Question 1

Which of the following balanced scorecard perspectives measures how an organization satisfies its stakeholders?

Accepted Answer

A)  Customer 
B)  Internal business processes 
C)  Learning and growth 
D)  Financial 
A)  Customer 
B)  Internal business processes 
C)  Learning and growth 
D)  Financial

Question 2

Almond, Inc. uses a balanced scorecard. One of the measures on the scorecard is the average education level of the firm's managers. Which balanced scorecard perspective would this measure most likely fit into?

Accepted Answer

A)  Customer perspective 
B)  Learning and growth perspective 
C)  Internal business perspective 
D)  Financial perspective 
A)  Customer perspective 
B)  Learning and growth perspective 
C)  Internal business perspective 
D)  Financial perspective

Question 3

The responsibility center in which the manager has responsibility and authority over revenues, costs and assets is the:

Accepted Answer

A)  cost center. 
B)  investment center. 
C)  profit center. 
D)  revenue center. 
A)  cost center. 
B)  investment center. 
C)  profit center. 
D)  revenue center.

Question 4

Swan Company has two divisions, Hill and Paradise. Hill produces a unit that Paradise could use in its production. Paradise currently is purchasing 5,000 units from an outside supplier for $56. Hill is operating at less than full capacity and has variable costs of $30.80 per unit. The full cost to manufacture the unit is $43.40. Hill currently sells 450,000 units at a selling price of $61.60. How much will Paradise save by not purchasing from outside if a transfer price of $42 is agreed upon?

Accepted Answer

A)  $70,000 
B)  $56,000 
C)  $7,000 more cost 
D)  $28,000 
A)  $70,000 
B)  $56,000 
C)  $7,000 more cost 
D)  $28,000

Question 5

In transfer pricing, the manager of the buying division is motivated to pay the highest price possible, while the manager of the selling division is motivated to sell at the lowest price possible

Accepted Answer

A) True 
 B)False

Question 6

Killian Corp. has a residual income of $30,000 on invested assets of $450,000. If the hurdle rate is 10%, what is the operating income?

Accepted Answer

A)  $30,000 
B)  $45,000 
C)  $3,000 
D)  $75,000 
A)  $30,000 
B)  $45,000 
C)  $3,000 
D)  $75,000

Question 7

When negotiating a transfer price, the highest price the buyer will be willing to pay is the _____________, while the lowest price the seller will be willing to accept is the _______________.

Accepted Answer

A)  market price; full cost 
B)  full cost; variable cost 
C)  market price; variable cost 
D)  variable cost; market price 
A)  market price; full cost 
B)  full cost; variable cost 
C)  market price; variable cost 
D)  variable cost; market price

Question 8

Holiday Corp. has two divisions, Quail and Marlin. Quail produces a widget that Marlin could use in its production. Quail's variable costs are $4 per widget while the full cost is $7. Widgets sell on the open market for $12 each. If Quail has excess capacity, what would be the cost savings if the transfer was made and Marlin currently is purchasing 100,000 units on the open market?

Accepted Answer

A)  $0 
B)  $700,000 
C)  $800,000 
D)  $1,200,000 
A)  $0 
B)  $700,000 
C)  $800,000 
D)  $1,200,000

Question 9

Miami Corp. has an operating income of $120,000, average invested assets of $600,000, and a cost of capital of 7%. What is the residual income?

Accepted Answer

A)  $100,000 
B)  $166,667 
C)  $78,000 
D)  $42,000 
A)  $100,000 
B)  $166,667 
C)  $78,000 
D)  $42,000

Question 10

The controllability principle holds that managers should be held responsible for what they can control and for allocated costs

Accepted Answer

A) True 
 B)False

Question 11

Colonial has an ROI of 18% based on revenues of $300,000. The investment turnover is 1.5 and residual income is $20,000. What is the hurdle rate?

Accepted Answer

A)  18% 
B)  12% 
C)  8% 
D)  15% 
A)  18% 
B)  12% 
C)  8% 
D)  15%

Question 12

Holiday Corp. has two divisions, Quail and Marlin. Quail produces a widget that Marlin could use in its production. Quail's variable costs are $4 per widget while the full cost is $7. Widgets sell on the open market for $12 each. If Quail has excess capacity, what would be the maximum transfer price if Marlin currently is purchasing 100,000 units on the open market?

Accepted Answer

A)  $4.00 
B)  $5.00 
C)  $7.00 
D)  $12.00 
A)  $4.00 
B)  $5.00 
C)  $7.00 
D)  $12.00

Question 13

Investment center managers have control over the investment of assets

Accepted Answer

A) True 
 B)False

Question 14

The hurdle rate is also called economic value added

Accepted Answer

A) True 
 B)False

Question 15

Concord Company has two divisions, Rice and Pine. Rice produces an item that Pine could use in its production. Pine currently is purchasing 12,000 units from an outside supplier for $18 per unit. Rice is currently operating at less than its full capacity of 500,000 units and has variable costs of $10 per unit. The full cost to manufacture the unit is $14. Rice currently sells 450,000 units at a selling price of $20 per unit.
a. What will be the effect on Concord Company's operating profit if the transfer is made internally?
b. What is the minimum transfer price from Rice's perspective?
c. What is the maximum transfer price from Pine' perspective?

Accepted Answer

a. $96,000 more profit = 12,00

Question 16

Howard has an ROI of 16% based on revenues of $400,000. The investment turnover is 2. What is the residual income if the cost of capital is 9%?

