Question 1

_____________________ refers to earnings before interest and taxes.

Accepted Answer

The answer of _____________________ refers to earnings before interest and...

Question 2

A Utah hospital decided to streamline its surgical suite operation. In order to speed things up, the nurses in charge studied how much time patients actually spent in various activities. They found that on average, a patient scheduled for an operation spent about 1 hours waiting, and 1.5 hours in moving from lab to x-ray to the operating room. The average operation takes 90 minutes. What is the MCE?

Accepted Answer

A)  100% 
B)  60% 
C)  50% 
D)  37.5% 
E)  20% 
A)  100% 
B)  60% 
C)  50% 
D)  37.5% 
E)  20%

Question 3

The selling division is forced to transfer a product internally when a cost-based transfer pricing policy is set by top management.

Accepted Answer

A) True 
 B)False

Question 4

_________________ is found by dividing sales by average operating assets.

Accepted Answer

The answer of _________________ is found by dividing sales by...

Question 5

In terms of operating income for the company as a whole, the transfer price set by the buying and selling divisions nets out.

Accepted Answer

A) True 
 B)False

Question 6

Using Economic Value Added (EVA) to calculate residual income, the cost of capital employed is

Accepted Answer

A)  the standard percentage cost of capital multiplied by the average capital employed. 
B)  the actual percentage cost of capital multiplied by the average capital employed. 
C)  the standard percentage cost of capital multiplied by the total capital employed. 
D)  the actual percentage cost of capital multiplied by the total capital employed. 
A)  the standard percentage cost of capital multiplied by the average capital employed. 
B)  the actual percentage cost of capital multiplied by the average capital employed. 
C)  the standard percentage cost of capital multiplied by the total capital employed. 
D)  the actual percentage cost of capital multiplied by the total capital employed.

Question 7

-Refer to Figure 12-1. Dempsey's turnover ratio for last year was

Accepted Answer

A)  2.0. 
B)  0.46. 
C)  0.56. 
D)  0.32. 
E)  0.10. 
A)  2.0. 
B)  0.46. 
C)  0.56. 
D)  0.32. 
E)  0.10.

Question 8

Return on investment (ROI) is calculated as

Accepted Answer

A)  operating income/average operating assets. 
B)  average operating assets/operating income. 
C)  (beginning operating assets + ending operating assets)/2. 
D)  sales/average operating assets. 
E)  operating income/sales. 
A)  operating income/average operating assets. 
B)  average operating assets/operating income. 
C)  (beginning operating assets + ending operating assets)/2. 
D)  sales/average operating assets. 
E)  operating income/sales.

Question 9

Economic value added (EVA) is similar to ROI in that it links net income to capital employed.

Accepted Answer

A) True 
 B)False

Question 10

Explain the differences between centralized and decentralized decision making. Also list some of the reasons why a company would choose to decentralize.

Accepted Answer

In centralized decision making, decision

Question 11

Paige Inc. has a division that makes paint and another division that constructs subdivisions. The paint division incurs the following costs for one gallon of paint:
   The Paint Division can make 1,000,000 gallons per year, and expects to produce 800,000 gallons next year. The Construction Division currently buys 200,000 gallons of paint from an outside supplier for $5.30 per gallon (the same price that the Paint Division receives).

Accepted Answer

The answer of Paige Inc. has a division that makes...

Question 12

Figure 12-6 The First National Bank has a mortgage loan office with conversion cost of $73,950 per month. There are five employees who each work 170 hours per month. Last month, 1,020 loan applications were processed, but the staff believes that system improvements could lead to the processing of as many as 1,700 per month.
-Refer to Figure 12-6. Calculate the following:

Accepted Answer

The answer of Figure 12-6 The First National Bank has...

Question 13

Select the term from below to match with the correct statement.
-The practice of delegating decision-making authority to lower levels is __________.

Accepted Answer

A) centralization 
B) revenue center 
C) profit center 
D) cost center 
E) investment center
F)decentralization 
A) centralization 
B) revenue center 
C) profit center 
D) cost center 
E) investment center
F)decentralization

Question 14

Describe the four perspectives of the Balanced Scorecard.

Accepted Answer

The four perspectives of the Balanced Sc

Question 15

The selling division would never agree to a transfer price below its full manufacturing cost.

Accepted Answer

A) True 
 B)False

Question 16

The Balanced Scorecard perspective that describes the economic consequences of actions taken in the other three perspectives is the ____ perspective.

Accepted Answer

A)  customer 
B)  internal business process 
C)  learning and growth 
D)  financial 
E)  None of these. 
A)  customer 
B)  internal business process 
C)  learning and growth 
D)  financial 
E)  None of these.

Question 17

The level of the transfer price can affect the overall company because

Accepted Answer

A)  the higher the transfer price, the higher the operating income. 
B)  it may impact on the taxes paid by the multinational company. 
C)  the lower the transfer price, the lower the total costs. 
D)  internal transfers are always costly to the firm. 
E)  the transfer price may be higher than the cost-based price. 
A)  the higher the transfer price, the higher the operating income. 
B)  it may impact on the taxes paid by the multinational company. 
C)  the lower the transfer price, the lower the total costs. 
D)  internal transfers are always costly to the firm. 
E)  the transfer price may be higher than the cost-based price.

