Assume that a company has decided not to allocate any support department costs to producing departments. Describe the likely behavior of the managers of the producing departments. Would this be good or bad? Explain why allocation would correct this type of behavior.

As manager of department B in MarIeys Manufacturing, based on the costs you identified in the previous exercise for further research, how does this impact the financial performance of your department, and what might be some questions you want to ask or solutions you might propose to Marleys management?

Discuss the concept of controllable and uncontrollable costs and how they affect the evaluation of the responsibility centers financial performance.

When allocating service department costs to production departments, why is the standard cost that the service department was expected to incur, rather than the actual cost that was incurred, used in the allocation?

Explain why either normal or peak capacity of the producing (or user) departments should be used to allocate the fixed costs of support departments.

When the manager has the responsibility and authority to make decisions that affect Costs and revenues but no responsibility for or authority over assets invested in the department, the department is called: A. A cost center B. A profit center C. An investment center D. A service department

Discuss how, as warehouse manager for Vinnies Vinyls, you view the different rate of allocated costs the warehouse is being charged compared to the West store. Describe the implications of this. What steps could you take to solve this discrepancy? What alternatives would you consider, assuming management is willing to consider making changes in the rate?

Why would management be concerned about the accuracy of product costs?

In a make-or-buy decision, a. the company must choose between expanding or dropping a product line. b. the company must choose between accepting or rejecting a special order. c. the company would consider the purchase price of the externally provided good to be relevant. d. the company would consider all fixed overhead to be irrelevant. e. None of these.

For the following descriptions state whether the cost is controllable or uncontrollable by responsibility center managers. A. property tax of an existing manufacturing facility B. research and development of a product C. advertising of a product D. insurance cost of the existing manufacturing facility E. design of a product