Conceptual objectives:

1. Distinguish between direct and indirect expenses and identify bases for allocating indirect expenses to departments.
2. Explain controllable costs and responsibility accounting.
3. Appendix 22A—Explain transfer pricing and methods to set transfer prices.
4. Appendix 22B—Describe allocation of joint costs across products.

Analytical objectives:

1. Analyze investment centers using return on assets, residual income, and balanced scorecard.
2. Analyze investment centers using profit margin and investment turnover.

Procedural objectives:

1. Prepare departmental income statements and contribution reports.