback: AACSB: Analytic AICPA: FN-Measurement Blooms: Analysis Difficulty: Medium Lanen - Chapter 12 #93 Learning Objective: 6 Topic Area: Effective Corporate Cost Allocation System 94. Wrigley Services has three divisions, commercial, retail and consumer, that share the common costs of the company's computer server network. The annual common costs are $1,200,000. You have been provided with the following information for the upcoming year: Required (use three decimal places in your calculations): a. What is the allocation rate for the upcoming year assuming Wrigley uses the single-rate method and allocates common costs based on the number of connections? Calculate the allocated amount for each division. b. What is the allocation rate for the upcoming year assuming Wrigley uses the single-rate method and allocates common costs based on the time on network? Calculate the allocated amount for each division. c. The cost accountant determined $850,000 of the server network's costs were fixed and should be allocated based on the number of connections. The remaining costs should be allocated based on the time on the network. What is the total server network costs allocated to each division? a. Rate: $10/connection; Commercial: $300,000; Retail: $400,000; Consumer: $500,000 b. Rate: $2/hour; Commercial: $240,00; Retail: $300,000; Consumer: $660,000 c. Commercial: $282,460; Retail: $370,500; Consumer: $546,840 Feedback: a. rate: $1,200,000/(30,000 + 40,000 + 50,000) = $10/connection Commercial: 30,000 $10 = $300,00; Retail: 40,000 $10 = $400,000; Consumer: 50,000 $10 = $500,000 b. rate: $1,200,000/(120,000 + 150,000 + 330,000) = $2/hour Commercial: 120,000 $2 = $240,000; Retail: 150,000 $2 = $300,000; Consumer: 330,000 $2 = $660,000 AACSB: Analytic AICPA: FN-Measurement Blooms: Analysis Difficulty: Medium Lanen - Chapter 12 #94 Learning Objective: 6 Topic Area: Effective Corporate Cost Allocation System 95. Comiskey has four divisions, commercial, retail, research and consumer, that share the common costs of the company's computer server network. The annual common costs are $2,400,000. You have been provided with the following information for the upcoming year: Required (use three decimal places in your calculations): a. What is the allocation rate for the upcoming year assuming Comiskey uses the single-rate method and allocates common costs based on the number of connections? Calculate the allocated amount for each division. b. What is the allocation rate for the upcoming year assuming Comiskey uses the single-rate method and allocates common costs based on the time on network? Calculate the allocated amount for each division. c. The cost accountant determined $1,700,000 of the server network's costs were fixed and should be allocated based on the number of connections. The remaining costs should be allocated based on the time on the network. What is the total server network costs allocated to each division? a. Rate: $8.571/connection; Commercial: $514,260; Retail: $685,680; Research: $342,840; Consumer: $857,100 b. Rate: $3.429/hour; Commercial: $411,480; Retail: $514,350; Research: $342,900; Consumer: $1,131,570 c. Commercial: $483,800; Retail: $636,200; Research: $343,100; Consumer: $936,900 Feedback: a. rate: $2,400,000/(60,000 + 80,000 + 40,000 + 100,000) = $8.571/connection Commercial: 60,000 $8.571 = $514,260; Retail: 80,000 $8.571 = $685,680; Research: 40,000 $8.571 = $342,840; Consumer: 100,000 $8.571 = $857,100 b. rate: $2,400,000/(120,000 + 150,000 + 100,000 + 330,000) = $3.429/hour Commercial: 120,000 $3.429 = $411,480; Retail: 150,000 $3.429 = $514,350; Research: 100,000 $3.429 = $342,900; Consumer: 330,000 $3.429 = $1,131,570 AACSB: Analytic AICPA: FN-Measurement Blooms: Analysis Difficulty: Medium Lanen - Chapter 12 #95 Learning Objective: 6 Topic Area: Effective Corporate Cost Allocation System 96. Jacobs Corp. has three divisions, commercial, retail and consumer, that share the common costs of the company's computer server network. The annual common costs are $2,400,000. You have been provided with the following information for the upcoming year: Required (use three decimal places in your calculations): a. What is the allocation rate for the upcoming year assuming Jacobs uses the single-rate method and allocates common costs based on the number of connections? Calculate the allocated amount for each division. b. What is the allocation rate for the upcoming year assuming Jacobs uses the single-rate method and allocates common costs based on the time on network? Calculate the allocated amount for each