Exam 24: Evaluating Decentralized Operations

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

A cost driver is used to allocate support department expenses. Match each of the following cost drivers with the appropriate department (a-h). -Number of employees A)Purchasing B)Payroll Accounting C)Human Resources D)Maintenance E)Information Systems F)Marketing G)President's Office H)Transportation

Using the data below for Ace Guitar Company, determine the divisional operating income for the A and B regions. Allocate support department expenses proportional to the sales of each region. Round percentage of sales allocations to one decimal place.

Match each of the following phrases as describing (a) an advantage, (b) a disadvantage, or (c) neither of decentralization. -Separate sales forces A)Advantage of decentralization B)Disadvantage of decentralization C)Neither an advantage nor a disadvantage

Match each definition that follows with the term (a-e) it defines. -Operating income minus minimum acceptable operating income A)Controllable revenues B)Profit margin C)Investment turnover D)Return on investments (ROI)e.Residual income

Clydesdale Company has sales of $4,500,000, invested assets of $2,000,000, and operating expenses of $3,600,000. The company has established a minimum return on investment of 7%. -Clydesdale Company's investment turnover is

A cost driver is used to allocate support department expenses. Match each of the following cost drivers with the appropriate department (a-h). -Number of payroll checks A)Purchasing B)Payroll Accounting C)Human Resources D)Maintenance E)Information Systems F)Marketing G)President's Office H)Transportation

Assume that divisional operating income amounts to $215,000 and top management has established 15% as the minimum return on divisional assets totaling $1,000,000. The residual income for the division is

In an investment center, the manager has responsibility and authority for making decisions that affect

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

Magnolia Company's Division A has operating income of $80,000 and assets of $400,000. The minimum acceptable return on investment is 12%. What is the residual income for the division?

The excess of divisional operating income over a minimum acceptable amount of divisional operating income is

ABC Corporation has three support departments with the following costs and cost drivers: ABC has three operating divisions, Micro, Macro, and Super. Their revenue, cost, and activity information are as follows: ​ -The support department allocation rate for Graphics Production is

Mason Corporation had $650,000 in invested assets, sales of $700,000, operating income amounting to $99,000, and a desired minimum return on investment of 15%. -Marshall Corporation had $220,000 in invested assets, sales of $242,000, operating income of $66,000, and a desired minimum return on investment of 3%. The return on investment for Marshall Corporation is

International Boot Company has operating income of $80,000, invested assets of $500,000, and sales of $1,525,000. -The investment turnover for International Boot Company is

A cost driver is used to allocate support department expenses. Match each of the following cost drivers with the appropriate department (a-h). -Number of computers in department A)Purchasing B)Payroll Accounting C)Human Resources D)Maintenance E)Information Systems F)Marketing G)President's Office H)Transportation

Match each definition that follows with the term (a-e) it defines. -Ratio of sales to invested assets A)Controllable revenues B)Profit margin C)Investment turnover D)Return on investments (ROI)e.Residual income

Materials used by Square Yard Products Inc. in producing Division 3's product are currently purchased from outside suppliers at a cost of $5.00 per unit. However, the same materials are available from Division 6. Division 6 has unused capacity and can produce the materials needed by Division 3 at a variable cost of $3.00 per unit. A transfer price of $3.20 per unit is established, and 40,000 units of material are transferred, with no reduction in Division 6's current sales.​ -Division 6's operating income will increase by

A cost driver is used to allocate support department expenses. Match each of the following cost drivers with the appropriate department (a-h). -Number of purchase requisitions A)Purchasing B)Payroll Accounting C)Human Resources D)Maintenance E)Information Systems F)Marketing G)President's Office H)Transportation

The term used to describe expenses that are incurred by a specific department is _____ expenses.