Question 1

Since transfer prices will affect a division's financial performance, it is used by decentralized segments of a business.

Accepted Answer

A) True 
 B)False  True

Question 2

Blair Inc.had $725,000 in invested assets, sales of $1,100,000, operating income amounting to $72,000, and a minimum acceptable rate of return of 14% on its invested assets.Blair's investment turnover is _____.

Accepted Answer

A)  1.7 
B)  1.3 
C)  1.1 
D)  1.5 
A)  1.7 
B)  1.3 
C)  1.1 
D)  1.5 D

Question 3

If operating income for a division is $120,000, sales are $975,000, and invested assets are $750,000, the investment turnover would be 6.3.

Accepted Answer

A) True 
 B)False  False

Question 4

A portion of the divisional income statement for the year just ended is presented below in a condensed form. $$\begin{array} { l r } 
& \text { Department F } \
\text { Net sales } & \$ 93,800 \
\text { Cost of goods sold } & 72,400 \
\text { Gross profit } & \$ 21,400 \
\text { Operating expenses } & 28,900 \
\text { Loss from operations } & \$ ( 7,500 ) \
\hline
\end{array}$$ ​
The operating expenses of Department F include $16,000 for direct expenses.
It is estimated that the discontinuance of Department F would not have affected the sales of the other departments nor have reduced the indirect expenses of the business.Assuming the accuracy of these estimates, determine the effect (increase or decrease and the amount) on the operating income of the business if Department F had been discontinued.

Accepted Answer

$5,400 decrease, which is the

Question 5

In an investment center, the manager has responsibility and authority for making decisions that affect:

Accepted Answer

A)  only costs. 
B)  both costs and revenues. 
C)  only assets. 
D)  costs, revenues, and assets. 
A)  only costs. 
B)  both costs and revenues. 
C)  only assets. 
D)  costs, revenues, and assets.

Question 6

The rates at which services are charged to each division are called service department charge rates.

Accepted Answer

A) True 
 B)False

Question 7

If operating income for a division is $6,000, invested assets are $25,000, and sales are $30,000, the profit margin calculated would be 20%.

Accepted Answer

A) True 
 B)False

Question 8

The major shortcoming of using operating income as an investment center performance measure is that, it ignores the amount of assets invested in each center.

Accepted Answer

A) True 
 B)False

Question 9

PDT Co.has two divisions, East and West.Invested assets and condensed income statement data for each division for the past year ended December 31 are as follows: $$\begin{array} { l r r } 
& \text { East Division } & \text { West Division } \
\text { Revenues } & \$ 1,200,000 & \$ 800,000 \
\text { Operating expenses } & 950,000 & 640,000 \
\text { Service department charges } & 145,000 & 72,000 \
\text { Invested assets } & 800,000 & 500,000
\end{array}$$ ?
(a)Prepare condensed income statements for the past year for each division.
(b)Using the expanded expression, determine the profit margin, investment turnover, and rate of return on investment for each division.Round to one decimal place.

Accepted Answer

(a)
  investment tur

Question 10

The profit center income statement should include only controllable revenues and expenses.

Accepted Answer

A) True 
 B)False

Question 11

Responsibility accounting reports for profit centers will include:

Accepted Answer

A)  only costs. 
B)  only revenues. 
C)  both expenses and fixed assets. 
D)  revenues, expenses, and net income or loss from operations. 
A)  only costs. 
B)  only revenues. 
C)  both expenses and fixed assets. 
D)  revenues, expenses, and net income or loss from operations.

Question 12

If operating income for a division is $6,000, invested assets are $25,000, and sales are $30,000, the investment turnover would be 1.2.

Accepted Answer

A) True 
 B)False

Question 13

Which component of the balanced scorecard evaluates the economic performance of the responsibility centers?

Accepted Answer

A)  Internal process 
B)  Financial 
C)  Innovation and learning 
D)  Customer 
A)  Internal process 
B)  Financial 
C)  Innovation and learning 
D)  Customer

Question 14

If operating income for a division is $6,000, invested assets are $25,000, and sales are $30,000, the profit margin calculated would be 24%.

Accepted Answer

A) True 
 B)False

Question 15

The rate of return on investment can be computed by dividing investment turnover by the profit margin.

Accepted Answer

A) True 
 B)False

Question 16

Materials used by Meeta-Products Inc.in producing Division A's product are currently purchased from outside suppliers at a cost of $12 per unit.However, the same materials are available from Division B.Division B has unused capacity and can produce the materials needed by Division A at a variable cost of $7 per unit.A transfer price of $9 per unit is established, and 35,000 units of material are transferred with no reduction in Division B's current sales. How much would Division B's operating income increase?

Accepted Answer

A)  $75,000 
B)  $175,000 
C)  $105,000 
D)  $70,000 
A)  $75,000 
B)  $175,000 
C)  $105,000 
D)  $70,000

Question 17

In the rate of return on investment analysis, the investment turnover component focuses on the efficiency in the use of assets and indicates the number of sales dollar generated for each dollar of invested assets.