division. a. Rate: $10/connection; Commercial: $600,000; Retail: $800,000; Consumer: $1,000,000 b. Rate: $4/hour; Commercial: $480,000; Retail: $600,000; Consumer: $1,320,000 Feedback: (need to show rate in answer for a & b because asked for it in problem) a. rate: $2,400,000/(60,000 + 80,000 + 100,000) = $10/connection Commercial: 60,000 $10 = $600,000; Retail: 80,000 $10 = $800,000; Consumer: 100,000 $10 = $1,000,000 b. rate: $2,400,000/(120,000 + 150,000 + 330,000) = $4/hour Commercial: 120,000 $4 = $480,000; Retail: 150,000 $4 = $600,000; Consumer: 330,000 $4 = $1,320,000 AACSB: Analytic AICPA: FN-Measurement Blooms: Analysis Difficulty: Medium Lanen - Chapter 12 #96 Learning Objective: 6 Topic Area: Effective Corporate Cost Allocation System 97. Marlin has three divisions, commercial, retail and consumer, that share the common costs of the company's computer server network. The annual common costs are $2,400,000. You have been provided with the following information for the upcoming year: Required (use three decimal places in your calculations): a. The cost accountant determined $1,800,000 of the server network's costs were fixed and should be allocated based on the number of connections. The remaining costs should be allocated based on the time on the network. What is the total server network costs allocated to each division? Commercial: $570,000; Retail: $749,600; Consumer: $1,080,600 Feedback: AACSB: Analytic AICPA: FN-Measurement Blooms: Analysis Difficulty: Medium Lanen - Chapter 12 #97 Learning Objective: 6 Topic Area: Effective Corporate Cost Allocation System 98. Sanper Corp. has four divisions, commercial, retail, research, and consumer, that share the common costs of the company's computer server network. The annual common costs are $3,500,000. You have been provided with the following information for the upcoming year: Required (use three decimal places in your calculations): a. What is the allocation rate for the upcoming year assuming Sanper uses the single-rate method and allocates common costs based on the number of connections? b. What is the allocation rate for the upcoming year assuming Sanper uses the single-rate method and allocates common costs based on the time on network? Calculate the allocated amount for each division. a. Commercial: $875,000; Retail: $1,125,000; Research: $250,000; Consumer: $1,250,000 b. Commercial: $600,000; Retail: $750,000; Research: $500,000; Consumer: $1,650,000 Feedback: a. rate: $3,500,000/(70,000 + 90,000 + 20 000 + 100,000) = $12.50/connection Commercial: 70,000 $12.50 = $875,000; Retail: 90,000 $12.50 = $1,125,000; Research: 20,000 $12.50 = $250,000; Consumer: 100,000 $12.50 = $1,250,000 b. rate: $3,500,000/(120,000 + 150,000 + 100,000 + 330,000) = $5/hour Commercial: 120,000 $5 = $600,000; Retail: 150,000 $5 = $750,000; Research: 100,000 $5 = $500,000; Consumer: 330,000 $5 = $1,650,000 AACSB: Analytic AICPA: FN-Measurement Blooms: Analysis Difficulty: Medium Lanen - Chapter 12 #98 Learning Objective: 6 Topic Area: Effective Corporate Cost Allocation System 99. Charleston has four divisions, commercial, retail, research, and consumer, that share the common costs of the company's computer server network. The annual common costs are $3,600,000. You have been provided with the following information for the upcoming year: Required (use three decimal places in your calculations): a. The cost accountant determined $2,300,000 of the server network's costs were fixed and should be allocated based on the number of connections. The remaining costs should be allocated based on the time on the network. What is the total server network costs allocated to each division? Commercial: $752,000; Retail: $944,000; Research: $324,000; Consumer: $1,580,000 Feedback: AACSB: Analytic AICPA: FN-Measurement Blooms: Analysis Difficulty: Medium Lanen - Chapter 12 #99 Learning Objective: 6 Topic Area: Effective Corporate Cost Allocation System 100. Redding has two divisions, Production and Support, that share the common costs of the company's communications network. The annual common costs are $4,500,000. You have been provided with the following information for the upcoming year: Required (use three decimal places in your calculations): a. What is the allocation rate for the upcoming year assuming Redding uses the single-rate method and allocates common costs based on the number of calls? Calculate the costs allocated to each division. b. What is the allocation rate for the upcoming year assuming Redding uses the single-rate method and allocates common costs based on the time on the