Accounting Online Program Managerial Accounting 3

Question 1

Responsibility accounting assigns costs and revenues to:

Accepted Answer

The managers who control them

Answer

External auditors

Answer

The CEO only

Answer

Government agencies

Question 2

Which of the following best describes a cost center?

Accepted Answer

A segment evaluated only on the costs it incurs

Answer

A segment that generates both revenues and costs

Answer

A segment evaluated on return on investment

Answer

A segment that controls capital expenditures

Question 3

What is the margin of safety?

Accepted Answer

The excess of budgeted sales over break-even sales

Answer

The difference between gross profit and net profit

Answer

Fixed costs divided by contribution margin ratio

Answer

The minimum inventory level required

Question 4

Activity-based costing (ABC) improves cost accuracy by:

Accepted Answer

Assigning costs based on the activities that drive them

Answer

Allocating all overhead based on direct labor hours

Answer

Eliminating all indirect costs from products

Answer

Using only variable costs for product pricing

Question 5

Which term refers to the range of activity within which cost behavior assumptions remain valid?

Accepted Answer

Relevant range

Answer

Marginal range

Answer

Normal activity level

Answer

Standard volume

Question 6

Return on investment (ROI) for an investment center is calculated as:

Accepted Answer

Operating income divided by average invested assets

Answer

Net income divided by total assets

Answer

Sales revenue divided by total costs

Answer

Contribution margin divided by fixed costs