Question 1

Margin is calculated as

Accepted Answer

A) operating income/sales. 
B) average operating assets/operating income. 
C) (beginning operating assets + ending operating assets)/2. 
D) sales/average operating assets. 
E) operating income/average operating assets operating income/sales. 
A) operating income/sales. 
B) average operating assets/operating income. 
C) (beginning operating assets + ending operating assets)/2. 
D) sales/average operating assets. 
E) operating income/average operating assets operating income/sales.

Question 2

Which of the following is an absolute dollar measure rather than a percentage?

Accepted Answer

A) Average operating assets. 
B) Operating income. 
C) Residual income. 
D) Economic value added (EV
A) . 
E) All of these. 
A) Average operating assets. 
B) Operating income. 
C) Residual income. 
D) Economic value added (EV
A) . 
E) All of these.

Question 3

If there is a competitive outside market for the transferred product,then the best transfer price is the _____________.

Accepted Answer

The answer of If there is a competitive outside market...

Question 4

Decentralization is frequently chosen by companies because it

Accepted Answer

A) allows higher management to make all decisions. 
B) allows higher management to gather local information to make better decisions. 
C) protects segments of the company from competitive pressures. 
D) allows for training and motivation of local managers. 
E) allows the CEO to make all important decisions. 
A) allows higher management to make all decisions. 
B) allows higher management to gather local information to make better decisions. 
C) protects segments of the company from competitive pressures. 
D) allows for training and motivation of local managers. 
E) allows the CEO to make all important decisions.

Question 5

Figure 12-5. The following information pertains to the three divisions of Yang Company:
  Refer to Figure 12-5.What are the average operating assets for Division C?

Accepted Answer

A) $95,000 
B) $410,000 
C) $82,000 
D) $420,000 
A) $95,000 
B) $410,000 
C) $82,000 
D) $420,000

Question 6

Division A had ROI of 15% last year.The manager of Division A is considering an additional investment for the coming year.What step will the manager likely choose to take?

Accepted Answer

A) Accept the investment as long as it provides positive operating income. 
B) Accept the investment as long as its ROI is positive. 
C) Reject the investment if it returns more than 15% ROI. 
D) Reject the investment if it returns less than 15% ROI. 
E) Reject the investment if it returns an ROI equal to 15%. 
A) Accept the investment as long as it provides positive operating income. 
B) Accept the investment as long as its ROI is positive. 
C) Reject the investment if it returns more than 15% ROI. 
D) Reject the investment if it returns less than 15% ROI. 
E) Reject the investment if it returns an ROI equal to 15%.

Question 7

A price charged for a component by the selling division to the buying division of the same company is called a(n)

Accepted Answer

A) transfer price. 
B) economic value added. 
C) market price. 
D) cost-based price. 
E) none of these. 
A) transfer price. 
B) economic value added. 
C) market price. 
D) cost-based price. 
E) none of these.

Question 8

Unlike ROI,residual income does not encourage a short-run orientation.

Accepted Answer

A) True 
 B)False

Question 9

Figure 12-5. The following information pertains to the three divisions of Yang Company:
  Refer to Figure 12-5.What are the sales for Division B?

Accepted Answer

A) $18,000 
B) $1,250,000 
C) $1,200,000 
D) $208,333 
A) $18,000 
B) $1,250,000 
C) $1,200,000 
D) $208,333

Question 10

Castor Company had income of $10,000,average assets of $100,000 and sales of $40,000.What is Castor's ROI?

Accepted Answer

A) 10% 
B) 20% 
C) 25% 
D) 0.4% 
E) 40% 
A) 10% 
B) 20% 
C) 25% 
D) 0.4% 
E) 40%

Question 11

Each month,the vacuum cleaner manufacturing cell has 800 hours of time available.During that time,the cell could have manufactured up to 2,400 vacuums; but only 1,600 vacuums were actually manufactured.Calculate the following:

Accepted Answer

The answer of Each month,the vacuum cleaner manufacturing cell has...

Question 12

Red Earth Company has two divisions,the Okla Division and the Homa Division.Last year,the Okla Division earned $66,000 using average operating assets of $550,000.Last year,the Homa Division earned $260,000 using average operating assets of $2,000,000.Minimum required rate of return for Red Earth is 9 percent.
   Now assume that the minimum required rate of return for Red Earth is 12 percent.

Accepted Answer

The answer of Red Earth Company has two divisions,the Okla...

Question 13

If the operating asset turnover ratio increased by 30 percent and the margin increased by 20 percent,the divisional ROI

Accepted Answer

A) would increase by 56 percent. 
B) would decrease by 60 percent. 
C) would increase by 20 percent. 
D) cannot be determined. 
A) would increase by 56 percent. 
B) would decrease by 60 percent. 
C) would increase by 20 percent. 
D) cannot be determined.

Question 14

_______________ indicate the minimum ROI necessary to accept an investment.

Accepted Answer

The answer of _______________ indicate the minimum ROI necessary to...

Question 15

Figure 12-2. The manager of Stock Division projects the following for next year:
  The manager can invest in an additional project that would require $40,000 investment in additional assets and would generate $6,000 of additional income.The company's minimum rate of return is 14%.
Refer to Figure 12-2.What is the residual income for Stock Division with the additional project?