Question 18

When a product is transferred at market price, the transfer will optimize both divisional and company-wide profits.

Accepted Answer

A) True 
 B)False

Question 19

Figure 12-3 $\begin{array}{ll}
\text { Direct materials } & \$ 0.23 \
\text { Direct labor } & \$ 0.20 \
\text { Variable overhead } & \$ 0.95 \
\text { Fixed overhead } & \$ 1.32 \
\text { Total } & \$ 2.70
\end{array}$ Quinn has capacity to make 950,000 zippers per year, but due to a soft market, only plans to produce and sell 620,000 zippers next year. LeatherStuff currently buys zippers from an outside supplier for $3.50 each (the same price that Style receives).
-Refer to Figure 12-4. Assume that Style and LeatherStuff have agreed on a transfer price of $3.25. What is the total benefit for Quinn, Inc.?

Accepted Answer

A)  $22,500 
B)  $292,500 
C)  $163,000 
D)  $169,000 
E)  $190,800 
A)  $22,500 
B)  $292,500 
C)  $163,000 
D)  $169,000 
E)  $190,800

Question 20

Which of the following is a disadvantage of a focus on return on investment?

Accepted Answer

A)  It can encourage managers to focus on cost cutting efforts. 
B)  It can produce a narrow focus on divisional profitability at the expense of profitability for the overall firm. 
C)  It can encourage managers to cut inventories and reduce overall investment. 
D)  It can encourage managers to focus on the long run at the expense of the short run. 
E)  It can accomplish all of these disadvantages. 
A)  It can encourage managers to focus on cost cutting efforts. 
B)  It can produce a narrow focus on divisional profitability at the expense of profitability for the overall firm. 
C)  It can encourage managers to cut inventories and reduce overall investment. 
D)  It can encourage managers to focus on the long run at the expense of the short run. 
E)  It can accomplish all of these disadvantages.

_____________________ refers to earnings before interest and taxes.

The selling division is forced to transfer a product internally when a cost-based transfer pricing policy is set by top management.

_________________ is found by dividing sales by average operating assets.

In terms of operating income for the company as a whole, the transfer price set by the buying and selling divisions nets out.

Using Economic Value Added (EVA) to calculate residual income, the cost of capital employed is

-Refer to Figure 12-1. Dempsey's turnover ratio for last year was

Return on investment (ROI) is calculated as

Economic value added (EVA) is similar to ROI in that it links net income to capital employed.

Explain the differences between centralized and decentralized decision making. Also list some of the reasons why a company would choose to decentralize.

Select the term from below to match with the correct statement. -The practice of delegating decision-making authority to lower levels is __________.

Describe the four perspectives of the Balanced Scorecard.

The selling division would never agree to a transfer price below its full manufacturing cost.

The Balanced Scorecard perspective that describes the economic consequences of actions taken in the other three perspectives is the ____ perspective.

The level of the transfer price can affect the overall company because

When a product is transferred at market price, the transfer will optimize both divisional and company-wide profits.

Which of the following is a disadvantage of a focus on return on investment?

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behavior

Cost-Volume-Profit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing, and Inventory Management

Profit Planning

Standard Costing: a Managerial Control Tool

Flexible Budgets and Overhead Analysis

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Statement of Cash Flows

Financial Statement Analysis

Filters

Exam 12: Performance Evaluation and Decentralization

_____________________ refers to earnings before interest and taxes.

The selling division is forced to transfer a product internally when a cost-based transfer pricing policy is set by top management.

_________________ is found by dividing sales by average operating assets.

In terms of operating income for the company as a whole, the transfer price set by the buying and selling divisions nets out.

Using Economic Value Added (EVA) to calculate residual income, the cost of capital employed is

-Refer to Figure 12-1. Dempsey's turnover ratio for last year was

Return on investment (ROI) is calculated as

Economic value added (EVA) is similar to ROI in that it links net income to capital employed.

Explain the differences between centralized and decentralized decision making. Also list some of the reasons why a company would choose to decentralize.

Select the term from below to match with the correct statement. -The practice of delegating decision-making authority to lower levels is __________.

Describe the four perspectives of the Balanced Scorecard.

The selling division would never agree to a transfer price below its full manufacturing cost.

The Balanced Scorecard perspective that describes the economic consequences of actions taken in the other three perspectives is the ____ perspective.

The level of the transfer price can affect the overall company because

When a product is transferred at market price, the transfer will optimize both divisional and company-wide profits.

Which of the following is a disadvantage of a focus on return on investment?

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behavior

Cost-Volume-Profit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing, and Inventory Management

Profit Planning

Standard Costing: a Managerial Control Tool

Flexible Budgets and Overhead Analysis

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Statement of Cash Flows

Financial Statement Analysis

Filters