This quiz works best with JavaScript enabled. Home > Finance > Accounting > Management Accounting > Responsibility Accounting > Responsibility Accounting – Quiz 1 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Responsibility Accounting Quiz 1 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. The following is what is meant by input in responsibility accounting objectives, except A) Raw materials consumed. B) Working hours. C) All intangible resources. D) Cost. Show Answer Correct Answer: C) All intangible resources. 2. If the performance of manager is evaluated based on division profitability, what transfer price method will best be used by the selling division? A) Hybrid transfer pricing. B) Standard transfer pricing. C) Cost-based transfer pricing. D) Market-based transfer pricing. Show Answer Correct Answer: D) Market-based transfer pricing. 3. Webster Company has sales revenue and operating expenses of $ 5, 000, 000 and $ 4, 200, 000, respectively, for the year just ended. If invested capital amounted to $ 6, 000, 000, the firm ROI was: A) 120%. B) 13.33%. C) 70%. D) 83.33%. Show Answer Correct Answer: B) 13.33%. 4. The basic purpose of a responsibility accounting system is A) Budgeting. B) Motivation. C) Authority. D) Variance Analysis. Show Answer Correct Answer: B) Motivation. 5. The most fundamental responsibility center affected by the use of market-based transfer prices is a(an) A) Cost Center. B) Production Center. C) Profit Center. D) Investment Center. Show Answer Correct Answer: C) Profit Center. 6. Which of the following will not improve return on investment if other factors are constant? A) Increasing selling prices. B) Increasing sales volume while holding fixed expenses constant. C) Decreasing expenses or assets. D) None of the choices. Show Answer Correct Answer: D) None of the choices. 7. Which center manages profits and invested capital? A) Cost Center. B) Revenue Center. C) Investment Center. D) Profit Center. Show Answer Correct Answer: C) Investment Center. 8. The basic objective of the residual income approach to performance measurement and evaluation is to have a division maximize its A) Cash Flows. B) Return on investment rate. C) Imputed interest rate charge. D) Income in excess of a desired minimum return. Show Answer Correct Answer: D) Income in excess of a desired minimum return. 9. Net income is a KPI of which perspective? A) Financial. B) Customer. C) Internal Business. D) Learning and Growth. Show Answer Correct Answer: A) Financial. 10. If the standard quantity of materials is 79, 200 units @ $ 0.15 per unit and the actual quantity is 90, 000 units @ $ 0.12 per unit then the total materials cost variance is: A) 2, 700 Favorable. B) 1080 Unfavorable. C) 2, 700 Unfavorable. D) 1080 Favorable. Show Answer Correct Answer: D) 1080 Favorable. 11. The optimal method for establishing the transfer price where on as no idle capacity and a competitive market exists would be the market price, where the transfer price is equal to A) Outlay cost. B) Opportunity cost. C) Outlay cost plus opportunity cost. D) Cost plus any mark-up. Show Answer Correct Answer: C) Outlay cost plus opportunity cost. 12. Hours of employee training is a KPI of which perspective? A) Financial. B) Customer. C) Internal Business. D) Learning and Growth. Show Answer Correct Answer: D) Learning and Growth. 13. Calculate the Return on investment if the following data given:i) net profit:RM8, 000, 000ii) sales revenue:RM10, 000, 000iii) Capital turnover:0.2 A) 0.16%. B) 16%. C) 1.6%. D) 0.016%. Show Answer Correct Answer: B) 16%. 14. Calculate the residual income of the company if the following data given as follows:i) Minimum required rate of return:25%ii) Net Income for the year:RM8, 500, 000iii) Average operating assets:RM10, 000, 000 A) RM6, 000, 000. B) RM2, 500, 000. C) RM7, 000, 000. D) RM6, 500, 000. Show Answer Correct Answer: A) RM6, 000, 000. 15. There are instances where a management decision would be beneficial for a given profit center, but not for the company. From the overall company viewpoint, this decision would lead to A) Sub-optimization. B) Profit maximization. C) Decentralization. D) Goal congruence. Show Answer Correct Answer: A) Sub-optimization. 16. Average repair time is a KPI for which perspective? A) Financial. B) Customer. C) Internal Business. D) Learning and Growth. Show Answer Correct Answer: C) Internal Business. 17. Which of the following is an objective of transfer pricing? A) Motivation for managers. B) Basis for rewarding managers. C) Incentive for managers to make decisions consistent with the firm's goals. D) All of the given choices are objectives of transfer pricing. Show Answer Correct Answer: D) All of the given choices are objectives of transfer pricing. 18. Which center focuses on generating revenue? A) Revenue Center. B) Profit Center. C) Investment Center. D) Cost Center. Show Answer Correct Answer: A) Revenue Center. 19. This is the price charged by one segment of an organization for a product or service supplied to another segment of the same organization? A) Outlay price. B) Exchange price. C) Selling price. D) Intersegment price. Show Answer Correct Answer: D) Intersegment price. 20. Which center deals with controlling costs and generating revenue? A) Investment Center. B) Revenue Center. C) Profit Center. D) Cost Center. Show Answer Correct Answer: C) Profit Center. 21. If a firm operates at capacity, the minimum transfer price should be the A) External market price less any cost savings. B) Outlay cost plus contribution margin. C) Either A or B. D) Neither A nor B. Show Answer Correct Answer: C) Either A or B. 22. If the company has a sales margin of 0.15 and capital turnover by 3.0, what is the return on investment for the company? A) 0.45%. B) 45%. C) 0.045%. D) 4.5%. Show Answer Correct Answer: B) 45%. 23. Formula for Return on Investment (ROI) is A) Sales margin x capital turnover. B) Sales margin x operating asset. C) Sales margin x net income. D) Sales margin x sales revenue. Show Answer Correct Answer: A) Sales margin x capital turnover. 24. A responsibility center in which the manager is held accountable for the profitable use of assets and capital is commonly known as a(n): A) Investment Center. B) Profit Center. C) Cost Center. D) Revenue Center. Show Answer Correct Answer: A) Investment Center. 25. An advantage of using a cost based transfer price is that A) Is useful for evaluating subunit performance. B) Preserves subunit autonomy. C) Achieve goal congruence. D) Is easy to implement. Show Answer Correct Answer: D) Is easy to implement. 26. Behavioral assumptions in responsibility accounting based on organizational goals are called A) Organizational structure. B) Management by Rivalry. C) Management by Objective. D) Management by Exception. Show Answer Correct Answer: C) Management by Objective. 27. Number of repeat customers is a KPI for which perspective? A) Financial. B) Customer. C) Internal Business. D) Learning and Growth. Show Answer Correct Answer: B) Customer. 28. What is a KPI for the Investment Center? A) Responsibility Reports. B) Performance Reports. C) Return on Investment. D) Budgets. Show Answer Correct Answer: C) Return on Investment. 29. The segment margin of Division A and ABC Corporation should not include A) Fixed Selling expenses of Division A. B) Division A's fair share of the salary of ABC Corporation's president. C) Variable selling expenses of Division A. D) Net Sales of Division A. Show Answer Correct Answer: B) Division A's fair share of the salary of ABC Corporation's president. 30. In theory, the optimal method for establishing a transfer price is A) Flexible budget cost. B) Market price. C) Incremental cost. D) Budgeted cost with or without a mark-up. Show Answer Correct Answer: B) Market price. Next →Related QuizzesManagement Accounting QuizzesAccounting QuizzesResponsibility Accounting Quiz 2 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books