network? Calculate the costs allocated to each division. c. The cost accountant determined $2,700,000 of the communication network's costs were fixed and should be allocated based on the number of calls. The remaining costs should be allocated based on the time on the network. What is the total communication network costs allocated to each division? a. Rate: $12.50/call; Production: $2,500,000; Support: $2,000,000 b. Rate: $5/hour; Production: $1,200,000; Support: $3,300,000 c. Production: $1,981,200; Support: $2,518,800 Feedback: a. rate: $4,500,000/(200,000 + 160,000) = $12.50/call Production: 200,000 $12.50 = $2,500,000; Support: 160,000 $12.50 = $2,000,000 b. rate: $4,500,000/(240,000 + 660,000) = $5/hour Production: 240,000 $5 = $1,200,000; Support: 660,000 $5 = $3,300,000 AACSB: Analytic AICPA: FN-Measurement Blooms: Analysis Difficulty: Medium Lanen - Chapter 12 #100 Learning Objective: 6 Topic Area: Effective Corporate Cost Allocation System 101. Salinas has two divisions, Marketing and Finance, that share the common costs of the company's communications network. The annual common costs are $2,250,000. You have been provided with the following information for the upcoming year: Required (use three decimal places in your calculations): a. What is the allocation rate for the upcoming year assuming Salinas uses the single-rate method and allocates common costs based on the number of calls? Calculate the costs allocated to each division. b. What is the allocation rate for the upcoming year assuming Salinas uses the single-rate method and allocates common costs based on the time on the network? Calculate the costs allocated to each division. a. Rate: $25/call; Marketing: $1,250,000; Finance: $1,000,000 b. Rate: $5/hour; Marketing: $600,000; Finance: $1,650,000 Feedback: a. rate: $2,250,000/(50,000 + 40,000) = $25/call Marketing: 50,000 $25 = $1,250,000; Finance: 40,000 $25 = $1,000,000 b. rate: $2,250,000/(120,000 + 330,000) = $5/hour Marketing: 120,000 $5 = $600,000; Finance: 330,000 $5 = $1,650,000 AACSB: Analytic AICPA: FN-Measurement Blooms: Analysis Difficulty: Medium Lanen - Chapter 12 #101 Learning Objective: 6 Topic Area: Effective Corporate Cost Allocation System 102. Tofte has two divisions, Research and Sales, that share the common costs of the company's communications network. The annual common costs are $2,250,000. You have been provided with the following information for the upcoming year: Required (use three decimal places in your calculations): a. The cost accountant determined $1,350,000 of the communication network's costs were fixed and should be allocated based on the number of calls. The remaining costs should be allocated based on the time on the network. What is the total communication network costs allocated to each division? a. Research: $990,600; Sales: $1,259,400 Feedback: AACSB: Analytic AICPA: FN-Measurement Blooms: Analysis Difficulty: Medium Lanen - Chapter 12 #102 Learning Objective: 6 Topic Area: Effective Corporate Cost Allocation System 103. The Black Swan Company has three client-contact departments: Market Research, Branding, and Promotion. Each department requires the services of the Legal Department for the contracts that each undertakes. The size of the Legal Department was based on long-run estimates of contracts. Information on the Legal Department's budgeted and actual costs is as follows: The budget for the Legal Dept is $300,000 + $10/contract. The budgeted volume of contracts is as follows: The actual number of contracts for Market Research was 315, for Branding was 450, and for Promotion was 720. Required (use three decimal places in your calculations): a. If a single charging rate based on budgeted usage is used, how much of the cost of the Legal Department would be allocated to each of the producing departments? b. If a dual charging rate is used, how much of the cost of the Legal Department would be allocated to each of the producing departments a. Market Research: $66,150; Branding: $94,500; Promotion: $151,200 b. Market Research: $63,150; Branding: $104,400; Promotion: $147,300 Feedback: a. rate = [$300,000 + $10 (300 + 500 + 700)]/(300 + 500 + 700) = $210/contract Market Research: 315 $210 = $66,150; Branding: 450 $210 = $94,500; Promotion: 720 $210 = $151,200 AACSB: Analytic AICPA: FN-Measurement Blooms: Analysis Difficulty: Medium Lanen - Chapter 12 #103 Learning Objective: 6 Topic Area: Effective Corporate Cost Allocation System 104. The Black Swan Company has three client-contact departments: Market Research, Branding, and Promotion. Each department