PREFINALS SCM

Question 1

The three primary
types of responsibility centers are

Answer 1

cost centers, profit centers, and investment
centers.

Question 2

is a business segment whose manager has control over costs, but
not over revenue or investment funds.

Answer 2

Cost center

Question 3

Service departments such as accounting,
general administration, legal and personnel are usually considered to be

Answer 3

cost
centers.

Question 4

is any business segment whose
manager has control over both costs and revenue.

Answer 4

Profit Center

Question 5

is a fixed cost that is incurred because of the
existence of a particular segment and would disappear over time if the segment
itself disappeared.

Answer 5

Traceable costs or a segment

Question 6

traceable fixed costs of one segment may be a common fixed cost of another
segment

Answer 6

True

Question 7

Identify three business practices that hinder proper cost assignment to
segments of a company

Answer 7

(a) omission of some costs in the
assignment process,
(b) the use of inappropriate allocation methods, and
(c)
allocation of common costs to segments.

Question 8

represents the
margin still remaining after deducting traceable fixed expenses from the
contribution margin.

Answer 8

Segment Margin

Question 9

The process that determines an allowable product cost while setting market price and
allowing for an acceptable profit margin is known as

Answer 9

Target Costing

Question 10

For product life cycle costing, R&D costs are

Answer 10

capitalized and allocated over the life cycle

Question 11

In which life-cycle stage are product quality improvements and stable selling prices likely
to occur?

Answer 11

Growth

Question 12

Kaizen costing helps to
a.
reduce product costs of products in the design and development stage.
b.
keep the target cost as the primary focus after a product enters production.
c.
keep profit margin relatively stable as product price declines over the product life
cycle.
d.
reduce the cost of engineering change orders during each stage of the product life
cycle.

Answer 12

C

Question 13

A good example of a common cost which normally could not be assigned to
products on a segmented income statement except on an arbitrary basis
would be:
a. Product advertising outlays
b. Salary of a corporation president
c. Direct materials
d. The product manager’s salary

Answer 13

Product Advertising Outlays

Question 14

All other things being equal, if a division’s traceable fixed expenses increase:

Answer 14

Division segment margin ratio the same

Question 15

There are costs that are charged directly to the segments in the report,
choose the exception.
a. Insurance and maintenance of the division building
b. Salary of the division manager
c. Common fixed expenses not traceable
d. Direct fixed costs

Answer 15

Common fixed cost

Question 16

Life cycle costing goal

Answer 16

cost reduction

Question 17

A manager is responsible for costs only in a

Answer 17

cost center

Question 18

For higher levels of management, responsibility accounting reports:
a. are more detailed than for lower levels of management
b. are more summarized than for lower levels of management
c. contain about the same level of detail as reports for lower levels of
management
d. are rarely provided or reviewed

Answer 18

B