Question 1

Investment turnover  (as used in determining the return on investment) focuses on the rate of profit earned on each sales dollar.

Accepted Answer

A) True 
 B)False

Question 2

Separation of businesses into more manageable operating units is termed decentralization.

Accepted Answer

A) True 
 B)False

Question 3

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 gross profit for the Rails Division is

Accepted Answer

A)  $60,800 
B)  $33,600 
C)  $8,700 
D)  $21,150 
A)  $60,800 
B)  $33,600 
C)  $8,700 
D)  $21,150

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).
-Number of advertising campaigns

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

Use this information for ABC Corporation to answer the questions that follow.
​
ABC Corporation has three service departments with the following costs and activity base:
​
   ABC has three operating divisions, Micro, Macro and Super. Their revenue, cost and activity information is as follows:
​
  
-What is Clydesdale Company's residual income?

Accepted Answer

A)  $252,000 
B)  $900,000 
C)  $1,400,000 
D)  $760,000 
A)  $252,000 
B)  $900,000 
C)  $1,400,000 
D)  $760,000

Question 6

Which of the following expressions is termed the profit margin factor as used in determining the return on investment?

Accepted Answer

A)  Sales/Income from Operations 
B)  Income from Operations/Sales 
C)  Invested Assets/Sales 
D)  Sales/Invested Assets 
A)  Sales/Income from Operations 
B)  Income from Operations/Sales 
C)  Invested Assets/Sales 
D)  Sales/Invested Assets

Question 7

Tom's Tool Factory is an investment center and is responsible for all of its net income and the use of its assets. This year, the invested assets totaled $475,000, and net income was $275,000. What is the return on investment?

Accepted Answer

A)  57.9% 
B)  172.3% 
C)  5.0% 
D)  115.0% 
A)  57.9% 
B)  172.3% 
C)  5.0% 
D)  115.0%

Question 8

A responsibility center in which the department manager has responsibility for and authority over costs, revenues, and assets invested in the department is termed a cost center.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is a measure of a manager's performance working in a profit center?

Accepted Answer

A)  a balance sheet 
B)  the return on investment and residual income measures 
C)  a budget performance report 
D)  the divisional income statements 
A)  a balance sheet 
B)  the return on investment and residual income measures 
C)  a budget performance report 
D)  the divisional income statements

Question 10

Use this information for ABC Corporation to answer the questions that follow.
​
ABC Corporation has three service departments with the following costs and activity base:
​
   ABC has three operating divisions, Micro, Macro and Super. Their revenue, cost and activity information is as follows:
​
  
-What is Clydesdale Company's investment turnover?

Accepted Answer

A)  1.80 
B)  2.25 
C)  1.25 
D)  1.4 
A)  1.80 
B)  2.25 
C)  1.25 
D)  1.4

Question 11

Managers of what type of decentralized units have authority and responsibility for revenues, costs, and assets invested in the unit?

Accepted Answer

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

Question 12

The cost price approach for transfer pricing is most often used between responsibility centers organized as cost centers that are not concerned with the revenue.

Accepted Answer

A) True 
 B)False

Question 13

The materials used by Holly Company's Division A are currently purchased from an outside supplier. Division B is able to supply Division A with 20,000 units at a variable cost of $42 per unit. The normal price for which Division B normally sells its units is $53 per unit. What is the range of transfer prices within which the two division managers should negotiate?

Accepted Answer

The answer of The materials used by Holly Company's Division...

Question 14

Match each of the following phrases as describing (a) an advantage, (b) a disadvantage, or (c) neither of decentralization.
-Operational issues are made by managers closest to the operations

Accepted Answer

A) Advantage of decentralization 
B) Disadvantage of decentralization 
C) Neither an advantage nor a disadvantage 
A) Advantage of decentralization 
B) Disadvantage of decentralization 
C) Neither an advantage nor a disadvantage

Question 15

If Division Q's yearly income from operations is $30,000 on invested assets of $200,000, the return on investment is 15%.

Accepted Answer

A) True 
 B)False

Question 16

The materials used by Hibiscus Company's Division A are currently purchased from an outside supplier at $55 per unit. Division B is able to supply Division A with 20,000 units at a variable cost of $42 per unit. The two divisions have recently negotiated a transfer price of $48 per unit for the 20,000 units. 
(a) By how much will each division's income increase as a result of this transfer? 
(b) What is the total increase in income for Hibiscus Company?

