$\begin{array}{lcc} \text { Item to Classify}&\text { Standard }&\text {Actual }\\ \text { Sales volume } & 100,000 \text { units } & 96,000 \text { units } \\ \text { Sales price } & \$ \quad 4 \text { per unit }&\$ 3.90 \text { per unit }\\ \text { Materials usage } & 40,000 \text { gallons } & 42,000 \text { gallons } \\ \text { Labor price } & 12.50 \text { per Hour } & 12,45 \text { per hour } \end{array}$ The sales volume variance was:

A) $16,000 favorable. B) $16,000 unfavorable. C) $25,000 unfavorable. D) $25,000 favorable. A) $16,000 favorable. B) $16,000 unfavorable. C) $25,000 unfavorable. D) $25,000 favorable.

Terra Company has two divisions, the Retail Division and the Wholesale Division. The following information was gathered for the two divisions for the current year: $\begin{array}{lcccc} &\text { Retail Division }&\text { Wholesale Divisiot }\\ \text { Operating income } & \$ 6,600,000 & \$ 3,100,000 \\ \text { Operating assets } & \$ 36,600,000 & \$ 16,600,000 \end{array}$ Assuming that these are the only divisions of Terra Company, what is the ROI for the company as a whole?

A) 18.03% B) 18.23% C) 18.67% D) 36.71% A) 18.03% B) 18.23% C) 18.67% D) 36.71%

Terra Company has two divisions, the Retail Division and the Wholesale Division. The following information was gathered for the two divisions for the current year: $\begin{array}{cc} & \text { Retall D1vislon }&\text { Wholesale} \\ &&\text { Division}\\ \text { Operating income } & \$ 2,500,000 &\$6,000,000\\ \text { Operating assets } & \$ 16,000,000&\$36,000,000 \end{array}$ Terra Company has set a target return on investment (ROI) of 15% for both divisions. Based on ROI, which division appears to have performed better?

A) Retail division. B) Wholesale division. C) Both divisions have the same results. D) The answer cannot be determined using the information provided. A) Retail division. B) Wholesale division. C) Both divisions have the same results. D) The answer cannot be determined using the information provided.

The following static budget is provided: $\begin{array}{lc} &\text { Per Unit }&\text {Total }\\ \text { Sales }&\$60&\$900,000\\ \text { Less variable costs: }\\ \text { Manufacturing costs } &30 & 450,000 \\ \text { Selling and administrative costs } & \underline{10} & \underline{ 150,000} \\ \text { Contribution margin }&\$20&\$300,000\\ \text { Less fixed costs: }\\ \text { Manufacturing costs } && 75,000 \\ \text { Selling and administrative costs } && \underline{ 125,000} \\ \text { Total fixed costs } && \underline{ 200,000} \\ \text { Net income } && \underline{ \$ 100,000} \end{array}$ What will be the overall volume variance if 12,000 units are produced and sold?

A) $80,000 F B) $80,000 U C) $60,000 U D) $160,000 U A) $80,000 F B) $80,000 U C) $60,000 U D) $160,000 U

Retail Sales and Wholesale Sales are the only divisions of Terra Company. The following information was gathered for the two divisions for the current year: $\begin{array}{lcccc} &\text { Retail Division }&\text { Wholesale Divisiot }\\ \text { Operating income } & \$ 7,500,000 & \$ 4,000,000 \\ \text { Operating assets } & \$ 37,500,000 & \$ 17,500,000 \end{array}$ The company has $2,500,000 in operating assets that are not assigned to either of the divisions and $350,000 in corporate expenses that are not reflected in the information above. Based on this information, what is the ROI for the company as a whole?

A) 20.91% B) 42.86% C) 19.39% D) The answer cannot be determined using the information provided. A) 20.91% B) 42.86% C) 19.39% D) The answer cannot be determined using the information provided.

Payne Company reported the following information for the current year: $\begin{array}{llr} \text {Sales } &\$910,000\\ \text { Average operating assets} &\$410,000\\ \text { Desired ROI } &14\%\\ \text { Operating income } &\$61,000 \end{array}$ The company's residual income was:

A) $9,000. B) $57,400. C) $3,600. D) $12,600. A) $9,000. B) $57,400. C) $3,600. D) $12,600.

Exam 15: Performance Evaluation

Item to Classify Standard Actual Sales volume 100,000 units 96,000 units Sales price \ 4 per unit \ 3.90 per unit Materials usage 40,000 gallons 42,000 gallons Labor price 12.50 per Hour 12,45 per hour The sales volume variance was:

(Multiple Choice)

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Question 121

Terra Company has two divisions, the Retail Division and the Wholesale Division. The following information was gathered for the two divisions for the current year: Retail Division Wholesale Divisiot Operating income \ 6,600,000 \ 3,100,000 Operating assets \ 36,600,000 \ 16,600,000 Assuming that these are the only divisions of Terra Company, what is the ROI for the company as a whole?

(Multiple Choice)

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Question 122

Terra Company has two divisions, the Retail Division and the Wholesale Division. The following information was gathered for the two divisions for the current year: Retall D1vislon Wholesale Division Operating income \ 2,500,000 \6 ,000,000 Operating assets \ 16,000,000 \3 6,000,000 Terra Company has set a target return on investment (ROI) of 15% for both divisions. Based on ROI, which division appears to have performed better?

