ACC – Problems of using investment centers include all of the problems



Question 1: Problems of using investment centers include all of the problems associated with profit centers plus all of the following EXCEPT:

how to identify the assets used by each investment center.

how to assign the responsibility for jointly-used assets such as buildings.

how to determine the value of the assets used by each investment center.

what method to use to depreciate the assets.

Question 2: Financial budgets include the:

capital spending plan.

production plan.

labor hiring and training plan.

expected cash flow statement.

Question 3: Talladega Industries, Inc., (TII) developed the following standard costs for direct material and direct labor for one of their major products, the 10-gallon plastic container.

Direct materials = 0.10 lbs (standard qty) $30 per lb (standard price)
Direct Labor = 0.05 (standard qty) $15 (standard price)

During August, TII produced and sold 10,000 containers using 980 pounds of direct materials at an average cost per pound of $32 and 500 direct labor hours at an average wage of $15.25 per hour.

August’s direct material quantity variance was:

$1,960 unfavorable.

$600 favorable.

$1,360 favorable.

None of these is correct.

Q4:________ is a form of earnings management in which expense recognition may be deferred to a future period with the goal of increasing net income in the current period.

Gain sharing


Data falsification


Q5: In a decentralized organization:

local-division managers have less control over their business segments.

there are few deviations from the standardized way of doing things.

front-line employees are not trained to respond to changes in the business environment.

decisions are made by the managers most familiar with the problems and opportunities.

q6: Financial analysts use the expected cash flow statement to do all of the following EXCEPT:

plan for when excess cash is generated.

plan for short-term cash investments.

project cash shortages and plan a strategy to deal with the shortages.

project sales.

Q7: The two major categories of technical considerations for a management accounting and control system are:

design and accuracy of information.

relevance of information and scope of system.

service and timely information.

development and flexibility.

Q8: Empowering employees in management accounting and control system design requires all of the following EXCEPT:

allowing employees to participate in decision making.

having highly-motivated employees in every position.

ensuring that employees understand the information they are using and generating.

enabling employees’ comprehension of performance measure computations.

Q9: Managers are often subject to intense pressures from their job circumstances to suspend their ethical judgment, which might include all of the choices below EXCEPT:

requests to tailor information to favor particular individuals or groups.

pressures to ignore questionable or unethical practices.

solicitations for confidential information.

pleas to verify reports or test results.

Q10: In zero-based budgeting:

the prior year’s budgeted amounts or actual results are used to build the new operating budget.

the budget is prepared by the top managers.

managers must justify each item within the operating budget as if it were a new budget item.

the budget is updated every month.

Q11: The MOST likely result of a negotiated transfer price is that it:

takes away the ultimate responsibility of the resulting transfer price from the two parties.

may reflect the relative negotiating skills of the two parties.

generally results in transferring more than the optimum number of units.

reflects purely economic considerations.


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