Question

A cost center responsibility report ________.

A) includes depreciation expense
B) typically focuses on the flexible budget variance
C) is the same as a performance report
D) shows all costs incurred by the department

Answer 1

A cost center responsibility report typically focuses on the flexible budget variance and assesses a cost center's control over its costs. It is a type of performance report but is specifically tailored to cost variances and does not include non-controllable costs like depreciation expense.

Step-by-step explanation:

The correct answer to the question: A cost center responsibility report ________. is B) it typically focuses on the flexible budget variance. These reports are used in performance management to assess how well a cost center has controlled its costs. Unlike financial statements that include depreciation expense, a cost center is only responsible for the actual costs over which it has control.

Therefore, you would not typically include depreciation expense in this report as it is a non-cash expense not directly controllable by the cost center. While a cost center responsibility report is a type of performance report, the term performance report is more general and can include a wide range of metrics beyond just cost variances. Lastly, a cost center responsibility report does not show all costs incurred by the department, as it excludes non-controllable costs and may be focused specifically on the variances from the flexible budget.