requires the services of the Legal Department for the contracts that each undertakes. The size of the Legal Department was based on long-run estimates of contracts. Information on the Legal Department's budgeted and actual costs is as follows: The budget for the Legal Dept is $200,000 + $7.50/contract. The budgeted volume of contracts is as follows: The actual number of contracts for Market Research was 286, for Branding was 450, and for Promotion was 675. Required (use three decimal places in your calculations): a. If a single charging rate based on budgeted usage is used, how much of the cost of the Legal Department would be allocated to each of the producing departments? b. If a dual charging rate is used, how much of the cost of the Legal Department would be allocated to each of the producing departments a. Market Research: $40,278; Branding: $63,375; Promotion: $95,062 b. Market Research: $42,145; Branding: $69,975; Promotion: $98,463 Feedback: a. rate = [$200,000 + $7.50 (300 + 500 + 700)]/(300 + 500 + 700) = $140.833/contract Market Research: 286 $140.833 = $40,278; Branding: 450 $140.833 = $63,375; Promotion: 675 $140.833 = $95,062 AACSB: Analytic AICPA: FN-Measurement Blooms: Analysis Difficulty: Medium Lanen - Chapter 12 #104 Learning Objective: 6 Topic Area: Effective Corporate Cost Allocation System 105. The Black Swan Company has three client-contact departments: Market Research, Branding, and Promotion. Each department requires the services of the Legal Department for the contracts that each undertakes. The size of the Legal Department was based on long-run estimates of contracts. Information on the Legal Department's budgeted and actual costs is as follows: The budget for the Legal Dept is $400,000 + $15/contract. The budgeted volume of contracts is as follows: The actual number of contracts for Market Research was 207, for Branding was 512, and for Promotion was 820. Required (use three decimal places in your calculations): a. If a single charging rate based on budgeted usage is used, how much of the cost of the Legal Department would be allocated to each of the producing departments? b. If a dual charging rate is used, how much of the cost of the Legal Department would be allocated to each of the producing departments a. Market Research: $58,305; Branding: $144,214; Promotion: $230,967 b. Market Research: $56,305; Branding: $140,880; Promotion: $225,500 Feedback: a. rate = [$400,000 + $15 (200 + 500 + 800)]/(200 + 500 + 800) = $281.667/contract Market Research: 207 $281.667 = $58,305; Branding: 512 $281.667 = $144,214; Promotion: 820 $281.667 = $230,967 AACSB: Analytic AICPA: FN-Measurement Blooms: Analysis Difficulty: Medium Lanen - Chapter 12 #105 Learning Objective: 6 Topic Area: Effective Corporate Cost Allocation System 106. Describe five advantages of decentralization. 1. Better use of local knowledge; 2. faster response; 3. wiser use of top management's time; 4. reduction of problems to manageable size, and 5) training, evaluation, and motivation of local managers. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Medium Lanen - Chapter 12 #106 Learning Objective: 2 Topic Area: Advantages of Decentralization 107. Describe two disadvantages of decentralization. One disadvantage is that local managers can make decisions that are not in the best interests of the organization as a whole. Second, decentralization will create administrative duplication. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Medium Lanen - Chapter 12 #107 Learning Objective: 2 Topic Area: Disadvantages of Decentralization 108. Describe the three main elements of a management control system. 1) Delegated decision authority is what decisions a subordinate manager can make in the name of the organization. 2) Performance evaluation and measurement system: how the performance of the subordinate manager is to be measured and how the results of the measurement will be used in evaluation. 3) Compensation and reward systems: how will the subordinate manager be paid for his/her performance. AACSB: Analytic AICPA: FN-Decision Making Blooms: Application Difficulty: Medium Lanen - Chapter 12 #108 Learning Objective: 3 Topic Area: Elements of a Management Control System 109. Describe the five basic types of decentralized units in responsibility accounting. 1) Cost Center: responsible for the cost of the activity of a center with a well defined input-output relationship. 2) Discretionary Cost Center: responsible for the cost of the activity of a center where the input-output relationship is not well specified. 