Allocating common fixed expenses to business segments: may cause managers to erroneously keep business segments that should be dropped. may cause managers to erroneously discontinue business segments. ensures that all costs are covered. helps managers make good decision

Allocating common fixed expenses to business segments: may cause managers to erroneously keep business segments that should be dropped. may cause managers to erroneously discontinue business segments. ensures that all costs are covered. helps managers make good decision

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter9: Responsibility Accounting And Decentralization

Section: Chapter Questions

Problem 9MC: Managers in decentralized organizations make decisions relating to all of the following...

See similar textbooks

Related questions

Q: Example Ltd is a manufacturer. Which of the following is an example of the control function in…

A: Answer: Developing corrective actions in response to lower than expected production levels.

Q: Cost accounting logic can lead managers to keep their resources busy all the time, increasing…

A: Cost accounting deals with allocating costs to several cost objects such as products, services, and…

Q: “A branch office or business segment that shows negative operating income should be shut down.” Do…

A: Operating Income:Operating income is income which is earned by carrying out the regular business…

Q: g the revenue per employee ratio as an indicator for productivity will lead to outsourcing of…

A: Revenue per employee is one of most important consideration for large companies.

Q: Fixed costs are distributed, what is the profitability of the remaining services if the company…

A: Introduction:- Fixed costs are cannot be avoided. Fixed costs are distributed remaining…

Q: If a system of equations contains a cost equation, and a revenue equation, the solution for the…

A: System of equation is a set of equation which helps in solving the variable in the equation. If…

Q: Statement 1: Goal congruence will more likely occur if management can establish the performance…

A: The performance measurement of the managers is very important for the company because it needs to…

Q: T. Turnover due to low job satisfaction may be desirable if it facilitates the introduction of new…

Q: O The industry in which business is operoting O Obtoining the complete knowledge of the production…

A: A cost accounting system refers to the set of guidelines formulated in order to help the company to…

Q: Sunk costs are ignored in decision making but information about sunk costs are usually found in the…

A: Sunk Cost refers to the expenditure incurred by the organization where there is no scope to recover.…

Q: A business that has a low operating leverage is considered normal for highly automated manufacturing…

A: Low operating leverage is preferable only for those organizations which has low fixed costs

Q: All of the following are problems with traditional accounting information EXCEPT: a. Managers in a…

Q: A profit center responsibility report ________. A. is the same as a performance report B.…

A: Profit center responsibility report is prepared using cost volume profit income statement format and…

Q: Costs that can be eliminated in whole or in part if a particular business segment is discontinued…

A: Opportunity Cost: Opportunity cost refers to the foregone revenue that could have been generated…

Q: Which form of business organization is characterized by having the shortest start-up time and lowest…

A: The Answer

Q: These are measures not found in the chart of accounts, such as customer satisfaction scores or…

A: Since you have asked multiple questions, we will solve the first question for you . If you want any…

Q: When a company is decentralized, top management will have little time to focus on long-term strategy…

A: 1) This statement is FALSE Decentralization means transfer of Authority , Responsibility ,…

Q: d) Discuss how allocation of customer-related overhead cost can lead to better decision making…

A: Customer profitability is defined as: ‘Analysis of the revenue streams and service costs associated…

Q: I'm having trouble determining the profitability of the firm's information systems services and…

A: Activity based costing is a method and type of costing, in which all indirect costs and indirect…

Q: Question (B) In many firms, managers' compensation is based on measures of managerial effort,…

A: the first question is asked about the manager living or change in the management and how the…

Q: What is turnover? What does it measure? Describe this in your own words. Writing a formula is not a…

A: What is the Turnover Turnover is the Gross sale made by the company. A company may selling the…

Q: When backflush costing is used, managers generally do not use which of the following to keep track…

A: Backflush Costing: Under this system, direct material expenditure incurred in the production…

Q: In a decentralized accounting system, a company that gives a manager responsibility over revenues,…

A: Cost Center: The centre where manager shall be responsible for the controlling costs incurrence in…

Q: Resilence in the case of a corporate means: O Increasing efficiency of production by re-structuring…

A: Corporate resilience is the ability and capacity to adapt or mobilize features that enable the…

Q: Assume that a company has decided not to allocate any support department costs to producing…

A: Cost allocation means assigns cost to different heads or departments. It is a good tool that can be…

Q: Firms often treat investment centers as if they were a... Revenue center Stand-alone business…

A: Decentralization: Decentralization alludes to a particular type of authoritative construction where…

Q: Attainable standards, as compared to ideal standards, a. do not allow for operating inefficiencies.…

A: Attainable standards: These are the standards that are easily achievable in the normal circumstances…

Q: Why might relevant costs analysis be bad for a company if used too frequently? Multiple Choice…

A: Introduction: In managerial accounting, avoidable expenses that are only incurred in conjunction…

Q: Explain what cost behavious is and why it is important for business? Explain what breakeven point…

A: “Since you have asked multiple questions, we will solve the first question for you. If you want a…

Q: Why might a manager focused solely on accounting numbers miss opportunities for future benefits?

