Question 1

Division A produces a component and wants to sell it to Division B. The transfer price is

Accepted Answer

A)  revenue to Division 'A' and a cost to Division B. 
B)  revenue to Division 'B' and a cost to Division A. 
C)  revenue to Division 'A' and no effect on Division B. 
D)  a cost to Division 'B' and no effect on Division A. 
A)  revenue to Division 'A' and a cost to Division B. 
B)  revenue to Division 'B' and a cost to Division A. 
C)  revenue to Division 'A' and no effect on Division B. 
D)  a cost to Division 'B' and no effect on Division A.

Question 2

JetSky Airways has three divisions, the Western Division, the Eastern Division, and the Northern Division. The manager of the Western Division had wanted to purchase replacement airplanes for the division. However, he decided against it because, although revenues would increase and the new planes would be less expensive to operate, the initial cost of the planes was quite large. The Western Division is most probably accounted for as a(n)

Accepted Answer

A)  cost center. 
B)  investment center. 
C)  profit center. 
D)  revenue center. 
E)  None of these. 
A)  cost center. 
B)  investment center. 
C)  profit center. 
D)  revenue center. 
E)  None of these.

Question 3

Pollux Company had the following income statement for last year:
   Beginning assets were $565,000 and ending assets were $597,000.
(Carry computations out to three decimal places.)
 A. What are average operating assets?
B. What is marpin?
C. What is turncver?
D. What is ROI?

Accepted Answer

The answer of Pollux Company had the following income statement...

Question 4

A key feature of economic value added (EVA) is that it emphasizes after-tax operating income and the actual cost of capital.

Accepted Answer

A) True 
 B)False

Question 5

Economic Value Added is residual income with the cost of capital equal to the firm's

Accepted Answer

A)  budgeted cost of capital. 
B)  average cost of capital. 
C)  standard cost of capital. 
D)  actual cost of capital. 
A)  budgeted cost of capital. 
B)  average cost of capital. 
C)  standard cost of capital. 
D)  actual cost of capital.

Question 6

___________________ is after tax operating income minus the dollar cost of capital employed.

Accepted Answer

Economic v

Question 7

Turnover is the most common measure of performance for an investment center.

Accepted Answer

A) True 
 B)False

Question 8

The calculation of Economic Value Added is

Accepted Answer

A)  margin minus total annual cost of capital. 
B)  operating income minus average cost of capital. 
C)  operating income minus total annual cost of capital. 
D)  operating income minus taxes and the total annual cost of capital. 
A)  margin minus total annual cost of capital. 
B)  operating income minus average cost of capital. 
C)  operating income minus total annual cost of capital. 
D)  operating income minus taxes and the total annual cost of capital.

Question 9

Last night, Shirley worked on her accounting homework for one and one half hours. During that time, she completed 6 problems. What is the cycle time for one problem?

Accepted Answer

A)  4 minutes 
B)  90 minutes 
C)  15 minutes 
D)  10 minutes 
E)  6 minutes 
A)  4 minutes 
B)  90 minutes 
C)  15 minutes 
D)  10 minutes 
E)  6 minutes

Question 10

The Balanced Scorecard perspective that describes the internal processes needed to provide value for customers and owners 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 11

Given the following information for the Reardon Division:
   Required:

Accepted Answer

The answer of Given the following information for the Reardon...

Question 12

A testable strategy is defined as a

Accepted Answer

A)  set of linked objectives aimed at an overall goal. 
B)  means of providing managers with information about the effectiveness of strategy implementation and the validity of the assumption underlying the strategy. 
C)  means of specifying objectives, measures, targets, and initiatives for each perspective of the Balanced Scorecard. 
D)  strategic management system that defines a strategic-based responsibility accounting system. 
E)  None of these. 
A)  set of linked objectives aimed at an overall goal. 
B)  means of providing managers with information about the effectiveness of strategy implementation and the validity of the assumption underlying the strategy. 
C)  means of specifying objectives, measures, targets, and initiatives for each perspective of the Balanced Scorecard. 
D)  strategic management system that defines a strategic-based responsibility accounting system. 
E)  None of these.

Question 13

The practice of delegating decision-making authority to the lower levels of management in a company is

Accepted Answer

A)  centralization. 
B)  decentralization. 
C)  performance evaluation. 
D)  authorization. 
E)  hierarchy flattening. 
A)  centralization. 
B)  decentralization. 
C)  performance evaluation. 
D)  authorization. 
E)  hierarchy flattening.

Question 14

Figure 12-3Grey Inc. has many divisions that are evaluated on the basis of ROI. One division, Centra, makes boxes. A second division, Mantra, makes chocolates and needs 80,000 boxes per year. Centra incurs the following costs for one box:
 $\begin{array}{ll}
\text { Direct materials } & \$ 0.35 \
\text { Direct labor } & \$ 0.60 \
\text { Variable overhead } & \$ 0.40 \
\text { Fixed overhead } & \$ 0.13 \
\text { Total } & \$ 1.48
\end{array}$ Centra has capacity to make 700,000 boxes per year. Mantra currently buys its boxes from an outside supplier for $1.80 each (the same price that Centra receives).
-Refer to Figure 12-3. Assume that Grey Inc. mandates that any transfers take place at full manufacturing cost. What would be the transfer price if Centra transferred boxes to Mantra?

