Question 1

Sales commissions expense for a department store is an example of a direct expense.

Accepted Answer

A) True 
 B)False

Question 2

Property tax expense for a department store's store equipment is an example of a direct expense.

Accepted Answer

A) True 
 B)False

Question 3

If divisional income from operations is $75,000,invested assets are $637,500,and the minimum rate of return on the invested assets is 6%,the residual income calculated would be $36,750.

Accepted Answer

A) True 
 B)False

Question 4

Depreciation expense on store equipment for a department store is a direct expense.

Accepted Answer

A) True 
 B)False

Question 5

In a profit center,the manager has responsibility and authority for making decisions that affect:

Accepted Answer

A) only costs. 
B) only assets. 
C) both costs and assets. 
D) both costs and revenues. 
A) only costs. 
B) only assets. 
C) both costs and assets. 
D) both costs and revenues.

Question 6

If the profit margin for a division is 11% and the investment turnover is 1.5,the rate of return on investment computed would be 16.5%.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is not a approach used for setting transfer prices?

Accepted Answer

A) Market price approach 
B) Revenue price approach 
C) Negotiated price approach 
D) Cost price approach 
A) Market price approach 
B) Revenue price approach 
C) Negotiated price approach 
D) Cost price approach

Question 8

How much would Division A's income from operations increase?

Accepted Answer

A) $175,000 
B) $70,000 
C) $105,000 
D) $75,000 
A) $175,000 
B) $70,000 
C) $105,000 
D) $75,000

Question 9

The balanced scorecard attempts to evaluate the underlying financial drivers of nonfinancial performance.

Accepted Answer

A) True 
 B)False

Question 10

To calculate income from operations,total service department charges are:

Accepted Answer

A) subtracted from income from operations before service department charges. 
B) subtracted from operating expenses. 
C) added to income from operations before service department charges. 
D) subtracted from gross profit margin. 
A) subtracted from income from operations before service department charges. 
B) subtracted from operating expenses. 
C) added to income from operations before service department charges. 
D) subtracted from gross profit margin.

Question 11

For higher levels of management,responsibility accounting reports:

Accepted Answer

A) are more detailed than for lower levels of management. 
B) are more summarized than for lower levels of management. 
C) contain almost the same level of detail as reports for lower levels of management. 
D) are rarely provided or reviewed. 
A) are more detailed than for lower levels of management. 
B) are more summarized than for lower levels of management. 
C) contain almost the same level of detail as reports for lower levels of management. 
D) are rarely provided or reviewed.

Question 12

Service department charges are similar to the expenses that would be incurred if the profit center purchased the services from outside the company.

Accepted Answer

A) True 
 B)False

Question 13

The primary accounting tool for controlling and reporting for cost centers is a budget performance report.

Accepted Answer

A) True 
 B)False

Question 14

The manager of the furniture department of a leading retailer does not have control on salaries of the department personnel.

Accepted Answer

A) True 
 B)False

Question 15

The major advantage of using the rate of return on investment over income from operations as a divisional performance measure is that,divisional investment is directly considered and thus comparability of divisions is facilitated.

Accepted Answer

A) True 
 B)False

Question 16

Operating expenses directly traceable to or incurred for the sole benefit of a specific department and usually subject to the control of the department manager are termed:

Accepted Answer

A) miscellaneous administrative expenses. 
B) indirect expenses. 
C) direct expenses. 
D) variable expenses. 
A) miscellaneous administrative expenses. 
B) indirect expenses. 
C) direct expenses. 
D) variable expenses.

Question 17

The ratio of sales to invested assets is termed the investment turnover,a component of the rate of return on investment.

Accepted Answer

A) True 
 B)False

Question 18

PDT Co.has two divisions,East and West.Invested assets and condensed income statement data for each division for the past year ended December 31 are as follows:

Accepted Answer

(a) PDT Co. Divisional Income Statements

Question 19

Responsibility accounting reports for a profit center typically show:

Accepted Answer

A) revenues,expenses,and profit controlled by the manager of the center. 
B) only the controllable revenues. 
C) revenues,expenses,profit,and investment in assets controlled by the manager of the center. 
D) all the investment in assets controlled by the manager of the center. 
A) revenues,expenses,and profit controlled by the manager of the center. 
B) only the controllable revenues. 
C) revenues,expenses,profit,and investment in assets controlled by the manager of the center. 
D) all the investment in assets controlled by the manager of the center.

