Question 1

The manager of the furniture department of a leading retailer does not have control on salaries of the department personnel.

Accepted Answer

A) True 
 B)False

Question 2

Responsibility accounting reports for profit centers are normally in the form of balance sheets.

Accepted Answer

A) True 
 B)False

Question 3

Operating expenses directly traceable to or incurred for the sole benefit of a specific department and usually subject to the control of the department manager are termed:

Accepted Answer

A)  miscellaneous administrative expenses. 
B)  indirect expenses. 
C)  direct expenses. 
D)  variable expenses. 
A)  miscellaneous administrative expenses. 
B)  indirect expenses. 
C)  direct expenses. 
D)  variable expenses.

Question 4

Controllable expenses are those that can be influenced by the decisions of the profit center management.

Accepted Answer

A) True 
 B)False

Question 5

Operating income for Division M is $150,000, and operating income before service department charges is $975,000.Therefore,:

Accepted Answer

A)  total operating expenses are $825,000. 
B)  total manufacturing expenses are $825,000. 
C)  direct materials, direct labor, and factory overhead total $825,000. 
D)  total service department charges are $825,000. 
A)  total operating expenses are $825,000. 
B)  total manufacturing expenses are $825,000. 
C)  direct materials, direct labor, and factory overhead total $825,000. 
D)  total service department charges are $825,000.

Question 6

Property tax expense for a department store's store equipment is an example of a direct expense.

Accepted Answer

A) True 
 B)False

Question 7

What additional information is needed to find the rate of return on investment if operating income is known?

Accepted Answer

A)  Invested assets 
B)  Residual income 
C)  Direct expenses 
D)  Sales 
A)  Invested assets 
B)  Residual income 
C)  Direct expenses 
D)  Sales

Question 8

A responsibility center in which the department manager has responsibility for and authority over costs and revenues is called a(n):

Accepted Answer

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

Question 9

If Division Q's operating income was $60,000 and invested assets amounted to $400,000, the rate of return on investment calculated would be 15%.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is not a approach used for setting transfer prices?

Accepted Answer

A)  Market price approach 
B)  Revenue price approach 
C)  Negotiated price approach 
D)  Cost price approach 
A)  Market price approach 
B)  Revenue price approach 
C)  Negotiated price approach 
D)  Cost price approach

Question 11

How do the responsibilities of a manager in an investment center compare to the responsibilities of managers in a cost or profit center?

Accepted Answer

A)  Investment center managers have more authority and responsibility than managers of a cost or profit center. 
B)  Investment center managers have more authority and responsibility than managers of a cost center but less than managers of a profit center. 
C)  Investment center managers have about the same authority and responsibility as managers of a cost or profit center. 
D)  Investment center managers have more authority and responsibility than managers of a profit center but less than managers of a cost center. 
A)  Investment center managers have more authority and responsibility than managers of a cost or profit center. 
B)  Investment center managers have more authority and responsibility than managers of a cost center but less than managers of a profit center. 
C)  Investment center managers have about the same authority and responsibility as managers of a cost or profit center. 
D)  Investment center managers have more authority and responsibility than managers of a profit center but less than managers of a cost center.

Question 12

The excess of divisional operating income over a minimum amount of desired operating income is termed residual income.

Accepted Answer

A) True 
 B)False

Question 13

The service department will determine its service department charge rate and charge the company's divisions or departments based on the usage of the service by each department.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following expenses incurred by a department store is an indirect expense?

Accepted Answer

A)  Insurance on merchandise inventory 
B)  Sales salaries 
C)  Depreciation on store equipment 
D)  Salary of vice-president of finance 
A)  Insurance on merchandise inventory 
B)  Sales salaries 
C)  Depreciation on store equipment 
D)  Salary of vice-president of finance

Question 15

Operating expenses directly traceable to or incurred for the sole benefit of a specific department and usually subject to the control of the department manager are termed indirect expenses.

Accepted Answer

A) True 
 B)False

Question 16

Division B's profit margin is 16%, and the investment turnover is 1.80.What is Division B's rate of return on investment?

Accepted Answer

A)  15.7% 
B)  28.8% 
C)  17.0% 
D)  10.6% 
A)  15.7% 
B)  28.8% 
C)  17.0% 
D)  10.6%

Question 17

Budget performance reports prepared for the vice-president of production would generally contain less detail than the reports prepared for the various plant managers.

Accepted Answer

A) True 
 B)False

Question 18

A centralized business organization is one in which all major planning and operating decisions are made by top management.

