Question 1

Which transfer price approach is used when the transfer price is set at the amount sold to outside buyers?

Accepted Answer

A)  market price 
B)  cost price 
C)  negotiated price 
D)  variable price 
A)  market price 
B)  cost price 
C)  negotiated price 
D)  variable price

Question 2

Using the data below for Ace Guitar Company, determine the divisional income from operations for the Regions A and B.​   Allocate service department expenses proportionally to the sales of each region. Round the percentage of sales allocation to one decimal place.

Accepted Answer

The answer of Using the data below for Ace Guitar...

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

An activity base is used to charge service department expenses. Match each of the following activity bases with the appropriate department (a-h).
-Allocated equally among divisions

Accepted Answer

A) Purchasing 
B) Payroll Accounting 
C) Human Resources 
D) Maintenance 
E) Information Systems
F)Marketing
G)President's Office
H)Transportation 
A) Purchasing 
B) Payroll Accounting 
C) Human Resources 
D) Maintenance 
E) Information Systems
F)Marketing
G)President's Office
H)Transportation

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

Businesses that are separated into two or more manageable units in which managers have authority and responsibility for operations are said to be

Accepted Answer

A)  decentralized 
B)  consolidated 
C)  diversified 
D)  centralized 
A)  decentralized 
B)  consolidated 
C)  diversified 
D)  centralized

Question 7

In a profit center, the department manager has responsibility for and the authority to make decisions that affect

Accepted Answer

A)  not only costs and revenues, but also assets invested in the center 
B)  the assets invested in the center, but not costs and revenues 
C)  both costs and revenues for the department or division 
D)  costs and assets invested in the center, but not revenues 
A)  not only costs and revenues, but also assets invested in the center 
B)  the assets invested in the center, but not costs and revenues 
C)  both costs and revenues for the department or division 
D)  costs and assets invested in the center, but not revenues

Question 8

Office salaries expense for a department store is an indirect expense.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is not one of the common types of responsibility centers?

Accepted Answer

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

Question 10

A disadvantage to using the residual income performance measure is that it encourages managers to spend only the minimum acceptable return on assets set by upper management.

Accepted Answer

A) True 
 B)False

Question 11

Use this information for Train Corporation to answer the questions that follow.
​
The following financial information was summarized from the accounting records of Train Corporation for the current year ended December 31:
​
  
-The net income for Train Corporation is

Accepted Answer

A)  $83,180 
B)  $35,940 
C)  $48,390 
D)  $60,840 
A)  $83,180 
B)  $35,940 
C)  $48,390 
D)  $60,840

Question 12

Division G of Elephant Preservation Inc. has sales of $895,000, cost of goods sold of $475,000, operating expenses of $79,500, and invested assets of $750,000.?
Calculate:
(a) The return on investment for Division G.
(b) The profit margin for Division G.
(c) The investment turnover for Division G.

Accepted Answer

1. Return on investment: ($895

Question 13

How much will Division C's income from operations increase?

Accepted Answer

A)  $0 
B)  $75,000 
C)  $12,500 
D)  $50,000 
A)  $0 
B)  $75,000 
C)  $12,500 
D)  $50,000

Question 14

If divisional income from operations is $75,000, invested assets are $737,500, and the minimum return on invested assets is 6%, the residual income is $36,750.

Accepted Answer

A) True 
 B)False

Question 15

The amount of detail presented in a budget performance report for a cost center depends on the level of management to which the report is directed.

Accepted Answer

A) True 
 B)False

Question 16

The ratio of sales to investment is termed the return on investment.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following would not be considered an internal centralized service department?

Accepted Answer

A)  Payroll Accounting Department 
B)  Manufacturing Department 
C)  Information Systems Department 
D)  Purchasing Department 
A)  Payroll Accounting Department 
B)  Manufacturing Department 
C)  Information Systems Department 
D)  Purchasing Department

Question 18

The profit center income statement should include only revenues and expenses that are controlled by the manager.

Accepted Answer

A) True 
 B)False

Exam 23: Decentralized Operations

Which transfer price approach is used when the transfer price is set at the amount sold to outside buyers?

Using the data below for Ace Guitar Company, determine the divisional income from operations for the Regions A and B.​ Allocate service department expenses proportionally to the sales of each region. Round the percentage of sales allocation to one decimal place.

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

An activity base is used to charge service department expenses. Match each of the following activity bases with the appropriate department (a-h). -Allocated equally among divisions

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

Businesses that are separated into two or more manageable units in which managers have authority and responsibility for operations are said to be

In a profit center, the department manager has responsibility for and the authority to make decisions that affect

Office salaries expense for a department store is an indirect expense.

Which of the following is not one of the common types of responsibility centers?

A disadvantage to using the residual income performance measure is that it encourages managers to spend only the minimum acceptable return on assets set by upper management.

Use this information for Train Corporation to answer the questions that follow. ​ The following financial information was summarized from the accounting records of Train Corporation for the current year ended December 31: ​ -The net income for Train Corporation is

Division G of Elephant Preservation Inc. has sales of $895,000, cost of goods sold of $475,000, operating expenses of $79,500, and invested assets of $750,000.? Calculate: (a) The return on investment for Division G. (b) The profit margin for Division G. (c) The investment turnover for Division G.

How much will Division C's income from operations increase?

If divisional income from operations is $75,000, invested assets are $737,500, and the minimum return on invested assets is 6%, the residual income is $36,750.

The amount of detail presented in a budget performance report for a cost center depends on the level of management to which the report is directed.

The ratio of sales to investment is termed the return on investment.

Which of the following would not be considered an internal centralized service department?

The profit center income statement should include only revenues and expenses that are controlled by the manager.

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting Systems

Accounting for Merchandising Businesses

Inventories

Internal Control and Cash

Receivables

Long-Term Assets: Fixed and Intangible

Current Liabilities and Payroll

Accounting for Partnerships and Limited Liability Companies

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Cost Systems

Cost-Volume-Profit Analysis

Evaluating Variances From Standard Costs

Differential Analysis, Product Pricing, and Activity-Based Costing

Capital Investment Analysis

Filters

Using the data below for Ace Guitar Company, determine the divisional income from operations for the Regions A and B. Allocate service department expenses proportionally to the sales of each region. Round the percentage of sales allocation to one decimal place.

Use this information for Train Corporation to answer the questions that follow. The following financial information was summarized from the accounting records of Train Corporation for the current year ended December 31: -The net income for Train Corporation is