3) Revenue Center: responsible for selling a product. 4) Profit Center: has responsibility for both costs and revenues. 5) Investment Center: has responsibility for costs and revenues (profits) and also the investment in assets. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Medium Lanen - Chapter 12 #109 Learning Objective: 4 Topic Area: Delegated Decision Authority: Responsibility Accounting 110. Explain the difference between fixed compensation and contingent compensation. Give an example of each. Fixed compensation is paid to the manager independent of measured performance. A manager's salary is an example. Contingent compensation is the amount of compensation that is paid based on measured performance. Sales commissions would be an example of this. AACSB: Analytic AICPA: FN-Decision Making Blooms: Comprehension Difficulty: Medium Lanen - Chapter 12 #110 Learning Objective: 5 Topic Area: Compensation Systems ch12 Summary Category AACSB: Analytic AICPA: FN-Decision Making AICPA: FN-Measurement AICPA: FN-Risk Analysis Blooms: Analysis Blooms: Application Blooms: Comprehension Blooms: Knowledge Difficulty: Easy Difficulty: Hard Difficulty: Medium Lanen - Chapter 12 Learning Objective: 1 Learning Objective: 2 Learning Objective: 3 Learning Objective: 4 Learning Objective: 5 Learning Objective: 6 Learning Objective: 7 Learning Objective: 8 Topic Area: Advantages of Decentralization Topic Area: Alignment of Managerial and Organizational Interests Topic Area: Compensation Systems Topic Area: Cost Centers Topic Area: Decentralized organizations Topic Area: Delegated Decision Authority: Responsibility Accounting Topic Area: Disadvantages of Decentralization Topic Area: Do Performance Evaluation Systems Create Incentives to Commit Fraud? Topic Area: Effective Corporate Cost Allocation System Topic Area: Elements of a Management Control System Topic Area: Evaluating Performance Topic Area: Incentive Problems with Allocated Costs Topic Area: Internal Controls to Protect Assets and Provide Quality Information Topic Area: Investment Centers Topic Area: Measuring Performance Topic Area: Profit Centers Topic Area: Responsibility Centers and Organization Structure Topic Area: Why a Management Control System? # of Questions 110 87 20 3 21 33 54 2 64 5 41 114 4 10 5 23 11 50 4 3 3 2 6 2 5 16 2 4 44 5 5 6 3 1 2 1 1 2

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Virginia Tech - ECON - 1001
ch13Student: _1.A budget is the plan, stated in financial terms, of how an organization expects to carry out its activities andmeet its goals.True2.A master budget consists of (a) organizational goals, (b) strategic long-range profit plan, and (c)
Virginia Tech - ECON - 1001
ch14Student: _1.Divisional income statements do not have to follow generally accepted accounting principles (GAAP)because they are internal reports.True2.One advantage of using after-tax income as a performance measure of divisional results is it's
Virginia Tech - ECON - 1001
ch15Student: _1.A transfer price is the value assigned to the transfer of goods or services between divisions within the sameorganization.True2.Transfer prices are not used to record the exchange between two cost centers within the same organizatio
Virginia Tech - ECON - 1001
ch16Student: _1.In essence, the terms "master budget" and "operating budget" mean the same thing and can be usedinterchangeably.True2.Variances are the difference between actual results and budgeted results.True3.FalseThe difference between ope
Virginia Tech - ECON - 1001
ch17Student: _1.The variable production cost variances are computed using the units produced instead of the units sold.True2.If variances are not prorated at the end of the accounting period, they are closed to the Cost of Goods Sold.True3.False
Virginia Tech - ECON - 1001
ch18Student: _1.One reason financial measures are used to evaluate performance is that they are easily quantifiable.True2.One disadvantage of using nonfinancial measures to evaluate performance is that they are only available ona monthly, quarterly
Virginia Tech - ECON - 1001
Chapter 01 - Environment and Theoretical Structure of Financial AccountingChapter 01Environment and Theoretical Structure of Financial AccountingTrue / False Questions1. The primary function of financial accounting is to provide relevant financial inf
Virginia Tech - ECON - 1001
Chapter 02 - Review of the Accounting ProcessChapter 02Review of the Accounting ProcessTrue / False Questions1. Owners' equity can be expressed as assets minus liabilities.True False2. Debits increase asset accounts and decrease liability accounts.
