COST ACCOUNTING
RESPONSIBILITY ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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should be designed to help achieve goal congruence
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motivate people to work in the company’s best interest
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Can only be used with profit centers and investment centers
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should be used to compare past performance with current performance
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Detailed explanation-1: -A responsibility-accounting system fosters goal congruence by establishing the performance criteria by which each manager will be evaluated. Development of performance measures and standards for those measures can help to ensure that managers are striving toward goals that support the organization’s overall objectives.
Detailed explanation-2: -Companies often use return on investment (ROI) as a performance measure for managers of investment centers. ROI is a financial performance measure equal to operating income divided by average operating assets.
Detailed explanation-3: -Answer and Explanation: The correct option is (c) should be evaluated on all costs and revenues that are controllable by the manager.
Detailed explanation-4: -Which of the following techniques would be best for evaluating the management performance of a department that is operated as a cost center? Variance analysis.