Which of the Following Is Not True Regarding a Responsibility

question 182

Multiple Choice

Which of the following is not true regarding a responsibility accounting system?

• A) It can be applied at any level of an organization.
• B) It should not hold a manager responsible for costs over which the manager has no influence.
• C) It is designed to measure the performance of managers in terms of controllable costs.
• D) It is only relevant in manufacturing companies.
• E) It assigns responsibility for costs to the appropriate managerial level that controls those costs.

---

Definitions:

Lower Quality

Lower quality typically refers to products or assets that do not meet certain standards or expectations in terms of performance, durability, or reliability.

Materials Quantity Variance

The difference between the actual quantity of materials used in production and the expected quantity, multiplied by the standard cost per unit.

SQ × AP

The standard quantity times actual price formula, used in cost accounting to calculate the variance between the actual cost and the standard cost of raw materials.

Direct Materials Price Variance

The difference between the actual cost and the standard cost of direct materials used in production, indicating how effectively the materials budget is being adhered to.