A: The accounting manager oversees the accountant. Create systems and processes for analyzing and…

Q: The chairman of the board of directors of the company for which you are chief accountant has told…

A: Historical cost is usually the price at which the asset is recorded that was purchased at. As the…

Q: A cost center is a responsibility center of a company which incurs losses. incurs costs and…

A: A cost center definitely incurs some cost to the business.

Q: Which of the following is not a way an accounting system can generate motivation? Multiple Cholce…

A: The accounting system is a computerized and technological way of performing and executing…

Q: Which of the following is not a qualitative decision that should be considered in an outsourcing…

A: Qualitative decisions are more subjective since they are based on elements other than numerical…

Q: Identify the major problems in this situation and explain how they impact the organization. You will…

A: Soldering workers rarely accomplish operations in less time than the standard permits at the moment.…

Q: Cost Concept Shaded cells have feedback Financial Statements Shaded cells have feedback A business…

A: Owners’ equity: It depicts to the proportion of the total assets of the company that are owned by…

Q: Explain why some management accountants believe that absorption costing may provide an incentive for…

A: Absorption costing Absorption costing is an accounting method which helps in computing the total…

Q: Companies that make honest, but optimistic, adjusting entries that lead to a higher net income are…

A: Higher quality Earnings: If a firm reports an increase in profit due to increased sales or cost…

Q: What does a consistently negative responsibility marginimply will happen to the operating income of…

A: The revenue less occurred variable costs(VC) and also the traceable fixed costs(FC) could result in…

Q: way a manager could improve turnover

A: Turnover is a important term used in accounting, taxation and business. The success of the business…

Q: What is the most likely consequence of unethical behaviours by management accountants? Satisfied…

A: Basic Concept of Management Accounting

Q: How can accounting consultants or auditors minimize the cost of doing business? How is this…

A: SOLUTIONS- ACCOUNTING CONSULTANTS ADVISES BUSINESSES ON FINANCIAL DECISION AND THEIR ACCOUNTING…

Question

Allocating common fixed expenses to business segments:
may cause managers to erroneously keep business segments that should be dropped.
may cause managers to erroneously discontinue business segments.
ensures that all costs are covered.
helps managers make good decisions.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

A cost center is a responsibility center of a company which incurs losses. incurs costs and generates revenues. only incurs costs and does not directly generate revenues. is a responsibility center which generates profits and evaluates the investment cost of earning the profit.
The costs referred to as “controllable costs” are a. Costs which management decides to incur in the current period to enable the company to achieve objectives other than the filling of orders placed by customers. b. Costs which are likely to respond to the amount of attention devoted to them by a specified manager. c. Costs which are governed mainly by past decisions that established the present levels of operating and organizational capacity and which only change slowly in response to small changes in capacity. d. Costs which fluctuate in total in response to small changes in the rate of utilization of capacity.
pick the support of the product manager and president. Also provide the reasons from the dropdown
Which of the following statement about management accounting information is incorrect? a. The benefits of providing the information should outweigh the costs. b. It is influenced by organisational structure and size. c. It is only prepared on an ad-hoc basis. d. It is used by senior managers.
What of the following is NOT a Benefit of Activity Based Management? a.It assists in the budgeting process. b.It aids management in cost cutting and/or cost control and inferentially in product profitability. c.It causes managers to identify non-value added activities and therefore encourages thinking of means of reducing such activities. d.Is more complex than traditional accounting system because it uses multiple cost application rates, one for each activity or cost pool.
Which of the following statements regarding traditional accounting is true? a. Traditional accounting does not provide managers in a JIT setting with timely information. b. The financial orientation allows for effective measuring disparate items. c. Overhead allocations may lead to cost distortions. d. All of the above are true statements. e. A and C are true, but B is not true.
Why might a manager focused solely on accounting numbers miss opportunities for future benefits?
What should an organization do if performance measures change? A. Make sure that the manager being evaluated is aware of the measurement change, as this may affect his or her decision-making. B. Make sure that the manager benefits without the corporation also benefitting. C. Make sure that there are significant overriding opportunities for each manager, if the manager is unaware of the change. D. Obtain customer surveys on the change before communicating the change to the manager.
Is there a way to prevent managers from focusing on accounting measures as performance measures?
Managers in decentralized organizations make decisions relating to all of the following except_______. A. the companys stock price B. equipment purchases C. personnel D. prices to charge customers
Why might relevant costs analysis be bad for a company if used too frequently? Multiple Choice It overemphasizes short-term goals and neglects long-term goals. It complicates the job of managers. It focuses too much on strategy and not enough on financial measures. It could lead to a permanent change in the production process of the company. It overemphasizes long-term goals and neglects short-term goals.
A profit center responsibility report ________. A. is the same as a performance report B. includes traceable fixed expenses C. does not include revenues since that information only appears on the revenue center responsibility report D. should not include costs for which the profit center manager is not accountable