wiL62279_QC_ch24.

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Chapter 24 Performance Measurement and Responsibility Accounting 1

Quick Check—Chapter 24

QC1
24-1. Service departments (a) manufacture products, (b) make sales directly to customers,
(c) produce revenues, (d ) assist operating departments.
24-2. Explain the difference between a cost center and a profit center. Cite an example of each.
24-3. Performance reports to evaluate managers should [select a, b, or c] (a) include data about
controllable expenses, (b) compare actual results with budgeted levels, or (c) both (a) and (b).

QC2
24-4. If a company has two operating (selling) departments (shoes and hats) and two service
departments (payroll and advertising), which of the following statements is correct? (a)
Wages incurred in the payroll department are direct expenses of the shoe department,
(b) Wages incurred in the payroll department are indirect expenses of the operating
departments, or (c) Advertising department expenses are allocated to the other three
departments.
24-5. Which of the following bases can be used to allocate supervisors’ salaries across
operating departments? (a) Hours spent in each department, (b) number of employees
in each department, (c) sales achieved in each department, or (d) any of the above,
depending on which information is most relevant and accessible.
24-6. What three steps are used to allocate expenses to operating departments?
24-7. An income statement showing departmental contribution to overhead (a) subtracts indirect
expenses from each department’s revenues, (b) subtracts only direct expenses from each
department’s revenues, or (c) shows net income for each department.
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2 Chapter 24 Performance Measurement and Responsibility Accounting

Guidance Answers to Quick Checks—Chapter 24

24-1. d 24-5. d
24-2. A cost center, such as a service department, incurs costs 24-6. (1) Assign the direct expenses to each department. (2)
without directly generating revenues. A profit center, Allocate indirect expenses to all departments. (3) Allo-
such as a product division, incurs costs but also gener- cate the service department expenses to the operating
ates revenues. departments.
24-3. c 24-7. b
24-4. b