Question 1

Which of the following is a type of decision a regional manager would make?

Accepted Answer

A) Pricing. 
B) Promotion. 
C) Office management. 
D) A and B only. 
E) A, B and C are decisions a regional manager would make. 
A) Pricing. 
B) Promotion. 
C) Office management. 
D) A and B only. 
E) A, B and C are decisions a regional manager would make.

Question 2

Cost center managers are charged with minimizing the cost of producing a specified level of output or the cost of delivering a specified level of service.

Accepted Answer

A) True 
 B)False

Question 3

To make effective trade-offs among the attributes of performance measures, organizations often use:

Accepted Answer

A) A combination of performance measures. 
B) Only financial performance measures. 
C) Avoid using more than one measure. 
D) Select a single performance measure that possesses of the characteristics of an effective performance measure. 
E) None of the above. 
A) A combination of performance measures. 
B) Only financial performance measures. 
C) Avoid using more than one measure. 
D) Select a single performance measure that possesses of the characteristics of an effective performance measure. 
E) None of the above.

Question 4

Cost centers for which there is a clear relation between inputs and outputs are termed discretionary cost centers.

Accepted Answer

A) True 
 B)False

Question 5

Ideally, the best performance measures:

Accepted Answer

A) Reflect the decision rights assigned to the individual/organizational unit. 
B) Yield the maximum information about the decisions or actions of the individual/organizational unit. 
C) Have low measurement error. 
D) Are easy to understand and communicate. 
E) All of the above. 
A) Reflect the decision rights assigned to the individual/organizational unit. 
B) Yield the maximum information about the decisions or actions of the individual/organizational unit. 
C) Have low measurement error. 
D) Are easy to understand and communicate. 
E) All of the above.

Question 6

The major criticism against ROI is that it is not an effective summary measure of business profitability.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following transfer price approaches is most appropriate for a short-term problem in which the selling division has excess capacity?

Accepted Answer

A) Variable cost-based transfer prices. 
B) Full cost-based transfer prices. 
C) Market-based transfer prices. 
D) Negotiated transfer prices. 
E) None of the above. 
A) Variable cost-based transfer prices. 
B) Full cost-based transfer prices. 
C) Market-based transfer prices. 
D) Negotiated transfer prices. 
E) None of the above.

Question 8

Gant Manufacturing Company has provided the following financial information: $$\begin{array} { l r } 
\text { Sales } & \$ 400,000 \
\text { Variable Expenses } & \$ 250,000 \
\text { Fixed Expenses } & \$ 50,000 \
\text { Investment in Fixed Assets } & \$ 300,000 \
\text { Required Rate of Ret urn } & 5 \%
\end{array}$$ What is Gant's residual income?

Accepted Answer

A) $80,000. 
B) $95,000. 
C) $100,000. 
D) $85,000. 
E) None of the above. 
A) $80,000. 
B) $95,000. 
C) $100,000. 
D) $85,000. 
E) None of the above.

Question 9

Divisional managers have a keen interest in the transfer price because their individual compensation often depends on the profit reported by their division.

Accepted Answer

A) True 
 B)False

Question 10

Normally, we exclude interest and taxes from the calculation of an investment center's profit results from its operations because profit center managers usually do not influence financial or tax-related decisions.

Accepted Answer

A) True 
 B)False

Which of the following is a type of decision a regional manager would make?

Cost center managers are charged with minimizing the cost of producing a specified level of output or the cost of delivering a specified level of service.

To make effective trade-offs among the attributes of performance measures, organizations often use:

Cost centers for which there is a clear relation between inputs and outputs are termed discretionary cost centers.

Ideally, the best performance measures:

The major criticism against ROI is that it is not an effective summary measure of business profitability.

Which of the following transfer price approaches is most appropriate for a short-term problem in which the selling division has excess capacity?

Gant Manufacturing Company has provided the following financial information: Sales \ 400,000 Variable Expenses \ 250,000 Fixed Expenses \ 50,000 Investment in Fixed Assets \ 300,000 Required Rate of Ret urn 5\% What is Gant's residual income?

Divisional managers have a keen interest in the transfer price because their individual compensation often depends on the profit reported by their division.

Normally, we exclude interest and taxes from the calculation of an investment center's profit results from its operations because profit center managers usually do not influence financial or tax-related decisions.

Accounting: Information for Decision Making

Identifying and Estimating Costs and Benefits

Cost Flows and Cost Terminology

Techniques for Estimating Fixed and Variable Costs

Cost-Volume-Profit Analysis

Decision Making in the Short Term

Operating Budgets: Bridging Planning and Control

Budgetary Control and Variance Analysis

Cost Allocations

Activity-Based Costing Management

Capital Budgeting

Strategic Planning and Control

Job-Costing Systems

Process-Costing Systems

Refining Systems: Support Activity

Filters

Exam 12: Performance Evaluation in Decentralized Organizations

Which of the following is a type of decision a regional manager would make?

Cost center managers are charged with minimizing the cost of producing a specified level of output or the cost of delivering a specified level of service.

To make effective trade-offs among the attributes of performance measures, organizations often use:

Cost centers for which there is a clear relation between inputs and outputs are termed discretionary cost centers.

Ideally, the best performance measures:

The major criticism against ROI is that it is not an effective summary measure of business profitability.

Which of the following transfer price approaches is most appropriate for a short-term problem in which the selling division has excess capacity?

Gant Manufacturing Company has provided the following financial information: Sales \ 400,000 Variable Expenses \ 250,000 Fixed Expenses \ 50,000 Investment in Fixed Assets \ 300,000 Required Rate of Ret urn 5\% What is Gant's residual income?

Divisional managers have a keen interest in the transfer price because their individual compensation often depends on the profit reported by their division.

Normally, we exclude interest and taxes from the calculation of an investment center's profit results from its operations because profit center managers usually do not influence financial or tax-related decisions.

Accounting: Information for Decision Making

Identifying and Estimating Costs and Benefits

Cost Flows and Cost Terminology

Techniques for Estimating Fixed and Variable Costs

Cost-Volume-Profit Analysis

Decision Making in the Short Term

Operating Budgets: Bridging Planning and Control

Budgetary Control and Variance Analysis

Cost Allocations

Activity-Based Costing Management

Capital Budgeting

Strategic Planning and Control

Job-Costing Systems

Process-Costing Systems

Refining Systems: Support Activity

Filters