Accepted Answer

The answer of The materials used by Hibiscus Company's Division...

Question 17

Which of the following is not​ a commonly used approach to 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 18

Blaser Corporation had $275,000 in invested assets, sales of $330,000, income from operations amounting to $33,000, and a desired minimum return of 7.5%. The return on investment for Blaser Corporation is

Accepted Answer

A)  8.3% 
B)  10% 
C)  12% 
D)  7.5% 
A)  8.3% 
B)  10% 
C)  12% 
D)  7.5%

Question 19

Use this information for ABC Corporation to answer the questions that follow.
​
ABC Corporation has three service departments with the following costs and activity base:
​
   ABC has three operating divisions, Micro, Macro and Super. Their revenue, cost and activity information is as follows:
​
  
-How much service department cost will be allocated to the Micro Division?

Accepted Answer

A)  $200,000 
B)  $145,000 
C)  $60,000 
D)  $345,000 
A)  $200,000 
B)  $145,000 
C)  $60,000 
D)  $345,000

Question 20

A responsibility center in which the authority over and responsibility for costs and revenues is vested in the department manager is termed a profit center.

Accepted Answer

A) True 
 B)False

Investment turnover (as used in determining the return on investment) focuses on the rate of profit earned on each sales dollar.

Separation of businesses into more manageable operating units is termed decentralization.

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 gross profit for the Rails Division is

An activity base is used to charge service department expenses. Match each of the following activity bases with the appropriate department (a-h). -Number of advertising campaigns

Which of the following expressions is termed the profit margin factor as used in determining the return on investment?

Tom's Tool Factory is an investment center and is responsible for all of its net income and the use of its assets. This year, the invested assets totaled $475,000, and net income was $275,000. What is the return on investment?

A responsibility center in which the department manager has responsibility for and authority over costs, revenues, and assets invested in the department is termed a cost center.

Which of the following is a measure of a manager's performance working in a profit center?

Managers of what type of decentralized units have authority and responsibility for revenues, costs, and assets invested in the unit?

The cost price approach for transfer pricing is most often used between responsibility centers organized as cost centers that are not concerned with the revenue.

Match each of the following phrases as describing (a) an advantage, (b) a disadvantage, or (c) neither of decentralization. -Operational issues are made by managers closest to the operations

If Division Q's yearly income from operations is $30,000 on invested assets of $200,000, the return on investment is 15%.

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

Blaser Corporation had $275,000 in invested assets, sales of $330,000, income from operations amounting to $33,000, and a desired minimum return of 7.5%. The return on investment for Blaser Corporation is

A responsibility center in which the authority over and responsibility for costs and revenues is vested in the department manager is termed a profit center.

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

Exam 23: Decentralized Operations

Investment turnover (as used in determining the return on investment) focuses on the rate of profit earned on each sales dollar.

Separation of businesses into more manageable operating units is termed decentralization.

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 gross profit for the Rails Division is

An activity base is used to charge service department expenses. Match each of the following activity bases with the appropriate department (a-h). -Number of advertising campaigns

Which of the following expressions is termed the profit margin factor as used in determining the return on investment?

Tom's Tool Factory is an investment center and is responsible for all of its net income and the use of its assets. This year, the invested assets totaled $475,000, and net income was $275,000. What is the return on investment?

A responsibility center in which the department manager has responsibility for and authority over costs, revenues, and assets invested in the department is termed a cost center.

Which of the following is a measure of a manager's performance working in a profit center?

Managers of what type of decentralized units have authority and responsibility for revenues, costs, and assets invested in the unit?

The cost price approach for transfer pricing is most often used between responsibility centers organized as cost centers that are not concerned with the revenue.

Match each of the following phrases as describing (a) an advantage, (b) a disadvantage, or (c) neither of decentralization. -Operational issues are made by managers closest to the operations

If Division Q's yearly income from operations is $30,000 on invested assets of $200,000, the return on investment is 15%.

Which of the following is not​ a commonly used approach to setting transfer prices?

Blaser Corporation had $275,000 in invested assets, sales of $330,000, income from operations amounting to $33,000, and a desired minimum return of 7.5%. The return on investment for Blaser Corporation is

A responsibility center in which the authority over and responsibility for costs and revenues is vested in the department manager is termed a profit center.

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

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 gross profit for the Rails Division is

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