Question 1

In general,calculating ROI based on the gross book value of assets gives managers an incentive to continue using old,outdated equipment.

Accepted Answer

A) True 
 B)False

Question 2

An effective performance evaluation system will ________.

Accepted Answer

A) promote goal congruence and coordination. 
B) provide feedback. 
C) communicate expectations. 
D) all of the above. 
A) promote goal congruence and coordination. 
B) provide feedback. 
C) communicate expectations. 
D) all of the above.

Question 3

Residual income is used as a key performance indicator for evaluating an investment center's financial performance.

Accepted Answer

A) True 
 B)False

Question 4

A responsibility accounting system evaluates the performance of each responsibility center and its manager.

Accepted Answer

A) True 
 B)False

Question 5

Goal congruence can be achieved when ________.

Accepted Answer

A) segment managers' goals align with top management's goals 
B) each segment manager makes decisions which best benefits their own division 
C) managers don't fully understand the "big picture" 
D) top management institutes strategic plans which segment managers have difficulty implementing 
A) segment managers' goals align with top management's goals 
B) each segment manager makes decisions which best benefits their own division 
C) managers don't fully understand the "big picture" 
D) top management institutes strategic plans which segment managers have difficulty implementing

Question 6

Performance evaluation systems provide top management with a framework for maintaining control over the entire organization.

Accepted Answer

A) True 
 B)False

Question 7

Marsh,Inc.provides the following information: $$\begin{array} { | l | c | c | c | c | } 
\hline & \text { Actual Sales } & \text { Static Budget } & \text { Flexible Budget } & \text { Sales Volume Variance } \
\hline \text { Sales Revenue } & \$ 560,000 & \$ 535,000 & \$ 450,000 & ? \
\hline
\end{array}$$ Calculate the sales volume variance.

Accepted Answer

A) 25,000 F 
B) 25,000 U 
C) $85,000 U 
D) $110,000 F 
A) 25,000 F 
B) 25,000 U 
C) $85,000 U 
D) $110,000 F

Question 8

Which of the following affects the company's ability to make on-time deliveries?

Accepted Answer

A) return on investment 
B) product's price 
C) warranty claims 
D) production cycle time 
A) return on investment 
B) product's price 
C) warranty claims 
D) production cycle time

Question 9

The balanced scorecard ________.

Accepted Answer

A) incorporates both financial and operational performance measures 
B) does not consider operational performance measures 
C) evaluates performance based on organizational participation in improving processes 
D) treats financial indicators as the sole measurement of performance 
A) incorporates both financial and operational performance measures 
B) does not consider operational performance measures 
C) evaluates performance based on organizational participation in improving processes 
D) treats financial indicators as the sole measurement of performance

Question 10

Sandpiper Inc.has a division that manufactures a component that sells for $150 and has a variable cost of $30.Another division of the company wants to purchase the component.Fixed cost per unit of the component is $20.What is the minimum transfer price if the division is operating at capacity?

Accepted Answer

A) $150 
B) $30 
C) $50 
D) $20 
A) $150 
B) $30 
C) $50 
D) $20

Question 11

A unique factor of responsibility accounting performance reports is the focus on responsibility and controllability.

Accepted Answer

A) True 
 B)False

Question 12

Long-term investments are made by the investment center manager for the purpose of ________.

Accepted Answer

A) increasing profits 
B) decreasing profits 
C) increasing interest expense 
D) decreasing plant assets 
A) increasing profits 
B) decreasing profits 
C) increasing interest expense 
D) decreasing plant assets

Question 13

When operating at capacity,a market-based transfer price should be used.

Accepted Answer

A) True 
 B)False

Question 14

Define cost-based transfer price.When should cost-based transfer pricing be used? Explain your answer.

Accepted Answer

Cost-based transfer price is a transfer

Question 15

Which of the following is a disadvantage of decentralization?

Accepted Answer

A) It results in increased customer response time. 
B) It allows only the top management to make decisions. 
C) It does not motivate employees because the decision-making powers are not delegated. 
D) It results in problems with achieving goal congruence. 
A) It results in increased customer response time. 
B) It allows only the top management to make decisions. 
C) It does not motivate employees because the decision-making powers are not delegated. 
D) It results in problems with achieving goal congruence.

Question 16

Goal congruence is the practice of comparing the company's achievements against the best practices in the industry.

Accepted Answer

A) True 
 B)False

Question 17

The transfer price should be an amount between the market price and the variable cost.

Accepted Answer

A) True 
 B)False

Question 18

Express Logistics provides the following information: $$\begin{array} { | l | r | } 
\hline \text { Operating income } & \$ 1,500,000 \
\hline \text { Net sales } & \$ 13,500,000 \
\hline \text { Average total assets } & \$ 2,000,000 \
\hline \text { Management's target rate of return } & 25 \% \
\hline
\end{array}$$ What is the company's return on investment? (Round your answer to two decimal places.)

