Question 1

In an investment center,the manager has the responsibility for and the authority to make decisions that affect:

Accepted Answer

A) the assets invested in the center but not costs and revenues. 
B) costs and assets invested in the center but not revenues. 
C) both costs and revenues for the department or division. 
D) not only costs and revenues but also assets invested in the center. 
A) the assets invested in the center but not costs and revenues. 
B) costs and assets invested in the center but not revenues. 
C) both costs and revenues for the department or division. 
D) not only costs and revenues but also assets invested in the center.

Question 2

The process of measuring and reporting operating data by areas of responsibility is termed responsibility accounting.

Accepted Answer

A) True 
 B)False

Question 3

The profit center income statement should include only controllable revenues and expenses.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following expressions is termed the profit margin factor as used in determining the rate of return on investment?

Accepted Answer

A) Sales/Income From Operations 
B) Income From Operations/Sales 
C) Invested Assets/Sales 
D) Sales/Invested Assets 
A) Sales/Income From Operations 
B) Income From Operations/Sales 
C) Invested Assets/Sales 
D) Sales/Invested Assets

Question 5

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

Accepted Answer

A) both cost and investment. 
B) only investment. 
C) only costs. 
D) both costs and revenues. 
A) both cost and investment. 
B) only investment. 
C) only costs. 
D) both costs and revenues.

Question 6

The manager of a profit center does not make decisions concerning the fixed assets invested in the center.

Accepted Answer

A) True 
 B)False

Question 7

How much would Meeta-Products total income from operations increase?

Accepted Answer

A) $70,000 
B) $175,000 
C) $105,000 
D) $100,000 
A) $70,000 
B) $175,000 
C) $105,000 
D) $100,000

Question 8

A portion of the divisional income statement for the year just ended is presented below in a condensed form.

Accepted Answer

$5,400 decrease,which is the i

Question 9

Which transfer price approach is used when the transfer price is set at the amount sold to outside buyers?

Accepted Answer

A) Market price 
B) Cost price 
C) Negotiated price 
D) Variable price 
A) Market price 
B) Cost price 
C) Negotiated price 
D) Variable price

Question 10

If income from operations for a division is $6,000,invested assets are $25,000,and sales are $30,000,the profit margin calculated would be 20%.

Accepted Answer

A) True 
 B)False

Question 11

In an investment center,the manager has responsibility and authority for making decisions that affect:

Accepted Answer

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

Question 12

How do the responsibilities of a manager in an investment center compare to the responsibilities of managers in a cost or profit center?

Accepted Answer

A) Investment center managers have more authority and responsibility than managers of a cost or profit center. 
B) Investment center managers have more authority and responsibility than managers of a cost center but less than managers of a profit center. 
C) Investment center managers have about the same authority and responsibility as managers of a cost or profit center. 
D) Investment center managers have more authority and responsibility than managers of a profit center but less than managers of a cost center. 
A) Investment center managers have more authority and responsibility than managers of a cost or profit center. 
B) Investment center managers have more authority and responsibility than managers of a cost center but less than managers of a profit center. 
C) Investment center managers have about the same authority and responsibility as managers of a cost or profit center. 
D) Investment center managers have more authority and responsibility than managers of a profit center but less than managers of a cost center.

Question 13

A department store apportions payroll costs on the basis of the number of payroll checks issued.Accounting costs are apportioned on the basis of the number of reports.The payroll costs for the year were $100,000,and the accounting costs for the year totaled $50,000.The number of payroll checks issued and the number of reports for each department are as follows:

Accepted Answer

Department (a) Total R S T Number of pay

Question 14

It is beneficial for related companies to negotiate a transfer price when the supplying company has unused capacity in its plant.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A) $32,500. 
B) $10,500. 
C) $59,500. 
D) $37,500. 
A) $32,500. 
B) $10,500. 
C) $59,500. 
D) $37,500.

