Week Seven: Responsibility Centers; Cost Control; Calculate Residual IncomeExercise #1 Responsibility centersAnswer should be no more than 100 words and adhere to the West Writing Style Handbook. Identify three responsibility centers in a fast-food restaurant and explain how they may interact. Exercise #2 Controllability and evaluationAnswer should be no more than 100 words and adhere to the West Writing Style Handbook. Suppose you are the manager of a fitness center that is one of many in a chain. Give one example of a cost that you control and one example of a cost you do not control. Why is it important in this setting to distinguish between costs that are controllable and coststhat are not controllable?Exercise #3 Residual income in a multiproduct companyShow all work. Based on an analysis of operations a company making sporting goods has determined that the income provided by its golf ski tennis and football product lines are $3.5 million $7.8 million $2.6 million and $1.7 million respectively. The accountant believes that the investment levels in these product lines are $35 million $50 million $45 million and $23 million respectively. Use a residual income analysis to evaluate the performance of each of these product lines assuming that the organization requires a 10% return on investment.Exercise #4 Assigning responsibility for uncontrollable events Some people and organizations believe that the discussion of controllable and uncontrollable events is distracting in the sense that itencourages finger-pointing and an excessive preoccupation with assigning blame. These observers argue that it is more important to find solutions than to identify responsibility for unacceptable or acceptable events.a. What do you think of this argument?b. As an organization moves away from assessing and rewarding controllable performance what changes would you expect to see in its organization structure?
