Question 1

The excess of divisional income from operations over a minimum acceptable income from operations is termed the residual income.

Accepted Answer

A) True 
 B)False

Question 2

The Creative Division of Barry Company reported the following results for December:​​   Based on this information, what were sales?

Accepted Answer

$1,200,000 × 30% = $

Question 3

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 the service department charge rate for the Accounting Department?

Accepted Answer

A)  $714 
B)  $250 
C)  $625 
D)  $0.004 
A)  $714 
B)  $250 
C)  $625 
D)  $0.004

Question 4

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:
​
  
-The residual income for Mason is?

Accepted Answer

A)  $0 
B)  $84,150 
C)  ($6,000) 
D)  $1,500 
A)  $0 
B)  $84,150 
C)  ($6,000) 
D)  $1,500

Question 5

Which of the following is a measure of a cost center manager's performance?

Accepted Answer

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

Question 6

The process of measuring and reporting operating data by responsibility centers is termed responsibility accounting.

Accepted Answer

A) True 
 B)False

Question 7

What is the investment turnover for Division A?

Accepted Answer

A)  0.93 
B)  9.3 
C)  1.07 
D)  10.7 
A)  0.93 
B)  9.3 
C)  1.07 
D)  10.7

Question 8

For higher levels of management, responsibility accounting reports

Accepted Answer

A)  are more detailed than for lower levels of management 
B)  are more summarized than for lower levels of management 
C)  contain about the same level of detail as reports for lower levels of management 
D)  are rarely provided or reviewed 
A)  are more detailed than for lower levels of management 
B)  are more summarized than for lower levels of management 
C)  contain about the same level of detail as reports for lower levels of management 
D)  are rarely provided or reviewed

Question 9

Miller's Quarter Horse Company has sales of $4,500,000. It also has invested assets of $2,500,000 and operating expenses of $3,800,000. The company has established a minimum return of 7%. If needed, round to one decimal place.
(a) What is Miller's profit margin?
(b) What is the investment turnover?
(c) What is the return on investment?
(d) What is Miller's residual income?

Accepted Answer

(a) $4,500,000 - $3,800,000 =

Question 10

Match each of the following phrases as describing (a) an advantage, (b) a disadvantage, or (c) neither of decentralization.
-Responsibilities delegated to unit managers

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 11

The sales, income from operations, invested assets, and residual income for each division of Marcus Company are as follows:​   Determine the minimum return for invested assets.

Accepted Answer

The answer of The sales, income from operations, invested assets,...

Question 12

The ratio of income from operations to sales is termed the profit margin component of the return on investment.

Accepted Answer

A) True 
 B)False

Question 13

The balanced scorecard measures

Accepted Answer

A)  only financial information 
B)  only nonfinancial information 
C)  both financial and nonfinancial information 
D)  external and internal information 
A)  only financial information 
B)  only nonfinancial information 
C)  both financial and nonfinancial information 
D)  external and internal information

Question 14

Match each of the following phrases as describing (a) an advantage, (b) a disadvantage, or (c) neither of decentralization.
-Separate sales forces

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

The transfer price approach that uses a variety of cost concepts is the

Accepted Answer

A)  negotiated price approach 
B)  standard cost approach 
C)  cost price approach 
D)  market price approach 
A)  negotiated price approach 
B)  standard cost approach 
C)  cost price approach 
D)  market price approach

Question 16

Bentz Co. has two divisions, A and B. Invested assets and condensed income statement data for each division for the year ended December 31 are as follows:?   (a)Prepare condensed income statements for the past year for each division.
(b)Using the DuPont formula, determine the profit margin, investment turnover, and return on investment for each division. Round the profit margin percentage to two decimal places and investment turnover to four decimal places.

Accepted Answer

The answer of Bentz Co. has two divisions, A and...

Question 17

Piano Company's costs were over budget by $47,000. Piano Company is divided into two regions. The first region's costs were over budget by $5,000. Determine the amount that the second region's costs were over or under budget.

Accepted Answer

$47,000 -

Question 18

The ratio of sales to invested assets, which is also a factor in the DuPont formula for determining the return on investment, is called

Accepted Answer

A)  profit margin 
B)  indirect margin 
C)  investment turnover 
D)  cost ratio 
A)  profit margin 
B)  indirect margin 
C)  investment turnover 
D)  cost ratio

Question 19

Transfer prices may be used when decentralized units are organized as cost, profit, or investment centers.

Accepted Answer

A) True 
 B)False

Question 20

If the profit margin for a division is 11% and the investment turnover is 1.5, the return on investment is 7.3%.

Accepted Answer

A) True 
 B)False

Exam 23: Decentralized Operations

The excess of divisional income from operations over a minimum acceptable income from operations is termed the residual income.

The Creative Division of Barry Company reported the following results for December:​​ Based on this information, what were sales?

Which of the following is a measure of a cost center manager's performance?

The process of measuring and reporting operating data by responsibility centers is termed responsibility accounting.

What is the investment turnover for Division A?

For higher levels of management, responsibility accounting reports

Match each of the following phrases as describing (a) an advantage, (b) a disadvantage, or (c) neither of decentralization. -Responsibilities delegated to unit managers

The sales, income from operations, invested assets, and residual income for each division of Marcus Company are as follows:​ Determine the minimum return for invested assets.

The ratio of income from operations to sales is termed the profit margin component of the return on investment.

The balanced scorecard measures

Match each of the following phrases as describing (a) an advantage, (b) a disadvantage, or (c) neither of decentralization. -Separate sales forces

The transfer price approach that uses a variety of cost concepts is the

Piano Company's costs were over budget by $47,000. Piano Company is divided into two regions. The first region's costs were over budget by $5,000. Determine the amount that the second region's costs were over or under budget.

The ratio of sales to invested assets, which is also a factor in the DuPont formula for determining the return on investment, is called

Transfer prices may be used when decentralized units are organized as cost, profit, or investment centers.

If the profit margin for a division is 11% and the investment turnover is 1.5, the return on investment is 7.3%.

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

The Creative Division of Barry Company reported the following results for December: Based on this information, what were sales?

The sales, income from operations, invested assets, and residual income for each division of Marcus Company are as follows: Determine the minimum return for invested assets.