Question 1

Which of the following is true of the balanced scorecard?

Accepted Answer

A) It ignores the financial performance of the company. 
B) It has the ability to reveal the underlying nonfinancial drivers of financial performance. 
C) It aims to improve the nonfinancial performance of the business. 
D) It focuses primarily on the short term performance of the business. 
A) It ignores the financial performance of the company. 
B) It has the ability to reveal the underlying nonfinancial drivers of financial performance. 
C) It aims to improve the nonfinancial performance of the business. 
D) It focuses primarily on the short term performance of the business.

Question 2

If income from operations for a division is $6,000,invested assets are $25,000,and sales are $30,000,the investment turnover would be 1.2.

Accepted Answer

A) True 
 B)False

Question 3

Investment turnover (as used in determining the rate of return on investment)focuses on the rate of profit earned on each sales dollar.

Accepted Answer

A) True 
 B)False

Question 4

The service department will determine its service department charge rate and charge the company's divisions or departments based on the usage of the service by each department.

Accepted Answer

A) True 
 B)False

Question 5

The profit margin is the ratio of:

Accepted Answer

A) income from operations to sales. 
B) income from operations to invested assets. 
C) assets to liabilities. 
D) sales to invested assets. 
A) income from operations to sales. 
B) income from operations to invested assets. 
C) assets to liabilities. 
D) sales to invested assets.

Question 6

The financial performance of responsibility centers is evaluated in the balanced scorecard under the financial section of the scorecard.

Accepted Answer

A) True 
 B)False

Question 7

Blancher Corporation had $495,000 in invested assets,sales of $660,000,income from operations amounting to $99,000,and a desired minimum rate of return of 15%.The profit margin for Blancher is:

Accepted Answer

A) 16%. 
B) 20%. 
C) 18%. 
D) 15%. 
A) 16%. 
B) 20%. 
C) 18%. 
D) 15%.

Question 8

The rate of return on investment can be computed by dividing investment turnover by the profit margin.

Accepted Answer

A) True 
 B)False

Question 9

The ratio of income from operations to sales is termed the profit margin,a component of the rate of return on investment.

Accepted Answer

A) True 
 B)False

Question 10

In evaluating the profit center manager,the income from operations should be compared:

Accepted Answer

A) across profit centers. 
B) to historical performance or budget. 
C) to the competitor's net income. 
D) to the total company's earnings per share. 
A) across profit centers. 
B) to historical performance or budget. 
C) to the competitor's net income. 
D) to the total company's earnings per share.

Question 11

The balanced scorecard evaluates managers on financial and nonfinancial measures of performance.

Accepted Answer

A) True 
 B)False

Question 12

Division A of Purvis Company has a rate of return on investment of 15% and an investment turnover of 1.6.What is the profit margin?

Accepted Answer

A) 10% 
B) 12.5% 
C) 9.4% 
D) 24% 
A) 10% 
B) 12.5% 
C) 9.4% 
D) 24%

Question 13

The net income for Globe Corporation is:

Accepted Answer

A) $59,000. 
B) $160,000. 
C) $19,400. 
D) $47,000. 
A) $59,000. 
B) $160,000. 
C) $19,400. 
D) $47,000.

Question 14

A common balanced scorecard measures performance in all of the following areas except:

Accepted Answer

A) education. 
B) internal process. 
C) financial. 
D) innovation and learning. 
A) education. 
B) internal process. 
C) financial. 
D) innovation and learning.

Question 15

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

Accepted Answer

A) $0 
B) $180,000 
C) $60,000 
D) $120,000 
A) $0 
B) $180,000 
C) $60,000 
D) $120,000

Question 16

A responsibility center in which the authority and responsibility for costs and revenues is vested on the department manager is termed an investment center.

Accepted Answer

A) True 
 B)False

Question 17

The minimum amount of desired divisional income from operations is set by top management by establishing a maximum rate of return that is expected from the invested assets.

Accepted Answer

A) True 
 B)False

Question 18

Under the cost price approach,the transfer price is the price at which the product or service transferred could be sold to outside buyers.

