Accounting Case

Sample Paper(Management accounting)

True of false

1) Management accounting information allows managers to compare actual and planned costs and to identify areas and opportunities for process improvement.

Answer: TRUE

2) The practical capacity of a cost driver is the short-term capacity made available by the amount of resources committed to an overhead activity.

Answer: FALSE

3) The whale curve shows that the middle 60% of customers generate the majority of total profits.

Answer: FALSE

Multiple choices

1) Which of the following describes a variable cost?

A) Variable cost are always indirect costs.

B) Variable costs increase in total when the actual level of activity increases.

C) Variable costs include most personnel costs and depreciation on machinery.

D) Variable costs can always be traced directly to the cost object.

2) The use of multiple-performance measures in the Balanced Scorecard would be expected to lead to all of the following EXCEPT:

A) more extensive use of financial measures such as cost and profit.

B) employees recognizing the various dimensions of their work.

C) the use of new performance measures such as customer satisfaction and employee morale.

D) group-level performance measures.

Short answer question

Describe a cost center. What are some of the problems faced by cost centers?

Answer: Cost centers are responsibility centers in which managers and other employees control only the costs of the product or service provided. A cost center cannot influence revenues or the level of investment

Problems faced by cost centers include the significant behavioral effects of setting standards and interpreting variances on employees who may try to misrepresent performance potential and performance results. Measures other than financial measures of cost may need to be evaluated as well in order to get a clear picture of the cost center's performance.

Problem

Hudson Hydronics Inc. is a corporation based in Troy, New York