Question

*12) A company using responsibility accounting system decides to exclude all uncontrollable costs from a manager's performance report. Jenson is the machine supervisor. Which of the following costs will impact Jenson's performance report?*

A) rent and taxes paid on by the company
B) cost of materials used in manufacture
C) machine maintenance cost
D) cost of power consumed by the plant
Objective 6.5

Answer 1

Jenson's performance report will likely include machine maintenance costs and possibly the cost of materials used in manufacture if he can control the efficiency in their usage. However, rent, taxes, and plant power consumption would typically not be included as they are uncontrollable overheads from his position.

Step-by-step explanation:

In the context of a responsibility accounting system, the performance report of Jenson, the machine supervisor, would include only the costs that Jenson can control. Since Jenson's role involves overseeing the operations of machinery, machine maintenance costs would likely be a controllable cost he is responsible for. Therefore, this would be factored into his performance report.

On the other hand, rent and taxes paid by the company would typically be considered fixed overheads and likely fall outside Jenson's influence, as would the cost of power consumed by the plant if he does not have authority over energy management decisions. However, the cost of materials used in manufacture could be controllable by Jenson if he is responsible for efficiency and minimizing waste in the use of materials during production.