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1.
The accumulation of data based on the individual manager who has authority to
make decisions about the daily activities in an area, is called *
A. Flexible accounting
B. master budgeting
C. responsibility accounting
D. static reporting
2. Responsibility accounting systems strive to: *

A. place blame on guilty individuals.
B. provide information to managers.
C. hold managers accountable for both controllable and non-controllable costs.
D. identify unfavorable variances.
E. provide information so that managers can make decisions that are in the best interest of their
individual centers rather than in the best interests of the firm as a whole.
3. Which of the following is critically important for a responsibility accounting system to

be effective? *
A. Each employee should receive a separate performance report.
B. Service department costs should be allocated to the operating departments that use the
service.
C. Each manager should know the criteria used for evaluating his or her performance.
D. The details on the performance reports for individual managers should add up to the totals on
the report to their supervisor.
4. The report to a territorial sales manager which shows the contribution to profit by
each salesperson in the territory. *
A. profit report
B. responsibility report
C. absorption profit report
D. distribution report
5. A responsibility center *
A. is an organization unit where management control exists over incurring costs or generating
revenue
B. is responsible for all other departments
C. has a responsible manager in charge of it
D. all of the above
6. The sequence that reflects increasing breadth of responsibility is *

A. cost center, investment center, profit center
B. cost center, profit center, investment center
C. profit center, cost center, investment center
D. investment center, cost center, profit center
7. A cost center is used to *

A. show responsibility for scheduling materials, labor, and overhead
B. collect costs incurred performing a set of homogeneous activities
C. show authority for choosing product markets and sources of supply
D. assign responsibility for setting the chart of accounts
8. A center that incurs costs and expenses, generates revenue but does not have
control over idle funds used for investment purposes. *
A. cost center
B. profit center
C. investment center
D. responsibility center
9. Among the management accounting concepts is controllability which means *

A. it is necessary at all times to identify the responsibilities and key result areas of the individuals
within the organization
B. management accounting must ensure that flexibility is maintained in assembling and
interpreting information.
C. management accounting identified elements or activities which management can or can not
influence, and seeks to arrest risk and sensitivity factors
D. accounting information must be of such quality that confidence can be placed in it.
10. In responsibility accounting, the most relevant classification of costs is *

A. Fixed and variable
B. Controllable and non-controllable
C. incremental and decremental
D. discretionary and committed
11. Controllable costs, as used in a responsibility accounting system, consist of: *

A. those costs that a manager can influence
B. those costs that are influenced by external parties
C. those costs about which a manager has some knowledge
D. only fixed costs
E. only direct costs
12. The criteria used for evaluating performance *

A. should be designed to help achieve goal congruence
B. can be used only with profit centers and investment centers
C. should be used to compare past performance with current performance
D. motivate people to work in the company’s best interest
13. Internal reports prepared under the responsibility accounting approach should be
limited to _____ costs. *
A. variable production
B. conversion
C. controllable
D. answer not given
14. The best basis to determine the effect of eliminating a product line on the net
operating income of the company as a whole, is the product line’s *
A. sales
B. contribution margin
C. segment margin
D. operating income
15. S1:A segment margin is computed by deducting variable and traceable fixed
expenses from the sales of a segment. S2: Fixed costs that arise because of the
existence of the segment and that would disappear if the segment were eliminated are
called traceable fixed costs of the segment. *
A. both are true
B. both are false
C. S1 is true
D. S2 is true
16. The difference between the profit margin controllable by a segment manager and
the segment profit margin is caused by: *
A. variable operating expenses
B. allocated common expenses
C. fixed expenses controllable by the segment manager.
D. fixed expenses traceable to the segment but controllable by others.
17. The best measure on which to base a segment manager's performance evaluation
for purposes of granting a bonus? *
A. sales
B. contribution margin
C. profit margin
D. profit margin controllable by the manager.
18. Manufacturing margin of Division A must be *
A. P322,000
B. P378,000
C. P465,000
D. P540,000
E. answer not given
19. using the same data in #18, the Contribution margin of Division A must be *
A. P322,000
B. P378,000
C. P465,000
D. P540,000
E. answer not given
20. using the same data in #18, If 40% of Division A’s total fixed costs is controllable
by Division A’s manager, the short run performance margin of Division A must be *
A. P238,000
B. P294,000
C. P322,000
D. P540,000
E. answer not given
21. using the same data in #18, If 40% of Division A’s total fixed costs is controllable
by Division A’s manager, the segment margin of Division A must be *
A. P238,000
B. P294,000
C. P322,000
D. P540,000
E. answer not given
22. using the same data in #18, Operating income of Division A must be *
A. P88,000
B. P238,000
C. P322,000
D. P378,000
E. answer not given
23. *
A. P20,000
B. P40,000
C. (P40,000)
D. (P60,000)
E. answer not given
24. Segment A generated sales revenues of P400,000 and variable operating

expenses of P180,000. Its controllable fixed expenses were P40,000. It was assigned
20% of P200,000 of fixed costs controlled by others. The common fixed costs were
P25,000. What was Segment A's controllable segment profit margin? *
A. P220,000
B. P180,000
C. P160,000
D. P140,000

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1.

2. Responsibility accounting systems strive to: *

3. Which of the following is critically important for a responsibility accounting system to

6. The sequence that reflects increasing breadth of responsibility is *

7. A cost center is used to *

9. Among the management accounting concepts is controllability which means *

10. In responsibility accounting, the most relevant classification of costs is *

11. Controllable costs, as used in a responsibility accounting system, consist of: *

12. The criteria used for evaluating performance *

18. Manufacturing margin of Division A must be *

24. Segment A generated sales revenues of P400,000 and variable operating

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