Question 1

The benefits of decentralization include all of the following except:

Accepted Answer

A)  It forces top levels of management to focus on individual units. 
B)  It empowers more employees at lower levels of management. 
C)  It allows for better and more timely decision making. 
D)  It trains future managers. 
A)  It forces top levels of management to focus on individual units. 
B)  It empowers more employees at lower levels of management. 
C)  It allows for better and more timely decision making. 
D)  It trains future managers.

Question 2

Which of the following is not a benefit of decentralization?

Accepted Answer

A)  Trains future managers. 
B)  Simple to coordinate decisions. 
C)  Empowers employees and increases job satisfaction. 
D)  Permits timely decisions. 
E)  All of the above are benefits of decentralization. 
A)  Trains future managers. 
B)  Simple to coordinate decisions. 
C)  Empowers employees and increases job satisfaction. 
D)  Permits timely decisions. 
E)  All of the above are benefits of decentralization.

Question 3

Managers of investment centers enjoy little autonomy in decentralized organizations.

Accepted Answer

A) True 
 B)False

Question 4

Supercircuits is a decentralized company and has a required opportunity cost of capital of 15%. The home computer division, whose current ROI is 10%, is considering an investment which will earn a 13% return. The gaming division, whose current ROI is 20%, is considering an investment which will earn a 17% return. If the objective is to maximize residual income, each division will make the following choice:

Accepted Answer

The answer of Supercircuits is a decentralized company and has...

Question 5

Which of the following is not a performance measure used to evaluate a profit center's manager? a. Customer satisfaction.
B) How well the manager utilizes funds made available to his/her division.
C) Employee turnover.
D) Market share.
E) All of the above are performance measures used to evaluate a profit center's manager.

Accepted Answer

The answer of Which of the following is not a...

Question 6

In an inter-company transfer, if the maximum price the buying division is willing to pay is less than the minimum price the selling division is willing to accept, both divisions will never agree to the internal transfer.

Accepted Answer

A) True 
 B)False

Question 7

Residual income represents the additional profit or value generated by an investment after meeting the required rate of return.

Accepted Answer

A) True 
 B)False

Question 8

Firms often view investment centers as: a. Support activities.
B) Discretionary cost centers.
C) Stand-alone businesses.
D) Revenue centers.
E) None of the above.

Accepted Answer

The answer of Firms often view investment centers as: a....

Question 9

A characteristic of an effective performance measure is that it is easy to understand and communicate.

Accepted Answer

A) True 
 B)False

Question 10

The Versa Company had the following results for 2009:   Versa Company's average operating assets were: a. $140,000
B) $40,000
C) $490,000
D) $21,000

Accepted Answer

The answer of The Versa Company had the following results...

Question 11

Which of the following transfer prices always results in both divisions voluntarily making the right decisions from the perspective of the company as a whole? a. Variable cost-based transfer prices.
B) Full cost-based transfer prices.
C) Market-based transfer prices.
D) Negotiated transfer prices.
E) None of the above.

Accepted Answer

The answer of Which of the following transfer prices always...

Question 12

Suma is a philosophy of continuous improvement that encourages and rewards employees who constantly seek and suggest improvements to activities and business processes.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is not an option in deciding how to incorporate depreciable fixed assets in measuring divisional investment? a. Net book value.
B) Gross book value.
C) Transfer price.
D) Replacement cost of the asset.
E) Current value of the asset.

Accepted Answer

The answer of Which of the following is not an...

Question 14

Which of the following is not a characteristic of effective performance measures?

Accepted Answer

A)  Is easy to understand and communicate. 
B)  Is easy to measure. 
C)  Separates employee and organizational goals. 
D)  Yields maximum information about the decisions or actions of the individual or organizational unit. 
E)  All of the above are characteristics of effective performance measures. 
A)  Is easy to understand and communicate. 
B)  Is easy to measure. 
C)  Separates employee and organizational goals. 
D)  Yields maximum information about the decisions or actions of the individual or organizational unit. 
E)  All of the above are characteristics of effective performance measures.

Question 15

Cost center managers are charged with minimizing the cost of producing a specified level of output or the cost of delivering a specified level of service.

Accepted Answer

A) True 
 B)False

Question 16

The controllability principle is always the right approach for choosing performance measures.

Accepted Answer

A) True 
 B)False

Question 17

From the perspective of determining corporate pre-tax income, a transfer price does not serve any useful purpose.

Accepted Answer

A) True 
 B)False

Question 18

Production managers have little control over the volume of production.

Accepted Answer

A) True 
 B)False

Question 19

Cost center managers serve two roles in organizations - achieving cost targets for a given level of output in the short term, and making continuous improvements to increase revenue in the long term.