Accepted Answer

A) True 
 B)False

Question 18

A common balanced scorecard measures performance in all of the following areas except:

Accepted Answer

A)  education. 
B)  internal process. 
C)  financial. 
D)  innovation and learning. 
A)  education. 
B)  internal process. 
C)  financial. 
D)  innovation and learning.

Question 19

The investment turnover is calculated as the ratio of sales to:

Accepted Answer

A)  operating income. 
B)  invested assets. 
C)  marketable investments. 
D)  profit margin. 
A)  operating income. 
B)  invested assets. 
C)  marketable investments. 
D)  profit margin.

Question 20

The manager of a profit center has the responsibility for making decisions that affect the center's _____.

Accepted Answer

A)  costs, revenues, and investment in fixed assets. 
B)  investment in fixed assets, but not costs. 
C)  costs and revenues, but not investment in fixed assets. 
D)  revenues and investment in fixed assets, but not costs. 
A)  costs, revenues, and investment in fixed assets. 
B)  investment in fixed assets, but not costs. 
C)  costs and revenues, but not investment in fixed assets. 
D)  revenues and investment in fixed assets, but not costs.

Since transfer prices will affect a division's financial performance, it is used by decentralized segments of a business.

Blair Inc.had $725,000 in invested assets, sales of $1,100,000, operating income amounting to $72,000, and a minimum acceptable rate of return of 14% on its invested assets.Blair's investment turnover is _____.

If operating income for a division is $120,000, sales are $975,000, and invested assets are $750,000, the investment turnover would be 6.3.

In an investment center, the manager has responsibility and authority for making decisions that affect:

The rates at which services are charged to each division are called service department charge rates.

If operating income for a division is $6,000, invested assets are $25,000, and sales are $30,000, the profit margin calculated would be 20%.

The major shortcoming of using operating income as an investment center performance measure is that, it ignores the amount of assets invested in each center.

The profit center income statement should include only controllable revenues and expenses.

Responsibility accounting reports for profit centers will include:

If operating income for a division is $6,000, invested assets are $25,000, and sales are $30,000, the investment turnover would be 1.2.

Which component of the balanced scorecard evaluates the economic performance of the responsibility centers?

If operating income for a division is $6,000, invested assets are $25,000, and sales are $30,000, the profit margin calculated would be 24%.

The rate of return on investment can be computed by dividing investment turnover by the profit margin.

In the rate of return on investment analysis, the investment turnover component focuses on the efficiency in the use of assets and indicates the number of sales dollar generated for each dollar of invested assets.

A common balanced scorecard measures performance in all of the following areas except:

The investment turnover is calculated as the ratio of sales to:

The manager of a profit center has the responsibility for making decisions that affect the center's _____.

The Role of Accounting in Business

Basic Accounting Systems: Cash Basis

Basic Accounting Systems: Accrual Basis

Accounting for Merchandising Businesses

Internal Control and Cash

Receivables and Inventories

Fixed Assets, Natural Resources, and Intangible Assets

Liabilities and Stockholders Equity

Metric Analysis of Financial Statements

Accounting for Manufacturing Operations

Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Costs

Capital Investment Analysis

Filters

Exam 14: Performance Evaluation for Decentralized Operations

Since transfer prices will affect a division's financial performance, it is used by decentralized segments of a business.

Blair Inc.had $725,000 in invested assets, sales of $1,100,000, operating income amounting to $72,000, and a minimum acceptable rate of return of 14% on its invested assets.Blair's investment turnover is _____.

If operating income for a division is $120,000, sales are $975,000, and invested assets are $750,000, the investment turnover would be 6.3.

In an investment center, the manager has responsibility and authority for making decisions that affect:

The rates at which services are charged to each division are called service department charge rates.

If operating income for a division is $6,000, invested assets are $25,000, and sales are $30,000, the profit margin calculated would be 20%.

The major shortcoming of using operating income as an investment center performance measure is that, it ignores the amount of assets invested in each center.

The profit center income statement should include only controllable revenues and expenses.

Responsibility accounting reports for profit centers will include:

If operating income for a division is $6,000, invested assets are $25,000, and sales are $30,000, the investment turnover would be 1.2.

Which component of the balanced scorecard evaluates the economic performance of the responsibility centers?

If operating income for a division is $6,000, invested assets are $25,000, and sales are $30,000, the profit margin calculated would be 24%.

The rate of return on investment can be computed by dividing investment turnover by the profit margin.

In the rate of return on investment analysis, the investment turnover component focuses on the efficiency in the use of assets and indicates the number of sales dollar generated for each dollar of invested assets.

A common balanced scorecard measures performance in all of the following areas except:

The investment turnover is calculated as the ratio of sales to:

The manager of a profit center has the responsibility for making decisions that affect the center's _____.

The Role of Accounting in Business

Basic Accounting Systems: Cash Basis

Basic Accounting Systems: Accrual Basis

Accounting for Merchandising Businesses

Internal Control and Cash

Receivables and Inventories

Fixed Assets, Natural Resources, and Intangible Assets

Liabilities and Stockholders Equity

Metric Analysis of Financial Statements

Accounting for Manufacturing Operations

Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Costs

Capital Investment Analysis

Filters