TEST BANK and SOLUTION MANUAL for Managerial
Accounting: Creating Value in a Dynamic Business
Environment, 13th Edition by Hilton | Verified Chapters 1 - 17
each | Complete Newest Version
goal congruence: - ANSWER: results when managers of sub-units throughout an
organization strive to achieve goals set by management
responsibility accounting: - ANSWER: various concepts & tools used by managers to
measure performance of people & departments in order to foster goal congruence
responsibility center: - ANSWER: sub-unit of organization whose manager is held
accountable for specified financial results of sub-units activities
4 types of responsibility centers: - ANSWER: -cost center
-revenue center
-profit center
-investment center
cost center: - ANSWER: organizational sub-unit such as a department or division
whose manager is held accountable for costs incurred in sub-units
revenue center: - ANSWER: manager is held accountable for revenue generated by
the sub-unit
profit center: - ANSWER: organizational sub-unit whose manager is held accountable
for profit
-for revenue & expenses attributed to sub-units
investment center: - ANSWER: manager held accountable for sub-unit's profit &
invested capital used by the sub-unit to generate profit
-also decides whether profits of the investment center are paid as bonuses,
reinvested in research & development, used in expansion, distributed to
shareholders, etc...
-referred to as profit centers by some managers
performance report - ANSWER: shows budgeted & actual amounts & variance in
between them of key financial results appropriate for the type of responsibility
center involved
In a performance report, performance of each responsibility center summarized: -
ANSWER: periodically
Performance report data helps managers use management by exception to: -
ANSWER: control organization operations effectively
, Performance report hierarchy: - ANSWER: performance of each sub-unit constitutes
part of performance of next higher level sub-unit
Performance report hierarchy starts at: - ANSWER: the bottom & builds upward
Each manager receives a performance report for: - ANSWER: own sub-unit &
performance reports for major sub-units in the next lower level
Variances are often broken down into smaller components to: - ANSWER: help
management pinpoint responsibility & diagnose performance
Many costs incurred by an organization are: - ANSWER: a joint result of several sub-
units activities
One function of responsibility accounting system: - ANSWER: assign all organization's
costs to sub-units that cause them to be incurred
cost pool: - ANSWER: collection of costs to be assigned
cost objects: - ANSWER: responsibility centers, products or services to which costs
are to be assigned
cost allocation/cost distribution: - ANSWER: process of assigning costs in a cost pool
to cost objects
allocation base: - ANSWER: measure of activity, physical characteristic or economic
characteristic associated with responsibility centers (which are cost objects in
allocation process)
The allocation base should reflect: - ANSWER: some characteristic of various
responsibility centers related costs of incurrence
Each cost pool is distributed to each responsibility center: - ANSWER: in proportion
to that center's relative amount of the allocation base
Administrative & marketing costs are distributed on the basis of: - ANSWER:
budgeted amounts of relevant allocation bases
-not actual amounts
Managerial accountants should design allocation procedure so: - ANSWER: behavior
of one responsibility center doesn't affect costs allocated to other responsibility
centers
Traditional responsibility accounting systems tend to: - ANSWER: focus on financial
performance measures of cost, revenue & profit for sub-units of the organization
Accounting: Creating Value in a Dynamic Business
Environment, 13th Edition by Hilton | Verified Chapters 1 - 17
each | Complete Newest Version
goal congruence: - ANSWER: results when managers of sub-units throughout an
organization strive to achieve goals set by management
responsibility accounting: - ANSWER: various concepts & tools used by managers to
measure performance of people & departments in order to foster goal congruence
responsibility center: - ANSWER: sub-unit of organization whose manager is held
accountable for specified financial results of sub-units activities
4 types of responsibility centers: - ANSWER: -cost center
-revenue center
-profit center
-investment center
cost center: - ANSWER: organizational sub-unit such as a department or division
whose manager is held accountable for costs incurred in sub-units
revenue center: - ANSWER: manager is held accountable for revenue generated by
the sub-unit
profit center: - ANSWER: organizational sub-unit whose manager is held accountable
for profit
-for revenue & expenses attributed to sub-units
investment center: - ANSWER: manager held accountable for sub-unit's profit &
invested capital used by the sub-unit to generate profit
-also decides whether profits of the investment center are paid as bonuses,
reinvested in research & development, used in expansion, distributed to
shareholders, etc...
-referred to as profit centers by some managers
performance report - ANSWER: shows budgeted & actual amounts & variance in
between them of key financial results appropriate for the type of responsibility
center involved
In a performance report, performance of each responsibility center summarized: -
ANSWER: periodically
Performance report data helps managers use management by exception to: -
ANSWER: control organization operations effectively
, Performance report hierarchy: - ANSWER: performance of each sub-unit constitutes
part of performance of next higher level sub-unit
Performance report hierarchy starts at: - ANSWER: the bottom & builds upward
Each manager receives a performance report for: - ANSWER: own sub-unit &
performance reports for major sub-units in the next lower level
Variances are often broken down into smaller components to: - ANSWER: help
management pinpoint responsibility & diagnose performance
Many costs incurred by an organization are: - ANSWER: a joint result of several sub-
units activities
One function of responsibility accounting system: - ANSWER: assign all organization's
costs to sub-units that cause them to be incurred
cost pool: - ANSWER: collection of costs to be assigned
cost objects: - ANSWER: responsibility centers, products or services to which costs
are to be assigned
cost allocation/cost distribution: - ANSWER: process of assigning costs in a cost pool
to cost objects
allocation base: - ANSWER: measure of activity, physical characteristic or economic
characteristic associated with responsibility centers (which are cost objects in
allocation process)
The allocation base should reflect: - ANSWER: some characteristic of various
responsibility centers related costs of incurrence
Each cost pool is distributed to each responsibility center: - ANSWER: in proportion
to that center's relative amount of the allocation base
Administrative & marketing costs are distributed on the basis of: - ANSWER:
budgeted amounts of relevant allocation bases
-not actual amounts
Managerial accountants should design allocation procedure so: - ANSWER: behavior
of one responsibility center doesn't affect costs allocated to other responsibility
centers
Traditional responsibility accounting systems tend to: - ANSWER: focus on financial
performance measures of cost, revenue & profit for sub-units of the organization