Accepted Answer

A) True 
 B)False

Question 20

Most controllable measures are informative, however an informative measure is not necessarily controllable.

Accepted Answer

A) True 
 B)False

The benefits of decentralization include all of the following except:

Which of the following is not a benefit of decentralization?

Managers of investment centers enjoy little autonomy in decentralized organizations.

In an inter-company transfer, if the maximum price the buying division is willing to pay is less than the minimum price the selling division is willing to accept, both divisions will never agree to the internal transfer.

Residual income represents the additional profit or value generated by an investment after meeting the required rate of return.

Firms often view investment centers as: a. Support activities. B) Discretionary cost centers. C) Stand-alone businesses. D) Revenue centers. E) None of the above.

A characteristic of an effective performance measure is that it is easy to understand and communicate.

The Versa Company had the following results for 2009: Versa Company's average operating assets were: a. $140,000 B) $40,000 C) $490,000 D) $21,000

Suma is a philosophy of continuous improvement that encourages and rewards employees who constantly seek and suggest improvements to activities and business processes.

Which of the following is not an option in deciding how to incorporate depreciable fixed assets in measuring divisional investment? a. Net book value. B) Gross book value. C) Transfer price. D) Replacement cost of the asset. E) Current value of the asset.

Which of the following is not a characteristic of effective performance measures?

Cost center managers are charged with minimizing the cost of producing a specified level of output or the cost of delivering a specified level of service.

The controllability principle is always the right approach for choosing performance measures.

From the perspective of determining corporate pre-tax income, a transfer price does not serve any useful purpose.

Production managers have little control over the volume of production.

Cost center managers serve two roles in organizations - achieving cost targets for a given level of output in the short term, and making continuous improvements to increase revenue in the long term.

Most controllable measures are informative, however an informative measure is not necessarily controllable.

Accounting: Information for Decision Making

Identification and Estimating Costs and Benefits

Cost Flows and Cost Terminology

Techniques for Estimating Fixed and Variable Costs

Cost-Volume-Profit Analysis

Decision Making in the Short Term

Operating Budgets: Bridging Planning and Control

Budgetary Control and Variance Analysis

Cost Allocations: Theory and Applications

Activity-Based Costing and Management

Managing Long-Lived Resources: Capital Budgeting

Strategic Planning and Control

Job Costing

Process Costing

Support Activity and Dual Rate Allocations

Filters

Exam 12: Performance Evaluation in Decentralized Organizations

The benefits of decentralization include all of the following except:

Which of the following is not a benefit of decentralization?

Managers of investment centers enjoy little autonomy in decentralized organizations.

In an inter-company transfer, if the maximum price the buying division is willing to pay is less than the minimum price the selling division is willing to accept, both divisions will never agree to the internal transfer.

Residual income represents the additional profit or value generated by an investment after meeting the required rate of return.

Firms often view investment centers as: a. Support activities. B) Discretionary cost centers. C) Stand-alone businesses. D) Revenue centers. E) None of the above.

A characteristic of an effective performance measure is that it is easy to understand and communicate.

The Versa Company had the following results for 2009: Versa Company's average operating assets were: a. $140,000 B) $40,000 C) $490,000 D) $21,000

Suma is a philosophy of continuous improvement that encourages and rewards employees who constantly seek and suggest improvements to activities and business processes.

Which of the following is not an option in deciding how to incorporate depreciable fixed assets in measuring divisional investment? a. Net book value. B) Gross book value. C) Transfer price. D) Replacement cost of the asset. E) Current value of the asset.

Which of the following is not a characteristic of effective performance measures?

Cost center managers are charged with minimizing the cost of producing a specified level of output or the cost of delivering a specified level of service.

The controllability principle is always the right approach for choosing performance measures.

From the perspective of determining corporate pre-tax income, a transfer price does not serve any useful purpose.

Production managers have little control over the volume of production.

Cost center managers serve two roles in organizations - achieving cost targets for a given level of output in the short term, and making continuous improvements to increase revenue in the long term.

Most controllable measures are informative, however an informative measure is not necessarily controllable.

Accounting: Information for Decision Making

Identification and Estimating Costs and Benefits

Cost Flows and Cost Terminology

Techniques for Estimating Fixed and Variable Costs

Cost-Volume-Profit Analysis

Decision Making in the Short Term

Operating Budgets: Bridging Planning and Control

Budgetary Control and Variance Analysis

Cost Allocations: Theory and Applications

Activity-Based Costing and Management

Managing Long-Lived Resources: Capital Budgeting

Strategic Planning and Control

Job Costing

Process Costing

Support Activity and Dual Rate Allocations

Filters