Accepted Answer

A) True 
 B)False

Question 19

Zygot Inc.had $650,000 invested in assets, sales of $1,250,000, operating income amounting to $140,000, and a minimum acceptable rate of return of 12% on its invested assets.The rate of return on investment for Zygot is:

Accepted Answer

A)  16.2%. 
B)  21.5%. 
C)  14.5%. 
D)  25.0%. 
A)  16.2%. 
B)  21.5%. 
C)  14.5%. 
D)  25.0%.

Question 20

The manager of a profit center does not make decisions concerning the fixed assets invested in the center.

Accepted Answer

A) True 
 B)False

The manager of the furniture department of a leading retailer does not have control on salaries of the department personnel.

Responsibility accounting reports for profit centers are normally in the form of balance sheets.

Operating expenses directly traceable to or incurred for the sole benefit of a specific department and usually subject to the control of the department manager are termed:

Controllable expenses are those that can be influenced by the decisions of the profit center management.

Operating income for Division M is $150,000, and operating income before service department charges is $975,000.Therefore,:

Property tax expense for a department store's store equipment is an example of a direct expense.

What additional information is needed to find the rate of return on investment if operating income is known?

A responsibility center in which the department manager has responsibility for and authority over costs and revenues is called a(n):

If Division Q's operating income was $60,000 and invested assets amounted to $400,000, the rate of return on investment calculated would be 15%.

Which of the following is not a approach used for setting transfer prices?

How do the responsibilities of a manager in an investment center compare to the responsibilities of managers in a cost or profit center?

The excess of divisional operating income over a minimum amount of desired operating income is termed residual income.

The service department will determine its service department charge rate and charge the company's divisions or departments based on the usage of the service by each department.

Which of the following expenses incurred by a department store is an indirect expense?

Operating expenses directly traceable to or incurred for the sole benefit of a specific department and usually subject to the control of the department manager are termed indirect expenses.

Division B's profit margin is 16%, and the investment turnover is 1.80.What is Division B's rate of return on investment?

Budget performance reports prepared for the vice-president of production would generally contain less detail than the reports prepared for the various plant managers.

A centralized business organization is one in which all major planning and operating decisions are made by top management.

Zygot Inc.had $650,000 invested in assets, sales of $1,250,000, operating income amounting to $140,000, and a minimum acceptable rate of return of 12% on its invested assets.The rate of return on investment for Zygot is:

The manager of a profit center does not make decisions concerning the fixed assets invested in the center.

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

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Exam 14: Performance Evaluation for Decentralized Operations

The manager of the furniture department of a leading retailer does not have control on salaries of the department personnel.

Responsibility accounting reports for profit centers are normally in the form of balance sheets.

Operating expenses directly traceable to or incurred for the sole benefit of a specific department and usually subject to the control of the department manager are termed:

Controllable expenses are those that can be influenced by the decisions of the profit center management.

Operating income for Division M is $150,000, and operating income before service department charges is $975,000.Therefore,:

Property tax expense for a department store's store equipment is an example of a direct expense.

What additional information is needed to find the rate of return on investment if operating income is known?

A responsibility center in which the department manager has responsibility for and authority over costs and revenues is called a(n):

If Division Q's operating income was $60,000 and invested assets amounted to $400,000, the rate of return on investment calculated would be 15%.

Which of the following is not a approach used for setting transfer prices?

How do the responsibilities of a manager in an investment center compare to the responsibilities of managers in a cost or profit center?

The excess of divisional operating income over a minimum amount of desired operating income is termed residual income.

The service department will determine its service department charge rate and charge the company's divisions or departments based on the usage of the service by each department.

Which of the following expenses incurred by a department store is an indirect expense?

Operating expenses directly traceable to or incurred for the sole benefit of a specific department and usually subject to the control of the department manager are termed indirect expenses.

Division B's profit margin is 16%, and the investment turnover is 1.80.What is Division B's rate of return on investment?

Budget performance reports prepared for the vice-president of production would generally contain less detail than the reports prepared for the various plant managers.

A centralized business organization is one in which all major planning and operating decisions are made by top management.

Zygot Inc.had $650,000 invested in assets, sales of $1,250,000, operating income amounting to $140,000, and a minimum acceptable rate of return of 12% on its invested assets.The rate of return on investment for Zygot is:

The manager of a profit center does not make decisions concerning the fixed assets invested in the center.

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