Answer (A) is correct . Allocated fixed overhead should not be included in internal reports based on a responsibility accounting system because it cannot be controlled by a manager of a responsibility center.
Answer (B) is incorrect because In responsibility accounting, managers are only held responsible for costs they have the authority to control.
Answer (C) is incorrect because The organizational chart, which outlines the authority-responsibility chain of a company, is an integral part of the responsibility accounting system.
Answer (D) is incorrect because A main purpose of internal reports is to show the variance between actual and budgeted controllable costs so corrective action can be taken when and where needed.
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