Cost Accounting Ch. 18

A strategic business unit (SBU) consists of a well-defined set of controllable operating activities over/about which the SBU manager is:

Responsible for strategy, execution, and performance.

Of most relevance in deciding how or which costs should be assigned to an SBU is the degree of:

Controllability.

Production or support SBUs within the firm that have the goal of providing the best quality product or service at the lowest cost are:

Cost centers.

SBUs that include the assets they employ as well as profits in the performance evaluation are:

Investment centers.

Which one of the following is a drawback of decentralization?

May hinder coordination among independent SBUs.

The objectives of management control of the manager include:

Motivation, incentive and fairness.

The most important objective of a strategic performance measurement system is:

Motivation.

SBUs that generate revenues and incur the major portion of the cost for producing those revenues are:

Profit centers.

The principal-agent economic model applied to employment contracts includes two of the following management performance aspects:

Uncertainty and lack of observability.

Other things being equal, income computed by the variable costing method will exceed that computed by the full costing method if:

Units sold exceed units produced.

The main concept of the balanced scorecard is that, to evaluate the SBU's progress to strategic success, an organization must use all of the following except:

Value chain analysis.