(Multiple Choice)

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Question 123

Which of the following statements about return on investment (ROI) is false?

(Multiple Choice)

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Question 124

The following static budget is provided: Per Unit Total Sales \6 0 \9 00,000 Less variable costs: Manufacturing costs 30 450,000 Selling and administrative costs Contribution margin \2 0 \3 00,000 Less fixed costs: Manufacturing costs 75,000 Selling and administrative costs Total fixed costs Net income What will be the overall volume variance if 12,000 units are produced and sold?

(Multiple Choice)

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Question 125

Retail Sales and Wholesale Sales are the only divisions of Terra Company. The following information was gathered for the two divisions for the current year: Retail Division Wholesale Divisiot Operating income \ 7,500,000 \ 4,000,000 Operating assets \ 37,500,000 \ 17,500,000 The company has $2,500,000 in operating assets that are not assigned to either of the divisions and $350,000 in corporate expenses that are not reflected in the information above. Based on this information, what is the ROI for the company as a whole?

(Multiple Choice)

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Question 126

In the current year, the New Products Division of Testar Company had operating income of $8,000,000 and operating assets of $44,800,000. Testar has set a target return on investment (ROI) of 16% for each of its divisions. Which of the following statements is correct?

(Multiple Choice)

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Question 127

Unless there are other factors to be considered, an investment opportunity with a return on investment that equals or exceeds the company's required rate of return would be accepted.

(True/False)

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Question 128

The kind of responsibility center that would be evaluated by comparing income on assets to the amount of assets invested is:

(Multiple Choice)

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Question 129

Spark Company's static budget is based on a planned activity level of 45,000 units. At the same time the static budget was prepared, the management accountant prepared two additional budgets, one based on 40,000 units and one based on 50,000. The company actually produced and sold 49,000 units. In evaluating its performance, management should compare the company's actual revenues and costs to which of the following budgets?

(Multiple Choice)

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Question 130

Select the term from the list that best matches the description or definition. Enter the number of the best answer in "Your Answer" column.

(Not Answered)

Question 131

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Payne Company reported the following information for the current year: Sales \9 10,000 Average operating assets \4 10,000 Desired ROI 14\% Operating income \6 1,000 The company's residual income was:

(Multiple Choice)

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Question 132

Which of the following is a difference between a static and a flexible budget?

(Multiple Choice)

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Question 133

A static budget is one that shows estimated revenues and costs at multiple activity levels.

(True/False)

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Question 134

Decentralization encourages upper level management to concentrate on short-term decisions.

(True/False)

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Question 135

The total sales variance includes both price and volume variances.

(True/False)

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Question 136

Which of the following is a characteristic that is needed for decentralization to work well in an organization?

(Multiple Choice)

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Question 137

Indicate whether each of the following statements is true or false.The difference between the actual fixed costs and budgeted fixed costs is the spending variance.For fixed costs, there is no flexible budget variance.While total fixed cost does not change in response to changes in the volume of activity, fixed cost per unit does change.To monitor the effects of volume on fixed cost per unit, companies calculate a fixed cost volume variance.The fixed cost volume variance is favorable if actual volume is less than planned because cost per unit is higher than expected.

(Short Answer)

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Question 138

The sales volume variance is the difference between sales revenue on the static budget and sales revenue on the flexible budget.

(True/False)

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Question 139

The process of evaluating the performance of individual managers is known as:

(Multiple Choice)

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Question 140

Item to Classify Standard Actual Sales volume 100,000 units 96,000 units Sales price \ 4 per unit \ 3.90 per unit Materials usage 40,000 gallons 42,000 gallons Labor price 12.50 per Hour 12,45 per hour The sales volume variance was:

Which of the following statements about return on investment (ROI) is false?

In the current year, the New Products Division of Testar Company had operating income of $8,000,000 and operating assets of $44,800,000. Testar has set a target return on investment (ROI) of 16% for each of its divisions. Which of the following statements is correct?

Unless there are other factors to be considered, an investment opportunity with a return on investment that equals or exceeds the company's required rate of return would be accepted.

The kind of responsibility center that would be evaluated by comparing income on assets to the amount of assets invested is:

Select the term from the list that best matches the description or definition. Enter the number of the best answer in "Your Answer" column.

Payne Company reported the following information for the current year: Sales \9 10,000 Average operating assets \4 10,000 Desired ROI 14\% Operating income \6 1,000 The company's residual income was:

Which of the following is a difference between a static and a flexible budget?

A static budget is one that shows estimated revenues and costs at multiple activity levels.

Decentralization encourages upper level management to concentrate on short-term decisions.

The total sales variance includes both price and volume variances.

Which of the following is a characteristic that is needed for decentralization to work well in an organization?

The sales volume variance is the difference between sales revenue on the static budget and sales revenue on the flexible budget.

The process of evaluating the performance of individual managers is known as:

An Introduction to Accounting

Accounting for Accruals and Deferrals

Accounting for Merchandising Businesses

Internal Controls, Accounting for Cash, and Ethics

Accounting for Receivables and Inventory Cost Flow

Accounting for Long-Term Operational Assets

Accounting for Liabilities

Proprietorships, Partnerships, and Corporations

Financial Statement Analysis

An Introduction to Management Accounting

Cost Behavior, Operating Leverage, and Profitability Analysis

Cost Accumulation, Tracing, and Allocation

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Planning for Capital Investments

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