Accepted Answer

A)  $64,000 
B)  $36,000 
C)  ($4,000) 
D)  $14,000 
A)  $64,000 
B)  $36,000 
C)  ($4,000) 
D)  $14,000

Question 17

Profit margin can be calculated as:

Accepted Answer

A)  sales revenue/average invested assets. 
B)  operating income/sales revenue. 
C)  operating income/average invested assets. 
D)  average invested assets/sales revenue. 
A)  sales revenue/average invested assets. 
B)  operating income/sales revenue. 
C)  operating income/average invested assets. 
D)  average invested assets/sales revenue.

Question 18

Estate has an ROI of 16% based on revenues of $400,000. The residual income is $14,000 and the investment turnover is 2. What is the hurdle rate?

Accepted Answer

A)  16% 
B)  8% 
C)  9% 
D)  18% 
A)  16% 
B)  8% 
C)  9% 
D)  18%

Question 19

A profit center manager often also supervises revenue and cost center managers

Accepted Answer

A) True 
 B)False

Question 20

Avocado Company has an operating income of $80,000 on revenues of $1,000,000. Average invested assets are $500,000 and Avocado Company has an 8% cost of capital. What is the investment turnover?

Accepted Answer

A)  10 
B)  5 
C)  2 
D)  16 
A)  10 
B)  5 
C)  2 
D)  16

Which of the following balanced scorecard perspectives measures how an organization satisfies its stakeholders?

Almond, Inc. uses a balanced scorecard. One of the measures on the scorecard is the average education level of the firm's managers. Which balanced scorecard perspective would this measure most likely fit into?

The responsibility center in which the manager has responsibility and authority over revenues, costs and assets is the:

In transfer pricing, the manager of the buying division is motivated to pay the highest price possible, while the manager of the selling division is motivated to sell at the lowest price possible

Killian Corp. has a residual income of $30,000 on invested assets of $450,000. If the hurdle rate is 10%, what is the operating income?

When negotiating a transfer price, the highest price the buyer will be willing to pay is the _, while the lowest price the seller will be willing to accept is the ___.

Miami Corp. has an operating income of $120,000, average invested assets of $600,000, and a cost of capital of 7%. What is the residual income?

The controllability principle holds that managers should be held responsible for what they can control and for allocated costs

Colonial has an ROI of 18% based on revenues of $300,000. The investment turnover is 1.5 and residual income is $20,000. What is the hurdle rate?

Investment center managers have control over the investment of assets

The hurdle rate is also called economic value added

Howard has an ROI of 16% based on revenues of $400,000. The investment turnover is 2. What is the residual income if the cost of capital is 9%?

Profit margin can be calculated as:

Estate has an ROI of 16% based on revenues of $400,000. The residual income is $14,000 and the investment turnover is 2. What is the hurdle rate?

A profit center manager often also supervises revenue and cost center managers

Avocado Company has an operating income of $80,000 on revenues of $1,000,000. Average invested assets are $500,000 and Avocado Company has an 8% cost of capital. What is the investment turnover?

Introduction to Managerial Accounting

Job-Order Costing

Process Costing

Activity-Based Cost Management

Cost Behavior and Estimation

Cost-Volume-Profit Analysis

Incremental Analysis for Short-Term Decision Making

Budgeting and Planning

Standard Costing and Variances

Capital Budgeting

Statement of Cash Flows

Financial Statement Analysis

Filters

Exam 10: Decentralized Performance Evaluation

Which of the following balanced scorecard perspectives measures how an organization satisfies its stakeholders?

Almond, Inc. uses a balanced scorecard. One of the measures on the scorecard is the average education level of the firm's managers. Which balanced scorecard perspective would this measure most likely fit into?

The responsibility center in which the manager has responsibility and authority over revenues, costs and assets is the:

In transfer pricing, the manager of the buying division is motivated to pay the highest price possible, while the manager of the selling division is motivated to sell at the lowest price possible

Killian Corp. has a residual income of $30,000 on invested assets of $450,000. If the hurdle rate is 10%, what is the operating income?

When negotiating a transfer price, the highest price the buyer will be willing to pay is the _____________, while the lowest price the seller will be willing to accept is the _______________.

Miami Corp. has an operating income of $120,000, average invested assets of $600,000, and a cost of capital of 7%. What is the residual income?

The controllability principle holds that managers should be held responsible for what they can control and for allocated costs

Colonial has an ROI of 18% based on revenues of $300,000. The investment turnover is 1.5 and residual income is $20,000. What is the hurdle rate?

Investment center managers have control over the investment of assets

The hurdle rate is also called economic value added

Howard has an ROI of 16% based on revenues of $400,000. The investment turnover is 2. What is the residual income if the cost of capital is 9%?

Profit margin can be calculated as:

Estate has an ROI of 16% based on revenues of $400,000. The residual income is $14,000 and the investment turnover is 2. What is the hurdle rate?

A profit center manager often also supervises revenue and cost center managers

Avocado Company has an operating income of $80,000 on revenues of $1,000,000. Average invested assets are $500,000 and Avocado Company has an 8% cost of capital. What is the investment turnover?

Introduction to Managerial Accounting

Job-Order Costing

Process Costing

Activity-Based Cost Management

Cost Behavior and Estimation

Cost-Volume-Profit Analysis

Incremental Analysis for Short-Term Decision Making

Budgeting and Planning

Standard Costing and Variances

Capital Budgeting

Statement of Cash Flows

Financial Statement Analysis

Filters

When negotiating a transfer price, the highest price the buyer will be willing to pay is the _, while the lowest price the seller will be willing to accept is the ___.