A Successful Responsibility Accounting Reporting System Is Dependent Upon (CMA

question 26

Multiple Choice

A successful responsibility accounting reporting system is dependent upon (CMA adapted) :

• A) The correct allocation of controllable variable costs.
• B) Identification of the management level at which all costs are controllable.
• C) The proper delegation of responsibility and authority.
• D) A reasonable separation of costs into their fixed and variable components since fixed costs are not controllable and must be eliminated from the responsibility report.

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Definitions:

Fiduciary

A person or entity entrusted to manage assets or interests of another with a duty to act in their best interest.

Trust

A fiduciary relationship in which one party holds legal title to property for the benefit of another.

Express Authority

The power granted to an agent or entity explicitly and clearly by the principal or by law.

Actual Authority

The power granted to an agent by a principal to legally bind the principal in transactions with third parties.