Successful Operation of a Responsibility Accounting System Requires All of the Following

question 63

Multiple Choice

Successful operation of a responsibility accounting system requires all of the following except:

• A)Budgets prepared for each responsibility center.
• B)The use of a bonus pool based on ROA (return on assets).
• C)An accounting system which measures the performance of each responsibility center.
• D)The preparation of timely performance reports.

---

Definitions:

Sales Price

The amount of money for which a product or service is sold to the customer.

Contribution Margin

The amount by which sales revenue exceeds variable costs, contributing to covering fixed costs and profit generation.

Fixed Costs

Expenses that do not change with the level of production or sales activities within a short time frame, such as rent, salaries, and insurance.

Variable Cost

Charges that adjust in accordance with the quantity of production or the scale of sales.