Virginia Tech - ECON - 1001
Chapter 03 - The Balance Sheet and Financial DisclosuresChapter 03The Balance Sheet and Financial DisclosuresTrue / False Questions1. The balance sheet reports a company's financial position at a point in time.True False2. A company's market value i
Virginia Tech - ECON - 1001
Chapter 04 - The Income Statement and Statement of Cash FlowsChapter 04The Income Statement and Statement of Cash FlowsTrue / False Questions1. Income from continuing operations sometimes includes gains from nonoperating activities.True False2. Intr
Virginia Tech - ECON - 1001
ch5Student: _1.Revenue is not recognized under the realization principle unless the earnings process is complete orvirtually complete and there is reasonable certainty about collectibility of the asset received.True2.Under IFRS, revenue from produc
Virginia Tech - ECON - 1001
ch6Student: _1.Compound interest includes interest earned on interest.True2.When interest is compounded, the stated rate of interest exceeds the effective rate of interest.True3.FalseAn annuity consists of level principal payments plus interest
Virginia Tech - ECON - 1001
ch7Student: _1.Cash equivalents would include investments in marketable equity securities as long as management intendsto sell the securities in the next three months.True2.From a financial accounting perspective, the main purposes of a system of i
Virginia Tech - ECON - 1001
ch8Student: _1.Physical counts of inventory are never done with perpetual inventory systems.True2.The main difference between perpetual and periodic inventory systems is the timing of the allocation ofcosts between inventory and cost of goods sold.
Virginia Tech - ECON - 1001
ch9Student: _1.In determining lower-of-cost-or-market, market is the expected selling price under normal operations.True2.Net realizable value is selling price less costs of completion and disposal.True3.FalsePurchase returns and purchase discou
Virginia Tech - ECON - 1001
ch10Student: _1.Property, plant, and equipment and intangible assets are long-term, revenue producing assets.True2.Sales tax paid on equipment acquired for use in the business is not capitalized.True3.FalseThe fair value of the asset, debt or eq
Virginia Tech - ECON - 1001
ch11Student: _1.The three factors in cost allocation of a depreciable asset are service life, allocation base, and allocationmethod.True2.The physical life of a depreciable asset sets the lower limit of its service life.True3.FalseOne of the ad
Virginia Tech - ECON - 1001
ch12Student: _1.Securities classified as held to maturity could be reported as either current or long-term in a classifiedbalance sheet, depending upon their maturity dates.True2.All investments in debt securities whose fair values are not readily
Virginia Tech - ECON - 1001
ch13Student: _1.Some liabilities are not contractual obligations and may not be payable in cash.True2.Amounts withheld from employees in connection with payroll often represent liabilities to third parties.True3.FalseFor a loss contingency to be
Virginia Tech - ECON - 1001
ch14Student: _1.The specific provisions of a bond issue are described in a document called a bond indenture.True2.Periodic interest expense is the stated interest rate times the amount of debt outstanding during the period.True3.FalseAn implicit
Virginia Tech - ECON - 1001
ch15Student: _1.At the inception of a lease agreement, the company's debt to equity ratio and rate of return on assets areboth affected whether the lease is classified as a capital lease or as an operating lease.True2.Capital leases are agreements
Virginia Tech - ECON - 1001
ch16Student: _1.A temporary difference originates in one period and reverses, or turns around, in one or more later periods.True2.Expenditures currently deducted in the tax return but not included with expenses in the income statementuntil subseque
Virginia Tech - ECON - 1001
ch17Student: _1.The projected benefit obligation may be less reliable than the accumulated benefit obligation.True2.The amount of the vested benefit obligation is less than the projected benefit obligation and more than theaccumulated benefit oblig
Virginia Tech - ECON - 1001
ch18Student: _1.Mandatorily redeemable preferred stock is reported as a liability.True2.Noncash assets received as consideration for the issue of stock are always valued based on the fair value ofthe stock.True3.FalseDividends in arrears on cum
