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True or False
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1
The reluctance of a department manager to adopt sophisticated budgeting and accounting methods that would provide benefits for those served by the department, under the belief that his/her interests are best served by older systems to which salary incentives are attached, is an example of goal incongruence.
A)True
B)False
2
The primary goal of responsibility accounting is to focus the manager's attention on the performance of his/her department or unit without regard to the organizational goals.
A)True
B)False
3
A responsibility center is a subunit in which its a manager is held accountable for specified financial results of its activities.
A)True
B)False
4
There are four types of responsibility centers.
A)True
B)False
5
A cost center is a subunit in which its manager is held accountable for its costs.
A)True
B)False
6
A revenue center is a subunit in which its manager is held responsible for its profit.
A)True
B)False
7
An investment center is a subunit in which its manager is held accountable for its profit and the invested capital used to generate its profit.
A)True
B)False
8
The manager of a cost center is held accountable for the profit generated by the center.
A)True
B)False
9
The flexible budget provides the benchmarks for variance disclosures in a performance report.
A)True
B)False
10
Responsibility centers, products, or services to which costs are assigned are called cost objects.
A)True
B)False
11
A cost pool is a collection of costs to be assigned to a set of cost objects.
A)True
B)False
12
Cost distribution or allocation is the process of allocating costs from cost pools to cost objects.
A)True
B)False
13
An allocation base is the measure of activity, physical characteristic, or economic characteristic that is associated with the responsibility centers, which are the cost objects in an allocation process.
A)True
B)False
14
Another term for cost distribution is cost allocation.
A)True
B)False
15
Activity-based responsibility accounting focuses on the cost of an activity and on the activity itself.
A)True
B)False
16
Responsibility accounting always leads to positive behavior because of the emphasis on finding individuals responsible for negative or less than optimum performance.
A)True
B)False
17
A key element in a successful responsibility-accounting system is placing emphasis on information rather than on who to blame.
A)True
B)False
18
Whether a cost is controllable or uncontrollable lies solely with the issue of who has influence over the cost.
A)True
B)False
19
Managerial accountants should use the responsibility accounting system to place blame for undesirable performance.
A)True
B)False
20
An accounting report in which the income of major segments and the entire enterprise are shown is the segmented income statement.
A)True
B)False
21
An incurred cost that benefits more than one organizational segment is called a common cost.
A)True
B)False
22
The segment contribution margin of a profit center can be calculated by subtracting from the segment's revenues its variable operating expenses plus its share of controllable fixed expenses.
A)True
B)False
23
The contribution format is one of the key features or characteristics of segmented reporting.
A)True
B)False
24
Customer profitability analysis is applied to all customers in order to determine such things as how frequent orders are placed and the size of the orders placed.
A)True
B)False
25
The extent to which a product's capability in performing its intended purpose, viewed in relation to other products with the same functional use, is called quality of design.
A)True
B)False
26
The extent of a product's capacity in performing its intended purpose, viewed in relation to other products with the same functional use, is called grade.
A)True
B)False
27
The extent to which a product meets the specifications of its design is called quality of conformance.
A)True
B)False
28
The costs of determining whether defective products exist are called prevention costs.
A)True
B)False
29
An appraisal cost is the cost of inspecting products on a production line.
A)True
B)False
30
An internal failure cost is the cost of reworking defective units that are found prior to sale.
A)True
B)False
31
A prevention cost is a cost of maintaining a quality control system.
A)True
B)False
32
The cost of freight for the return of defective products sold to a customer is an example of an external failure cost.
A)True
B)False
33
The opportunity cost of lost sales and decreased market share may represent the results of hidden costs.
A)True
B)False
34
The traditional viewpoint holds that finding the optimal level of product quality is a balancing act between incurring prevention and appraisal costs on one hand and incurring costs of failure on the other.
A)True
B)False
35
Under the contemporary viewpoint of finding the optimal level of product quality, product quality exists when the defect level is below 5%.
A)True
B)False
36
Total quality management (TQM) is the broad set of management and control processes designed to focus an entire organization and all its employees on providing products or services that do the best possible job of satisfying the customer.
A)True
B)False
37
A Pareto diagram is used to show the hierarchy of variances within a subunit.
A)True
B)False
38
A Six Sigma program achieves results by reducing subjective errors in the assessment of problems.
A)True
B)False
39
The ISO 9000 standards basically require that a manufacturer have a well-defined quality control system in place, and that the target level of product quality be maintained consistently.
A)True
B)False
40
The ISO 9000 standards consist of three parts.
A)True
B)False
41
ISO 9002 standard addresses the issue of quality assurance in final inspection and testing.
A)True
B)False
42
Although extensive in addressing issues of quality control, the ISO 9000 standards have had little impact on the way companies approach their quality assurance objectives.
A)True
B)False
43
Business activities that produce goods and services needed in the present without limiting the ability of future generations to meet their needs is called ecoefficiency.
A)True
B)False
44
Installing scrubbers on a smokestack to meet EPA regulations is an example of a private environmental cost.
A)True
B)False
45
Both social and private environmental costs are always visible.
A)True
B)False
46
Visible private environmental costs are measurable and have been clearly identified as tied to environmental issues.
A)True
B)False
47
The costs of both visible and hidden private environmental costs can be classified as monitoring costs, abatement costs, and remediation costs.
A)True
B)False
48
One approach to environmental cost strategy in which companies modify products and production processes to produce little or no pollutants, or find ways to recycle wastes internally, is called an end-of-pipe strategy.
A)True
B)False
49
One approach to environmental cost strategy in which companies strife to not produce any pollutants in the first place is called prevention strategy.
A)True
B)False





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