Accepted Answer

A) 11.11% 
B) 14.81% 
C) 75.00% 
D) 25.00% 
A) 11.11% 
B) 14.81% 
C) 75.00% 
D) 25.00%

Question 19

The production manager is responsible for ________.

Accepted Answer

A) all product costs 
B) decisions to acquire new equipment 
C) his or her own salary 
D) efficiently and effectively producing quality products 
A) all product costs 
B) decisions to acquire new equipment 
C) his or her own salary 
D) efficiently and effectively producing quality products

Question 20

Residual income compares the division's actual operating income with the minimum operating income expected by top management for the given size of the division's average total assets.

Accepted Answer

A) True 
 B)False

In general,calculating ROI based on the gross book value of assets gives managers an incentive to continue using old,outdated equipment.

An effective performance evaluation system will ________.

Residual income is used as a key performance indicator for evaluating an investment center's financial performance.

A responsibility accounting system evaluates the performance of each responsibility center and its manager.

Goal congruence can be achieved when ________.

Performance evaluation systems provide top management with a framework for maintaining control over the entire organization.

Marsh,Inc.provides the following information: Actual Sales Static Budget Flexible Budget Sales Volume Variance Sales Revenue \ 560,000 \ 535,000 \ 450,000 ? Calculate the sales volume variance.

Which of the following affects the company's ability to make on-time deliveries?

The balanced scorecard ________.

Sandpiper Inc.has a division that manufactures a component that sells for $150 and has a variable cost of $30.Another division of the company wants to purchase the component.Fixed cost per unit of the component is $20.What is the minimum transfer price if the division is operating at capacity?

A unique factor of responsibility accounting performance reports is the focus on responsibility and controllability.

Long-term investments are made by the investment center manager for the purpose of ________.

When operating at capacity,a market-based transfer price should be used.

Define cost-based transfer price.When should cost-based transfer pricing be used? Explain your answer.

Which of the following is a disadvantage of decentralization?

Goal congruence is the practice of comparing the company's achievements against the best practices in the industry.

The transfer price should be an amount between the market price and the variable cost.

Express Logistics provides the following information: Operating income \ 1,500,000 Net sales \ 13,500,000 Average total assets \ 2,000,000 Management's target rate of return 25\% What is the company's return on investment? (Round your answer to two decimal places.)

The production manager is responsible for ________.

Residual income compares the division's actual operating income with the minimum operating income expected by top management for the given size of the division's average total assets.

Accounting Information Systems

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost Management Systems: Activity-Based, just-In-Time, and Quality Management Systems

Cost-Volume-Profit Analysis

Variable Costing

Master Budgets

Flexible Budgets and Standard Cost Systems

Short-Term Business Decisions

Capital Investment Decisions

Filters

Exam 24: Responsibility Accounting and Performance Evaluation

In general,calculating ROI based on the gross book value of assets gives managers an incentive to continue using old,outdated equipment.

An effective performance evaluation system will ________.

Residual income is used as a key performance indicator for evaluating an investment center's financial performance.

A responsibility accounting system evaluates the performance of each responsibility center and its manager.

Goal congruence can be achieved when ________.

Performance evaluation systems provide top management with a framework for maintaining control over the entire organization.

Marsh,Inc.provides the following information: Actual Sales Static Budget Flexible Budget Sales Volume Variance Sales Revenue \ 560,000 \ 535,000 \ 450,000 ? Calculate the sales volume variance.

Which of the following affects the company's ability to make on-time deliveries?

The balanced scorecard ________.

Sandpiper Inc.has a division that manufactures a component that sells for $150 and has a variable cost of $30.Another division of the company wants to purchase the component.Fixed cost per unit of the component is $20.What is the minimum transfer price if the division is operating at capacity?

A unique factor of responsibility accounting performance reports is the focus on responsibility and controllability.

Long-term investments are made by the investment center manager for the purpose of ________.

When operating at capacity,a market-based transfer price should be used.

Define cost-based transfer price.When should cost-based transfer pricing be used? Explain your answer.

Which of the following is a disadvantage of decentralization?

Goal congruence is the practice of comparing the company's achievements against the best practices in the industry.

The transfer price should be an amount between the market price and the variable cost.

Express Logistics provides the following information: Operating income \ 1,500,000 Net sales \ 13,500,000 Average total assets \ 2,000,000 Management's target rate of return 25\% What is the company's return on investment? (Round your answer to two decimal places.)

The production manager is responsible for ________.

Residual income compares the division's actual operating income with the minimum operating income expected by top management for the given size of the division's average total assets.

Accounting Information Systems

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost Management Systems: Activity-Based, just-In-Time, and Quality Management Systems

Cost-Volume-Profit Analysis

Variable Costing

Master Budgets

Flexible Budgets and Standard Cost Systems

Short-Term Business Decisions

Capital Investment Decisions

Filters