Virginia Tech - ECON - 1001
ch19Student: _1.GAAP requires using intrinsic value accounting for employee stock options.True2.If previous experience indicates that a material number of stock options will be forfeited before they vest,the fair value estimate of the options on th
Virginia Tech - ECON - 1001
ch20Student: _1.Most, but not all, changes in accounting principle are reported using the retrospective approach.True2.Prior years' financial statements are restated when the prospective approach is used.True3.FalseBoth changes in reporting enti
Virginia Tech - ECON - 1001
ch21Student: _1.Amounts held in cash equivalent investments must be reported separately from amounts held as cash in thestatement of cash flows.True2.If the direct method is used to report cash flows from operating activities in the body of the sta
Virginia Tech - ECON - 1001
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Virginia Tech - ECON - 1001
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Virginia Tech - ECON - 1001
CHAPTER 13 PART 2-PROPERTY TRANSACTIONS: DETERMINATION OF GAIN OR LOSS,CHAPTER 13 PART2-PROPERTY TRANSACTIONS: DETERMINATION OFGAIN OR LOSS, BASIS CONSIDERATIONS, ANDNONTAXABLE EXCHANGESBASIS CONSIDERATIONS, AND NONTAXABLE EXCHANGES1. Louis sold his
Virginia Tech - ECON - 1001
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Virginia Tech - ECON - 1001
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Virginia Tech - ECON - 1001
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Virginia Tech - ECON - 1001
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Virginia Tech - ECON - 1001
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Virginia Tech - ECON - 1001
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Virginia Tech - ECON - 1001
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Virginia Tech - ECON - 1001
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Virginia Tech - ECON - 1001
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Virginia Tech - ECON - 1001
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Virginia Tech - ECON - 1001
CHAPTER 24-MULTISTATE CORPORATE TAXATIONCHAPTER 24-MULTISTATE CORPORATE TAXATION1. Roughly one-fifth of all taxes paid by businesses in the U.S. are to state, local, and municipal jurisdictions.True False2. Usually a business chooses a location where
Virginia Tech - ECON - 1001
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Virginia Tech - ECON - 1001
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Virginia Tech - ECON - 1001
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Virginia Tech - ECON - 1001
CHAPTER 28-INCOME TAXATION OF TRUSTS AND ESTATESCHAPTER 28-INCOME TAXATION OF TRUSTS AND ESTATES1. Trusts are created exclusively to reduce tax liabilities.True False2. A trust might be used by a newly elected politician.True False3. Like a partners
Ludwig Maximilians Universit├Ąt - ECON - 101
Running head: A NEW HOUSE - ECONOMYA New House - EconomyTina JagoszXECO/21204/27/2011Don MacLean1A NEW HOUSE - ECONOMY2A New House EconomyThe strength of the economyThe strength of the economy as a whole could affect the marginal benefits and t
UMBC - CHEM - 101
Section:KEYTeam:Manager:Blogger:Scribe:Researcher:101D week 2, doc 2Isotopes~ Are all atoms the same? ~GOAL(S)Investigate what an isotope isIdentify the components of an atomSKILL(S)Be able to calculate average atomic massThe Parts of an At
UMBC - CHEM - 101
101D week 5, doc 1Section Day, Time: Thursdays, 1-3PMTeam:PlutoniumManager:Shomaila ShaikhBlogger:Marcus GarciaScribe:Ashly McClureResearcher: Shomaila ShaikhPolar, Nonpolar and Ionic Bonds~ Lets play nice and try to share electrons. ~GOALSU
UMBC - CHEM - 101
101D week 5, doc 2Section Day, Time:Team:Manager:Blogger:Scribe:Researcher:Chemical Nomenclature~ Whats in a name?~GOALSLearn how to name molecular compoundsLearn how to name ionic compoundsUnderstand the patterns in chemical namesSKILLSBe a
UMBC - CHEM - 101
101D week 7, doc1Section Day, Time: Thursday 1-3Team: plutoniumManager:Ashly McClureBlogger:Scribe: Shomaila ShaikhResearcher: Marcus GarciaMolecular Shapes~ Shape up or ship out! ~GOALSUnderstand Valence Shell Electron Pair Repulsion (VSPER) th