1. Which of the following is not an example of a responsibility center?
A. Cost center.
B. Revenue center.
C. Profit center.
D. Investment center.
E. Contribution center.
2. The amounts charged for goods and services exchanged between two divisions are known as:
A. opportunity costs.
B. transfer prices.
C. standard variable costs.
D. residual prices.
E. target prices.
3. A manufacturer's raw-material purchasing department would likely be classified as a:
A. cost center.
B. revenue center.
C. profit center.
D. investment center.
E. contribution center.
4. 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. cost center.
B. revenue center.
C. profit center.
D. investment center.
E. contribution center.
5. Controllable costs, as used in a responsibility accounting system, consist of:
A. only fixed costs.
B. only direct materials and direct labor.
C. those costs that a manager can influence in the time period under review.
D. those costs about which a manager has some knowledge.
E. those costs that are influenced by parties external to the organization.
6. If the head of a hotel's food and beverage operation is held accountable for revenues and costs, the food and beverage operation would be considered a(n):
A. cost center.
B. revenue center.
C. profit center.
D. investment center.
E. contribution center.
7. Which of the following is not a typical quality-cost classification?
A. External failure cost.
B. Internal failure cost.
C. Production inefficiency cost.
D. Prevention cost.
E. Appraisal cost.
8. The cost of servicing a unit under a warranty agreement is known as a(n):
A. external failure cost.
B. internal failure cost.
C. production inefficiency cost.
D. prevention cost.
E. appraisal cost.
9. Tunley Corporation has excess capacity. If the firm desires to implement the general transfer-pricing rule, opportunity cost would be equal to:
A. zero.
B. the direct expenses incurred in producing the goods.
C. the total difference in the cost of production between two divisions.
D. the contribution margin forgone from the lost external sale.
E. the summation of variable cost plus fixed cost.
10. Which of the following transfer-pricing methods can lead to dysfunctional decision-making behavior by managers?
A. Variable cost.
B. Full cost.
C. External market price.
D. A professionally negotiated, amicable settlement between the buying and selling divisions.
E. None of these.