Question 20

Responsibility accounting reports for profit centers will include:

Accepted Answer

A) only costs. 
B) only revenues. 
C) both expenses and fixed assets. 
D) revenues,expenses,and net income or loss from operations. 
A) only costs. 
B) only revenues. 
C) both expenses and fixed assets. 
D) revenues,expenses,and net income or loss from operations.

Sales commissions expense for a department store is an example of a direct expense.

Property tax expense for a department store's store equipment is an example of a direct expense.

If divisional income from operations is $75,000,invested assets are $637,500,and the minimum rate of return on the invested assets is 6%,the residual income calculated would be $36,750.

Depreciation expense on store equipment for a department store is a direct expense.

In a profit center,the manager has responsibility and authority for making decisions that affect:

If the profit margin for a division is 11% and the investment turnover is 1.5,the rate of return on investment computed would be 16.5%.

Which of the following is not a approach used for setting transfer prices?

How much would Division A's income from operations increase?

The balanced scorecard attempts to evaluate the underlying financial drivers of nonfinancial performance.

To calculate income from operations,total service department charges are:

For higher levels of management,responsibility accounting reports:

Service department charges are similar to the expenses that would be incurred if the profit center purchased the services from outside the company.

The primary accounting tool for controlling and reporting for cost centers is a budget performance report.

The manager of the furniture department of a leading retailer does not have control on salaries of the department personnel.

The major advantage of using the rate of return on investment over income from operations as a divisional performance measure is that,divisional investment is directly considered and thus comparability of divisions is facilitated.

Operating expenses directly traceable to or incurred for the sole benefit of a specific department and usually subject to the control of the department manager are termed:

The ratio of sales to invested assets is termed the investment turnover,a component of the rate of return on investment.

PDT Co.has two divisions,East and West.Invested assets and condensed income statement data for each division for the past year ended December 31 are as follows:

Responsibility accounting reports for a profit center typically show:

Responsibility accounting reports for profit centers will include:

The Role of Accounting in Business

Basic Accounting Concepts

Accrual Accounting Concepts

Accounting for Merchandising Businesses

Sarbanes-Oxley, internal Control, and Cash

Receivables and Inventories

Fixed Assets and Intangible Assets

Liabilities and Stockholders Equity

Financial Statement Analysis

Accounting Systems for Manufacturing Businesses

Cost Behavior and Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Cost Systems

Capital Investment Analysis

Filters

Exam 14: Performance Evaluation for Decentralized Operations

Sales commissions expense for a department store is an example of a direct expense.

Property tax expense for a department store's store equipment is an example of a direct expense.

If divisional income from operations is $75,000,invested assets are $637,500,and the minimum rate of return on the invested assets is 6%,the residual income calculated would be $36,750.

Depreciation expense on store equipment for a department store is a direct expense.

In a profit center,the manager has responsibility and authority for making decisions that affect:

If the profit margin for a division is 11% and the investment turnover is 1.5,the rate of return on investment computed would be 16.5%.

Which of the following is not a approach used for setting transfer prices?

How much would Division A's income from operations increase?

The balanced scorecard attempts to evaluate the underlying financial drivers of nonfinancial performance.

To calculate income from operations,total service department charges are:

For higher levels of management,responsibility accounting reports:

Service department charges are similar to the expenses that would be incurred if the profit center purchased the services from outside the company.

The primary accounting tool for controlling and reporting for cost centers is a budget performance report.

The manager of the furniture department of a leading retailer does not have control on salaries of the department personnel.

The major advantage of using the rate of return on investment over income from operations as a divisional performance measure is that,divisional investment is directly considered and thus comparability of divisions is facilitated.

Operating expenses directly traceable to or incurred for the sole benefit of a specific department and usually subject to the control of the department manager are termed:

The ratio of sales to invested assets is termed the investment turnover,a component of the rate of return on investment.

PDT Co.has two divisions,East and West.Invested assets and condensed income statement data for each division for the past year ended December 31 are as follows:

Responsibility accounting reports for a profit center typically show:

Responsibility accounting reports for profit centers will include:

The Role of Accounting in Business

Basic Accounting Concepts

Accrual Accounting Concepts

Accounting for Merchandising Businesses

Sarbanes-Oxley, internal Control, and Cash

Receivables and Inventories

Fixed Assets and Intangible Assets

Liabilities and Stockholders Equity

Financial Statement Analysis

Accounting Systems for Manufacturing Businesses

Cost Behavior and Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Cost Systems

Capital Investment Analysis

Filters