Accepted Answer

A) $40,000 
B) $6,000 
C) $7,900 
D) $4,200 
E) $25,600 
A) $40,000 
B) $6,000 
C) $7,900 
D) $4,200 
E) $25,600

Question 16

MCE (manufacturing cycle efficiency)is calculated using the following formula:

Accepted Answer

A) processing time/nonprocessing time. 
B) nonprocessing time/processing time. 
C) total time/processing time. 
D) processing time/total time. 
E) total time/nonprocessing time. 
A) processing time/nonprocessing time. 
B) nonprocessing time/processing time. 
C) total time/processing time. 
D) processing time/total time. 
E) total time/nonprocessing time.

Question 17

JetSky Airways has three divisions,the Western Division,the Eastern Division,and the Northern Division.The manager of the Western Division had wanted to purchase replacement airplanes for the division.However,he decided against it because,although revenues would increase and the new planes would be less expensive to operate,the initial cost of the planes was quite large.The Western Division is most probably accounted for as a(n)

Accepted Answer

A) cost center. 
B) investment center. 
C) profit center. 
D) revenue center. 
E) none of these. 
A) cost center. 
B) investment center. 
C) profit center. 
D) revenue center. 
E) none of these.

Question 18

Pautner Company had the following historical accounting data per unit:   The units are normally transferred internally from Division A to Division BThe units also may be sold externally for $210 per unit.The minimum profit level accepted by the company is a markup of 30 percent.There were no beginning or ending inventories.
What would be the transfer price if Division X uses full cost plus markup?

Accepted Answer

A) $167.70 
B) $198.90 
C) $136.50 
D) $129.00 
A) $167.70 
B) $198.90 
C) $136.50 
D) $129.00

Question 19

Several transfer pricing policies are used in practice.These transfer pricing policies include

Accepted Answer

A) transfer at market price. 
B) transfer at negotiated price. 
C) transfer at cost. 
D) all of these. 
A) transfer at market price. 
B) transfer at negotiated price. 
C) transfer at cost. 
D) all of these.

Question 20

Figure 12-2. The manager of Stock Division projects the following for next year:
  The manager can invest in an additional project that would require $40,000 investment in additional assets and would generate $6,000 of additional income.The company's minimum rate of return is 14%.
Refer to Figure 12-2.Which of the following statements is true?

Accepted Answer

A) If the manager invests in the additional project,ROI of the division will decrease. 
B) The residual income of the project is less than the residual income of the division without the project; therefore the project will be rejected. 
C) Average investment for Stock Division will decrease if the project is accepted for investment. 
D) If the manager invests in the additional project,residual income of the division will increase. 
E) none of these. 
A) If the manager invests in the additional project,ROI of the division will decrease. 
B) The residual income of the project is less than the residual income of the division without the project; therefore the project will be rejected. 
C) Average investment for Stock Division will decrease if the project is accepted for investment. 
D) If the manager invests in the additional project,residual income of the division will increase. 
E) none of these.

Margin is calculated as

Which of the following is an absolute dollar measure rather than a percentage?

If there is a competitive outside market for the transferred product,then the best transfer price is the _____________.

Decentralization is frequently chosen by companies because it

Figure 12-5. The following information pertains to the three divisions of Yang Company: Refer to Figure 12-5.What are the average operating assets for Division C?

Division A had ROI of 15% last year.The manager of Division A is considering an additional investment for the coming year.What step will the manager likely choose to take?

A price charged for a component by the selling division to the buying division of the same company is called a(n)

Unlike ROI,residual income does not encourage a short-run orientation.

Figure 12-5. The following information pertains to the three divisions of Yang Company: Refer to Figure 12-5.What are the sales for Division B?

Castor Company had income of $10,000,average assets of $100,000 and sales of $40,000.What is Castor's ROI?

Each month,the vacuum cleaner manufacturing cell has 800 hours of time available.During that time,the cell could have manufactured up to 2,400 vacuums; but only 1,600 vacuums were actually manufactured.Calculate the following:

If the operating asset turnover ratio increased by 30 percent and the margin increased by 20 percent,the divisional ROI

_______________ indicate the minimum ROI necessary to accept an investment.

MCE (manufacturing cycle efficiency)is calculated using the following formula:

Several transfer pricing policies are used in practice.These transfer pricing policies include

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

Margin is calculated as

Which of the following is an absolute dollar measure rather than a percentage?

If there is a competitive outside market for the transferred product,then the best transfer price is the _____________.

Decentralization is frequently chosen by companies because it

Figure 12-5. The following information pertains to the three divisions of Yang Company: Refer to Figure 12-5.What are the average operating assets for Division C?

Division A had ROI of 15% last year.The manager of Division A is considering an additional investment for the coming year.What step will the manager likely choose to take?

A price charged for a component by the selling division to the buying division of the same company is called a(n)

Unlike ROI,residual income does not encourage a short-run orientation.

Figure 12-5. The following information pertains to the three divisions of Yang Company: Refer to Figure 12-5.What are the sales for Division B?

Castor Company had income of $10,000,average assets of $100,000 and sales of $40,000.What is Castor's ROI?

Each month,the vacuum cleaner manufacturing cell has 800 hours of time available.During that time,the cell could have manufactured up to 2,400 vacuums; but only 1,600 vacuums were actually manufactured.Calculate the following:

If the operating asset turnover ratio increased by 30 percent and the margin increased by 20 percent,the divisional ROI

_______________ indicate the minimum ROI necessary to accept an investment.

MCE (manufacturing cycle efficiency)is calculated using the following formula:

Several transfer pricing policies are used in practice.These transfer pricing policies include

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