Exam 24: Evaluating Decentralized Operations

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

What additional information is needed to determine the return on investment if operating income is known?

Assume that Division Blue has achieved a yearly operating income of $110,000 using $900,000 of invested assets. If management has set a minimum acceptable return on investment of 11%, the residual income is

A manager is responsible for costs only in a(n) _____ center.

The entity that grants the right or license to another company to market its goods or services is called the

If operating income for a division is $6,000, invested assets are $25,000, and sales are $30,000, the investment turnover is 1.2.

Which of the following is a measure of performance for the manager of an investment center?

Which of the following statements best describes a decentralized company?

A department store allocates payroll costs on the basis of the number of payroll checks issued. Accounting costs are allocated on the basis of the number of reports. The payroll costs for the year were $231,000, and the accounting costs for the year totaled $75,500. The departments and the number of payroll checks and accounting reports for each are as follows: Determine the amount of (a) payroll costs and (b) accounting costs to be allocated to each department.

The primary disadvantage of decentralized operations is that decisions made by one manager may affect other managers in such a way that the profitability of the entire company may suffer.