 Show Chapter 9 Multiple Choice: 1.It is a subdivision of managerial accounting which relates reporting or performance directly with the person who has the responsibility for its control. It is useful in assessing the performance of persons responsible for controlling costs, revenues, or invested capital and analyzing deviations from planned and prior performance. a.Accounting systems design and installation b. Cost accounting c.Standard cost accounting d.Responsibility accounting 2.It relates accounting to the budgetary system, thus acting as a control device. Management reports give details of budgeted and actual performances and show responsibilities at all levels of management. a.Programmingc. Responsibility accounting b.Accounting system d. Budgeting 3.Which of the following statements is correct? a.The direct cost of a particular department is always a controllable cost. b.Responsibility accounting identifies cost, revenues and even capital investments with individuals, e.g., managers, and thus provides for more control and evaluation of performance. c.All managers within an organization have equal authority and responsibility d.Internal reports prepared under the responsibility accounting system should be limited to only variable manufacturing costs. 4.B Company uses an accounting system that charges costs to the manager who has been given the authority to make the decisions regarding the incurrence of such costs. For example, if the Production manager was not able to monitor the efficiency of the workers in his department, so that he was forced to ask them to work overtime to finish a specific job on time, the additional cost of working overtime is charged to such Manager or his department. This type of accounting system is known as a.Transfer price accountingc. functional accounting b.Responsibility accountingd. cost accounting 5.In a responsibility accounting system, costs are classified as controllable and non- controllable costs, which imply that some revenues and costs can be changed through effective management. Controllable costs can be described as including a.Discretionary costs only b.Prime costs only c.Only those costs that the manager can influence in the current time period d.All the costs that are directly traceable to the responsibility center 6.The basic purpose of responsibility accounting is a.Motivationc. authority b.Variance analysisd. budgeting Meaning Of Responsibility CentreA responsibility center is an operational unit or entity within an organization, that is responsible for all the activities and tasks structured for that unit. These centers have their own goal, staffs, objectives, policies and procedures, and financial reports. And are used to balance responsibilities related to expenses incurred, revenue generated, and funds invested to an individual. In a multinational or large corporation, the organization tasks are divided into a subtask, and each task is given to various small division or groups. In this context, all groups in that organization are responsibility centers. Related links: What is a responsibility accounting? Types of Responsibility Centre:
Also add: What are the functions of management? The above mentioned is the concept, that is elucidated in detail about ‘Responsibility Centre’ for the Commerce students. To know more, stay tuned to BYJU’S. Do You Know? Q1. What is the 4 Ps of Marketing MIx? Answer: The 4 Ps of Marketing Mix are Product, Price, Place, and Promotion Q2. Who is known as the father of modern management theory? Answer: Henry Fayol is the father of modern management theory Who is responsible for both cost and revenue?The profit centre considers both cost and revenue, whereas investment considers both investment and revenue. Option b. is incorrect. Cost and investment centres are two separate centres where the cost centre only takes care of data related to cost.
What is the manager's role in a responsibility center?The manager of a responsibility center is responsible for the activities of the organizational subunit. In addition, they are responsible for the results of specified financial and non-financial performance measurements.
What is responsibility Centre in cost accounting?A responsibility center is a functional entity within a business that has its own goals and objectives, dedicated staff, policies and procedures, and financial reports. It is used to give managers specific responsibility for revenues generated, expenses incurred, and/or funds invested.
In which type of responsibility center is the manager held accountable for its profits?The answer is d) investment center. An investment center is a business unit of a company that utilizes the firm's capital to invest in capital assets for generating returns that contribute to increasing the company's overall profitability.
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Is the department belong to the manager who is responsible for both cost and revenue?
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