Question 16

Purchase requisitions for Purchasing and the number of payroll checks for Payroll Accounting are examples of activity bases.

Accepted Answer

A) True 
 B)False

Question 17

What additional information is needed to find the rate of return on investment if income from operations is known?

Accepted Answer

A) Invested assets 
B) Residual income 
C) Direct expenses 
D) Sales 
A) Invested assets 
B) Residual income 
C) Direct expenses 
D) Sales

Question 18

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 investment turnover for Blancher is:

Accepted Answer

A) 1.20. 
B) 1.00. 
C) 1.10. 
D) 1.33. 
A) 1.20. 
B) 1.00. 
C) 1.10. 
D) 1.33.

Question 19

If income from operations for a division is $6,000,invested assets are $25,000,and sales are $30,000,the profit margin calculated would be 24%.

Accepted Answer

A) True 
 B)False

Question 20

The primary disadvantage of decentralized operations is that decisions made by one manager may affect other managers in such a way that the profitability of the entire company may suffer.

Accepted Answer

A) True 
 B)False

In an investment center,the manager has the responsibility for and the authority to make decisions that affect:

The process of measuring and reporting operating data by areas of responsibility is termed responsibility accounting.

The profit center income statement should include only controllable revenues and expenses.

Which of the following expressions is termed the profit margin factor as used in determining the rate of return on investment?

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

The manager of a profit center does not make decisions concerning the fixed assets invested in the center.

How much would Meeta-Products total income from operations increase?

A portion of the divisional income statement for the year just ended is presented below in a condensed form.

Which transfer price approach is used when the transfer price is set at the amount sold to outside buyers?

If income from operations for a division is $6,000,invested assets are $25,000,and sales are $30,000,the profit margin calculated would be 20%.

In an investment center,the manager has responsibility and authority for making decisions that affect:

How do the responsibilities of a manager in an investment center compare to the responsibilities of managers in a cost or profit center?

It is beneficial for related companies to negotiate a transfer price when the supplying company has unused capacity in its plant.

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

Purchase requisitions for Purchasing and the number of payroll checks for Payroll Accounting are examples of activity bases.

What additional information is needed to find the rate of return on investment if income from operations is known?

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 investment turnover for Blancher is:

If income from operations for a division is $6,000,invested assets are $25,000,and sales are $30,000,the profit margin calculated would be 24%.

The primary disadvantage of decentralized operations is that decisions made by one manager may affect other managers in such a way that the profitability of the entire company may suffer.

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

In an investment center,the manager has the responsibility for and the authority to make decisions that affect:

The process of measuring and reporting operating data by areas of responsibility is termed responsibility accounting.

The profit center income statement should include only controllable revenues and expenses.

Which of the following expressions is termed the profit margin factor as used in determining the rate of return on investment?

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

The manager of a profit center does not make decisions concerning the fixed assets invested in the center.

How much would Meeta-Products total income from operations increase?

A portion of the divisional income statement for the year just ended is presented below in a condensed form.

Which transfer price approach is used when the transfer price is set at the amount sold to outside buyers?

If income from operations for a division is $6,000,invested assets are $25,000,and sales are $30,000,the profit margin calculated would be 20%.

In an investment center,the manager has responsibility and authority for making decisions that affect:

How do the responsibilities of a manager in an investment center compare to the responsibilities of managers in a cost or profit center?

It is beneficial for related companies to negotiate a transfer price when the supplying company has unused capacity in its plant.

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

Purchase requisitions for Purchasing and the number of payroll checks for Payroll Accounting are examples of activity bases.

What additional information is needed to find the rate of return on investment if income from operations is known?

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 investment turnover for Blancher is:

If income from operations for a division is $6,000,invested assets are $25,000,and sales are $30,000,the profit margin calculated would be 24%.

The primary disadvantage of decentralized operations is that decisions made by one manager may affect other managers in such a way that the profitability of the entire company may suffer.

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