Answer (D) is correct . A well-designed responsibility accounting system establishes responsibility centers within an organization. In a responsibility accounting system, managerial performance should be evaluated only on the basis of those factors directly regulated (or at least capable of being significantly influenced) by the manager. Thus, a manager of an assembly line is responsible for direct labor, materials, repairs and maintenance, and supervisory salaries. The manager is not responsible for depreciation on the manufacturing facility. (S)he is not in a position to control or influence capital budgeting decisions.
Answer (A) is incorrect because Direct labor is controllable by the production manager.
Answer (B) is incorrect because Materials are controllable by the production manager.
Answer (C) is incorrect because Repairs and maintenance are controllable by the production manager.
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