Accepted Answer

A) True 
 B)False

Question 19

Materials used by Ford Company in producing Division A's product are currently purchased from outside suppliers at a cost of $30 per unit.However,the same materials are available from Division B.Division B has unused capacity and can produce the materials needed by Division A at a variable cost of $20 per unit.
(a)	If a transfer price of $25 per unit is established and 60,000 units of material are transferred with no reductions in Division B's current sales, how much would Ford Company's total income from operations increase?
(b)	How much would the income from operations of Division A increase?
(c)	How much would the income from operations of Division B increase?
(d)	If the negotiated price approach is used, what would be the range of acceptable transfer prices?

Accepted Answer

(a)$600,000? [60,000 × ($30 - $25)] + [6

Question 20

Plamba Corporation had $250,000 invested in assets,sales of $490,000,income from operations amounting to $70,000,and a desired minimum rate of return of 15%.The rate of return on investment for Plamba is:

Accepted Answer

A) 14%. 
B) 28%. 
C) 20%. 
D) 15%. 
A) 14%. 
B) 28%. 
C) 20%. 
D) 15%.

Which of the following is true of the balanced scorecard?

If income from operations for a division is $6,000,invested assets are $25,000,and sales are $30,000,the investment turnover would be 1.2.

Investment turnover (as used in determining the rate of return on investment)focuses on the rate of profit earned on each sales dollar.

The service department will determine its service department charge rate and charge the company's divisions or departments based on the usage of the service by each department.

The profit margin is the ratio of:

The financial performance of responsibility centers is evaluated in the balanced scorecard under the financial section of the scorecard.

Blancher Corporation had $495,000 in invested assets,sales of $660,000,income from operations amounting to $99,000,and a desired minimum rate of return of 15%.The profit margin for Blancher is:

The rate of return on investment can be computed by dividing investment turnover by the profit margin.

The ratio of income from operations to sales is termed the profit margin,a component of the rate of return on investment.

In evaluating the profit center manager,the income from operations should be compared:

The balanced scorecard evaluates managers on financial and nonfinancial measures of performance.

Division A of Purvis Company has a rate of return on investment of 15% and an investment turnover of 1.6.What is the profit margin?

The net income for Globe Corporation is:

A common balanced scorecard measures performance in all of the following areas except:

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

A responsibility center in which the authority and responsibility for costs and revenues is vested on the department manager is termed an investment center.

The minimum amount of desired divisional income from operations is set by top management by establishing a maximum rate of return that is expected from the invested assets.

Under the cost price approach,the transfer price is the price at which the product or service transferred could be sold to outside buyers.

Plamba Corporation had $250,000 invested in assets,sales of $490,000,income from operations amounting to $70,000,and a desired minimum rate of return of 15%.The rate of return on investment for Plamba is:

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

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Exam 14: Performance Evaluation for Decentralized Operations

Which of the following is true of the balanced scorecard?

If income from operations for a division is $6,000,invested assets are $25,000,and sales are $30,000,the investment turnover would be 1.2.

Investment turnover (as used in determining the rate of return on investment)focuses on the rate of profit earned on each sales dollar.

The service department will determine its service department charge rate and charge the company's divisions or departments based on the usage of the service by each department.

The profit margin is the ratio of:

The financial performance of responsibility centers is evaluated in the balanced scorecard under the financial section of the scorecard.

Blancher Corporation had $495,000 in invested assets,sales of $660,000,income from operations amounting to $99,000,and a desired minimum rate of return of 15%.The profit margin for Blancher is:

The rate of return on investment can be computed by dividing investment turnover by the profit margin.

The ratio of income from operations to sales is termed the profit margin,a component of the rate of return on investment.

In evaluating the profit center manager,the income from operations should be compared:

The balanced scorecard evaluates managers on financial and nonfinancial measures of performance.

Division A of Purvis Company has a rate of return on investment of 15% and an investment turnover of 1.6.What is the profit margin?

The net income for Globe Corporation is:

A common balanced scorecard measures performance in all of the following areas except:

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

A responsibility center in which the authority and responsibility for costs and revenues is vested on the department manager is termed an investment center.

The minimum amount of desired divisional income from operations is set by top management by establishing a maximum rate of return that is expected from the invested assets.

Under the cost price approach,the transfer price is the price at which the product or service transferred could be sold to outside buyers.

Plamba Corporation had $250,000 invested in assets,sales of $490,000,income from operations amounting to $70,000,and a desired minimum rate of return of 15%.The rate of return on investment for Plamba is:

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