Accepted Answer

A)  $1.35 
B)  $1.48 
C)  $1.00 
D)  Cannot be determined from the information given. 
E)  $0.90 
A)  $1.35 
B)  $1.48 
C)  $1.00 
D)  Cannot be determined from the information given. 
E)  $0.90

Question 15

________________ decision making allows managers at lower levels to make and implement key decisions pertaining to their areas of responsibility.

Accepted Answer

The answer of ________________ decision making allows managers at lower...

Question 16

In a decentralized company, central management is able to focus on strategic planning and decision making.

Accepted Answer

A) True 
 B)False

Question 17

Decreasing inventories leads to a reduction in return on investment (ROI).

Accepted Answer

A) True 
 B)False

Question 18

Division A had ROI of 15% last year. The manager of Division A is considering an additional investment for the coming year. What step will the manager likely choose to take?

Accepted Answer

A)  Accept the investment as long as it provides positive operating income. 
B)  Accept the investment as long as its ROI is positive. 
C)  Reject the investment if it returns more than 15% ROI. 
D)  Reject the investment if it returns less than 15% ROI. 
E)  Reject the investment if it returns an ROI equal to 15%. 
A)  Accept the investment as long as it provides positive operating income. 
B)  Accept the investment as long as its ROI is positive. 
C)  Reject the investment if it returns more than 15% ROI. 
D)  Reject the investment if it returns less than 15% ROI. 
E)  Reject the investment if it returns an ROI equal to 15%.

Question 19

The practice of delegating decision-making authority to lower levels of management in a company is called centralization.

Accepted Answer

A) True 
 B)False

Question 20

-Refer to Figure 12-5. What are the average operating assets for Division B?

Accepted Answer

A)  $125,000 
B)  $120,000 
C)  $18,000 
D)  $420,000 
A)  $125,000 
B)  $120,000 
C)  $18,000 
D)  $420,000

Division A produces a component and wants to sell it to Division B. The transfer price is

Pollux Company had the following income statement for last year: Beginning assets were $565,000 and ending assets were $597,000. (Carry computations out to three decimal places.) A. What are average operating assets? B. What is marpin? C. What is turncver? D. What is ROI?

A key feature of economic value added (EVA) is that it emphasizes after-tax operating income and the actual cost of capital.

Economic Value Added is residual income with the cost of capital equal to the firm's

___________________ is after tax operating income minus the dollar cost of capital employed.

Turnover is the most common measure of performance for an investment center.

The calculation of Economic Value Added is

Last night, Shirley worked on her accounting homework for one and one half hours. During that time, she completed 6 problems. What is the cycle time for one problem?

The Balanced Scorecard perspective that describes the internal processes needed to provide value for customers and owners is the ____ perspective.

Given the following information for the Reardon Division: Required:

A testable strategy is defined as a

The practice of delegating decision-making authority to the lower levels of management in a company is

________________ decision making allows managers at lower levels to make and implement key decisions pertaining to their areas of responsibility.

In a decentralized company, central management is able to focus on strategic planning and decision making.

Decreasing inventories leads to a reduction in return on investment (ROI).

Division A had ROI of 15% last year. The manager of Division A is considering an additional investment for the coming year. What step will the manager likely choose to take?

The practice of delegating decision-making authority to lower levels of management in a company is called centralization.

-Refer to Figure 12-5. What are the average operating assets for Division B?

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

Division A produces a component and wants to sell it to Division B. The transfer price is

Pollux Company had the following income statement for last year: Beginning assets were $565,000 and ending assets were $597,000. (Carry computations out to three decimal places.) A. What are average operating assets? B. What is marpin? C. What is turncver? D. What is ROI?

A key feature of economic value added (EVA) is that it emphasizes after-tax operating income and the actual cost of capital.

Economic Value Added is residual income with the cost of capital equal to the firm's

___________________ is after tax operating income minus the dollar cost of capital employed.

Turnover is the most common measure of performance for an investment center.

The calculation of Economic Value Added is

Last night, Shirley worked on her accounting homework for one and one half hours. During that time, she completed 6 problems. What is the cycle time for one problem?

The Balanced Scorecard perspective that describes the internal processes needed to provide value for customers and owners is the ____ perspective.

Given the following information for the Reardon Division: Required:

A testable strategy is defined as a

The practice of delegating decision-making authority to the lower levels of management in a company is

________________ decision making allows managers at lower levels to make and implement key decisions pertaining to their areas of responsibility.

In a decentralized company, central management is able to focus on strategic planning and decision making.

Decreasing inventories leads to a reduction in return on investment (ROI).

Division A had ROI of 15% last year. The manager of Division A is considering an additional investment for the coming year. What step will the manager likely choose to take?

The practice of delegating decision-making authority to lower levels of management in a company is called centralization.

-Refer to Figure 12-5. What are the average operating assets for Division B?

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