Operating department managers will only use an external provider of material-handing services if it costs more than the variable rate cost per hour (S40 in ou under the dual-rate method. By charging the fixed costs of resources budgeted to be used by the operating departments as a lump sum, the dual-rate method succeeds in removing fixed The dual-rate method guides department managers to make decisions that benefit both the organization as a whole and each department because it signals t Operating department managers will only use an external provider of material-handling services if it costs less than the variable rate cost per hour (520 in our under the single-rate method. Allocating fixed costs based on budgeted usage helps user departments with both short-run and long-run planning because user departments know the costs planning horizon; budgeted usage measures the long-run demands of the user departments for support-department services. By charging the fixed costs of resources budgeted to be used by the operating departments as a lump sum, the dual-rate method succeeds in removing varial

Operating department managers will only use an external provider of material-handing services if it costs more than the variable rate cost per hour (S40 in ou under the dual-rate method. By charging the fixed costs of resources budgeted to be used by the operating departments as a lump sum, the dual-rate method succeeds in removing fixed The dual-rate method guides department managers to make decisions that benefit both the organization as a whole and each department because it signals t Operating department managers will only use an external provider of material-handling services if it costs less than the variable rate cost per hour (520 in our under the single-rate method. Allocating fixed costs based on budgeted usage helps user departments with both short-run and long-run planning because user departments know the costs planning horizon; budgeted usage measures the long-run demands of the user departments for support-department services. By charging the fixed costs of resources budgeted to be used by the operating departments as a lump sum, the dual-rate method succeeds in removing varial

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Efficient and effective use of limited resources is the key to success in today’s economy. Assisting in the budget planning process is a major task for managerial accountants. All organizations have limited resources, but whom in the organization should be involved in the budgeting process?
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A department’s profit is equal to a. the department's revenue less divisional variable costs. b. the department’s revenue less their share of corporate costs only. c. the department’s revenue less divisional variable costs and less investment costs. d. the department’s revenue less divisional variable and less their share of corporate costs.
Why would a company use zero-based budgeting,given that it requires more time and effort from managersthroughout the company?
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When looking at the main difference between the budget preparation process of a manufacturing company and that of a service company, a. service company budgets focus more on the sales budget than do manufacturing companies. O b. the budget process contains the same level of complexity in both types of companies. c. manufacturing budgets focus more on the long-range planning components of the process than do service companies. O d. the budget process is more important to a manufacturing company because of the higher level of capital investment involved.
Xerox Corporation has been an innovator in its responsibility-accounting system. In one initiative, management changed the responsibility-center orientation of its Logistics and Distribution Department from a cost center to a profit center. The department manages the inventories and provides other logistical services to the company s Business Systems Group. Formerly, the manager of the Logistics and Distribution Department was held accountable for adherence to an operating expense budget. Now the department "sells" its services to the company s other segments, and the department s manager is evaluated partially on the basis of the department s profit. Xerox Corporation s management feels that the change has been beneficial. The change has resulted in more innovative thinking in the department and has moved decision making down to lower levels in the company. Required: Comment on the new responsibility-center designation for the Logistics and Distribution Department.
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