Question 1

The manager of a division is displeased with the ROI of the division.One step that would increase ROI (holding everything else constant)is

Accepted Answer

A) increasing investment. 
B) increasing sales. 
C) increasing costs. 
D) decreasing operating income. 
E) none of these. 
A) increasing investment. 
B) increasing sales. 
C) increasing costs. 
D) decreasing operating income. 
E) none of these.

Question 2

Figure 12-6.
The First National Bank has a mortgage loan office with conversion cost of $73,950 per month.There are five employees who each work 170 hours per month.Last month,1,020 loan applications were processed,but the staff believes that system improvements could lead to the processing of as many as 1,700 per month.
Refer to Figure 12-6.Calculate the following:

Accepted Answer

The answer of Figure 12-6.
The First National Bank has a...

Question 3

Economic value added is just a specific way of calculating residual income.

Accepted Answer

A) True 
 B)False

Question 4

A Utah hospital decided to streamline its surgical suite operation.In order to speed things up,the nurses in charge studied how much time patients actually spent in various activities.They found that on average,a patient scheduled for an operation spent about 1 hours waiting,and 1.5 hours in moving from lab to x-ray to the operating room.The average operation takes 90 minutes.What is the MCE?

Accepted Answer

A) 100% 
B) 60% 
C) 50% 
D) 37.5% 
E) 20% 
A) 100% 
B) 60% 
C) 50% 
D) 37.5% 
E) 20%

Question 5

In negotiated transfer pricing,the selling division sets the ceiling (maximum possible transfer price)for the bargaining range.

Accepted Answer

A) True 
 B)False

Question 6

When a manager is responsible for only costs it is known as a(n)_______________.

Accepted Answer

The answer of When a manager is responsible for only...

Question 7

The following information pertains to the three divisions of Marlow Company:   What is the residual income for Division X?

Accepted Answer

A) $36,000 
B) $45,000 
C) $(9,000) 
D) $(36,000) 
A) $36,000 
B) $45,000 
C) $(9,000) 
D) $(36,000)

Question 8

Figure 12-7
Monfett Manufacturing earned operating income last year as shown in the following income statement:
   At the beginning of the year,the value of operating assets was $263,000.At the end of the year,the value of operating assets was $336,000.Monfett Manufacturing requires a minimum rate of return of 15%.Total capital employed equal $350,000 and actual cost of capital is 6%.
Refer to Figure 12-7.Calculate the following: 
A.Residual income
B.EVA

Accepted Answer

The answer of Figure 12-7
Monfett Manufacturing earned operating income last...

Question 9

The selling division is forced to transfer a product internally when a cost-based transfer pricing policy is set by top management.

Accepted Answer

A) True 
 B)False

Question 10

How is EVA (Economic Value Added)different from standard residual income calculations?

Accepted Answer

The key features of EVA are th

Question 11

A key feature of economic value added (EVA)is that it emphasizes after-tax operating income and the actual cost of capital.

Accepted Answer

A) True 
 B)False

Question 12

The net income reduced by the total annual cost of capital is equal to the economic value added.

Accepted Answer

A) True 
 B)False

Question 13

The calculation of Economic Value Added is

Accepted Answer

A) margin minus total annual cost of capital. 
B) operating income minus average cost of capital. 
C) operating income minus total annual cost of capital. 
D) operating income minus taxes and the total annual cost of capital. 
A) margin minus total annual cost of capital. 
B) operating income minus average cost of capital. 
C) operating income minus total annual cost of capital. 
D) operating income minus taxes and the total annual cost of capital.

Question 14

Provide the missing data in the following situations:

Accepted Answer

The answer of Provide the missing data in the following...

Question 15

The direct comparison of the performance of two different investment centers is difficult using residual income because residual income is an absolute measure.

Accepted Answer

A) True 
 B)False

Question 16

A responsibility center in which a manager is responsible only for costs is a(n)

Accepted Answer

A) investment center. 
B) revenue center. 
C) profit center. 
D) cost center. 
E) center not presented here. 
A) investment center. 
B) revenue center. 
C) profit center. 
D) cost center. 
E) center not presented here.

Question 17

The Auto Division of Big Department Store had a net operating income of $560,000,a net asset base of $4,000,000,and a required rate of return of 12 percent.Sales for the period totaled $3,000,000.The residual income for the period is

Accepted Answer

A) $480,000. 
B) $360,000. 
C) $120,000. 
D) $80,000. 
A) $480,000. 
B) $360,000. 
C) $120,000. 
D) $80,000.

