43.

Division A reported operating income of $975,000 and total support department allocations of $675,000. As a result,

a.net income was $300,000

b.the gross profit was $300,000

c.consolidated net income was $300,000

d.operating income before support department allocations was $1,650,000

42.

Operating income of the Pierce Automobile Division is $2,225,000. If operating income before support department allocations is $3,250,000,

a.noncontrollable charges are $1,025,000

b.direct manufacturing charges are $1,025,000

c.operating expenses are $1,025,000

d.total support department allocations are $1,025,000

41.

Operating expenses directly traceable to or incurred for the sole benefit of a specific department and usually subject to the control of the department manager are _____ expenses.

a.direct operating

b.fixed

c.indirect

d.miscellaneous administrative

40.

Which of the following expenses incurred by a department store would be a direct expense of the Sporting Goods Department?

a.commissions earned by Sporting Goods Department sales clerks

b.uncollectible accounts expense

c.office salaries

d.depreciation expense-office equipment

39.

Which of the following is a measure of a cost center manager's performance?

a.balance sheet

b.divisional income statements

c.budget performance report

d.return on investment and residual income measures

38.

For higher levels of management, responsibility accounting reports

a.contain about the same level of detail as reports for lower levels of management

b.are rarely provided or reviewed

c.are more detailed than for lower levels of management

d.are more summarized than for lower levels of management

37.

In a cost center, the manager has responsibility and authority for making decisions that affect

a.investments in assets

b.revenues

c.costs

d.both costs and revenues

36.

Which of the following is a disadvantage of decentralization?

a.Decisions made by one manager may negatively affect the profitability of the entire company.

b.Managers closest to the operations make decisions.

c.Managers are able to acquire expertise in their areas of responsibility.

d.Decentralization helps retain quality managers.

35.

All of the following are advantages of decentralization except

a.expertise in all areas of the business is difficult; decentralization makes it better to delegate certain responsibilities

b.managers make better decisions when closer to the operations of the company

c.each decentralized operation purchases its own assets and pays for operating costs

d.decentralized managers can respond quickly to customer needs

34.

Which of the following is not a disadvantage of decentralized operations?

a.top management freed from everyday tasks to do strategic planning

b.price cutting by departments that are competing in the same product market

c.duplication of operations

d.competition among managers