Chapter 6, Problem 6.19MCQ

Responsibility centers. Elmhurst Corporation is considering changes to its responsibility accounting system. Which of the following statements is/are correct for a responsibility accounting system.

1. I. In a cost center, managers are responsible for controlling costs but not revenue.
2. II. The idea behind responsibility accounting is that a manager should be held responsible for those items that the manager can control to a significant extent.
3. III. To be effective, a good responsibility accounting system must help managers to plan and to control.
4. IV. Costs that are allocated to a responsibility center are normally controllable by the responsibility center manager.
5. 1. I and II only are correct.
6. 2. II and III only are correct.
7. 3. I, II, and III are correct.
8. 4. I, II and IV are correct.