Question 18

The price charged for the transferred good affects the costs of the buying division and the revenues of the selling division.

Accepted Answer

A) True 
 B)False

Question 19

Beta Division had the following information:   If the asset base is decreased by $100,000,with no other changes,the return on investment of Beta Division will be

Accepted Answer

A) 100.0%. 
B) 16.7%. 
C) 600.0%. 
D) 62.5%. 
A) 100.0%. 
B) 16.7%. 
C) 600.0%. 
D) 62.5%.

Question 20

The pager manufacturing cell has 1,200 hours of time available per quarter.The cell could make 7,200 pagers but only made 6,000 during that time.Calculate the following:

Accepted Answer

The answer of The pager manufacturing cell has 1,200 hours...

The manager of a division is displeased with the ROI of the division.One step that would increase ROI (holding everything else constant)is

Economic value added is just a specific way of calculating residual income.

In negotiated transfer pricing,the selling division sets the ceiling (maximum possible transfer price)for the bargaining range.

When a manager is responsible for only costs it is known as a(n)_______________.

The following information pertains to the three divisions of Marlow Company: What is the residual income for Division X?

The selling division is forced to transfer a product internally when a cost-based transfer pricing policy is set by top management.

How is EVA (Economic Value Added)different from standard residual income calculations?

A key feature of economic value added (EVA)is that it emphasizes after-tax operating income and the actual cost of capital.

The net income reduced by the total annual cost of capital is equal to the economic value added.

The calculation of Economic Value Added is

Provide the missing data in the following situations:

The direct comparison of the performance of two different investment centers is difficult using residual income because residual income is an absolute measure.

A responsibility center in which a manager is responsible only for costs is a(n)

The Auto Division of Big Department Store had a net operating income of $560,000,a net asset base of $4,000,000,and a required rate of return of 12 percent.Sales for the period totaled $3,000,000.The residual income for the period is

The price charged for the transferred good affects the costs of the buying division and the revenues of the selling division.

Beta Division had the following information: If the asset base is decreased by $100,000,with no other changes,the return on investment of Beta Division will be

The pager manufacturing cell has 1,200 hours of time available per quarter.The cell could make 7,200 pagers but only made 6,000 during that time.Calculate the following:

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behavior

Cost-Volume-Profit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing,and Inventory Management

Profit Planning

Standard Costing: a Managerial Control Tool

Flexible Budgets and Overhead Analysis

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Statement of Cash Flows

Financial Statement Analysis

Filters

Exam 12: Performance Evaluation and Decentralization

The manager of a division is displeased with the ROI of the division.One step that would increase ROI (holding everything else constant)is

Economic value added is just a specific way of calculating residual income.

In negotiated transfer pricing,the selling division sets the ceiling (maximum possible transfer price)for the bargaining range.

When a manager is responsible for only costs it is known as a(n)_______________.

The following information pertains to the three divisions of Marlow Company: What is the residual income for Division X?

The selling division is forced to transfer a product internally when a cost-based transfer pricing policy is set by top management.

How is EVA (Economic Value Added)different from standard residual income calculations?

A key feature of economic value added (EVA)is that it emphasizes after-tax operating income and the actual cost of capital.

The net income reduced by the total annual cost of capital is equal to the economic value added.

The calculation of Economic Value Added is

Provide the missing data in the following situations:

The direct comparison of the performance of two different investment centers is difficult using residual income because residual income is an absolute measure.

A responsibility center in which a manager is responsible only for costs is a(n)

The Auto Division of Big Department Store had a net operating income of $560,000,a net asset base of $4,000,000,and a required rate of return of 12 percent.Sales for the period totaled $3,000,000.The residual income for the period is

The price charged for the transferred good affects the costs of the buying division and the revenues of the selling division.

Beta Division had the following information: If the asset base is decreased by $100,000,with no other changes,the return on investment of Beta Division will be

The pager manufacturing cell has 1,200 hours of time available per quarter.The cell could make 7,200 pagers but only made 6,000 during that time.Calculate the following:

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behavior

Cost-Volume-Profit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing,and Inventory Management

Profit Planning

Standard Costing: a Managerial Control Tool

Flexible Budgets and Overhead Analysis

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Statement of Cash Flows

Financial Statement Analysis

Filters