Reference no: EM13905722

1. Management by exception

means that material differences will be investigated.

causes managers to be buried under voluminous paperwork.

means that only unfavorable differences will be investigated.

means that all differences will be investigated.

2. The accumulation of accounting data on the basis of the individual manager who has the authority to make day-to-day decisions about activities in an area is called

static reporting.

master budgeting.

responsibility accounting.

flexible accounting.

3. A cost is considered controllable at a given level of managerial responsibility if

it is a variable cost, but it is uncontrollable if it is a fixed cost.

it changes in magnitude in a flexible budget.

the cost has not exceeded the budget amount in the master budget.

the manager has the power to incur the cost within a given time period.

4. A responsibility report should

only be prepared at the highest level of managerial responsibility.

be prepared in accordance with generally accepted accounting principles.

only show variable costs.

show only those costs that a manager can control.

5. Which of the following is not a true statement?

All costs are controllable at some level within a company.

Responsibility accounting applies to both profit and not-for-profit entities.

Fewer costs are controllable as one moves up to each higher level of managerial responsibility.

The term segment is sometimes used to identify areas of responsibility in decentralized operations.