For each of the following responsibility centers, state the typical focus of the responsibility report and briefly discuss the focus
Responsibility Center Focus of the
Responsibility Report
Brief Discussion of the Focus
Cost
Revenue
Profit
What will be an ideal response
Responsibility Center Focus of the
Responsibility Report
Brief Discussion of the Focus
Cost Flexible budget variance Because the manager is responsible for costs, the evaluation is focused on the flexible budget variance—the difference between actual cost results and the flexible budget.
Revenue Flexible budget variance and sales volume variance The manager is responsible for revenues. The flexible budget variance focuses on the differences in sales prices.
The sales volume variance reflects the difference between the planned sales as shown in the static budget and the actual sales.
Profit Revenues and expenses; flexible budget variances Managers of profit centers are responsible for both generating revenue and controlling costs, so their performance reports include both revenues and expenses along with flexible budget variances.
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Which of the following inventory cost methods is appropriate for a business who has inventory with a relatively small number of unique items and a high cost per item?
A) FIFO B) LIFO C) average D) specific identification
After totaling actual overhead and overhead applied, the Factory Overhead account has a debit balance of $113,000 and credit balance of $108,000 . What is the proper journal entry?
a. Debit Cost of Goods Sold $5,000, credit Factory Overhead $5,000. b. Debit Factory Overhead $5,000, credit Cost of Goods Sold $5,000. c. Debit Cost of Goods Sold $2,500, credit Factory Overhead $2,500. d. Debit Work in Process Inventory $2,500, credit Factory Overhead $2,500. e. Debit Work in Process Inventory $5,000, credit Factory Overhead $5,000.