Question 1

List and briefly discuss the two limitations of financial performance measures.

Accepted Answer

Measurement issues-Both the return on in

Question 2

Guardian Corporation has two major divisions- Healthcare Products and Pharmaceutical Products.It provides the following information for the year. $$\begin{array} { | l | r | r | } 
\hline & \text { Healthcare Division } & \begin{array} { c } 
\text { Pharmaceutical } \
\text { Division }
\end{array} \
\hline \text { Net sales } & \$ 150,000 & \$ 1,000,000 \
\hline \text { Operating income } & \$ 47,000 & \$ 218,400 \
\hline \text { Average assets } & \$ 310,000 & \$ 5,660,000 \
\hline \text { Target rate of return } & 13.0 \% & 13.0 \% \
\hline
\end{array}$$ Calculate the residual income for the Healthcare Division.

Accepted Answer

A) $27,500 
B) $6700 
C) $103,000 
D) $47,000 
A) $27,500 
B) $6700 
C) $103,000 
D) $47,000

Question 3

The balanced scorecard system requires management to consider ________.

Accepted Answer

A) both financial and operational performance measures 
B) only performance measures 
C) only leading indicators 
D) only financial and customer perspectives 
A) both financial and operational performance measures 
B) only performance measures 
C) only leading indicators 
D) only financial and customer perspectives

Question 4

Dantone,Inc.provides the following information: $$\begin{array} { | l | r | } 
\hline \text { Profit margin ratio } & 5 \% \
\hline \text { Asset turnover ratio } & 2 \text { times } \
\hline \text { Net sales } & \$ 450,000 \
\hline \text { Target rate of return } & 9 \% \
\hline
\end{array}$$ Calculate the return on investment.

Accepted Answer

A) 10% 
B) 45% 
C) 4% 
D) 14% 
A) 10% 
B) 45% 
C) 4% 
D) 14%

Question 5

Sales revenue growth,gross margin growth,and return on investment are the key performance indicators for the ________.

Accepted Answer

A) financial perspective 
B) customer perspective 
C) internal business perspective 
D) learning and growth perspective 
A) financial perspective 
B) customer perspective 
C) internal business perspective 
D) learning and growth perspective

Question 6

A company may prefer to use residual income over return on investment for performance evaluation because ________.

Accepted Answer

A) residual income is a ratio but return on investment is an absolute figure 
B) residual income is more likely to lead to goal congruence than return on investment 
C) residual income is easier to calculate than return on investment 
D) residual income considers three elements but return on investment considers only two elements 
A) residual income is a ratio but return on investment is an absolute figure 
B) residual income is more likely to lead to goal congruence than return on investment 
C) residual income is easier to calculate than return on investment 
D) residual income considers three elements but return on investment considers only two elements

Question 7

The performance evaluation system should provide incentives to segment managers for coordinating the activities of the subunits and directing them toward the overall company goals.Which of the following performance measurement goals has been described by this statement?

Accepted Answer

A) motivating segment managers 
B) promoting goal congruence 
C) providing feedback 
D) benchmarking 
A) motivating segment managers 
B) promoting goal congruence 
C) providing feedback 
D) benchmarking

Question 8

In a decentralized company,segment managers may not fully understand the big picture when making decisions.

Accepted Answer

A) True 
 B)False

Question 9

Anderson Construction Materials Company has a sales office that sells concrete culvert pipes to property developers.The sales office is a revenue center and prepares a monthly responsibility report.The following information is provided.Complete the responsibility report.
Anderson Construction Materials Company
Revenue Center Responsibility Report

$\begin{array}{l}
\begin{array}{crrrrr}
&Actual~Sales& Flexible~Budget&&Sales Volume\
\text { Product Type } & \text { Revenue } & \text { Variance } & \text { Flexible Budget } & \text { Variance } & \text { Static Budget } \
40 \text { inch } & \$ 31,700 && \$ 30,500 && \$ 40,800 \
36 \text { inch } & 40,150 && 42,200 && 33,000 \
\underline{\text {32 inch}} & \underline{19,100} && \underline{20,000} && \underline{28,450} & & \
\underline{\text { Total }}
\end{array}
\end{array}$

Accepted Answer

Anderson Construction Materials Company

Question 10

To create goal congruence,some firms prefer calculating ROI based on the gross book value of asset.

Accepted Answer

A) True 
 B)False

Question 11

List the four types of responsibility centers.For each center,state the responsibility of the manager.
 $\begin{array}{|c|c|}
\hline
\begin{array}{c}
\text { Type of } \
\text { responsibility center }
\end{array} & \text { Responsibility of the manager } \
\hline & \
\hline & \
\hline & \
\hline & \
\hline
\end{array}$

Accepted Answer

\[\begin{array} { | l | l | } 
\hline  {

Question 12

Raven,Inc.has a division that manufactures a component that sells for $190 and has a variable cost of $35.Another division of the company wants to purchase the component.Fixed cost per unit of the component is $22.What is the minimum transfer price if the division is operating below its capacity?

Accepted Answer

A) $190 
B) $35 
C) $57 
D) $22 
A) $190 
B) $35 
C) $57 
D) $22

Question 13

Percentage of market share and rate of on-time deliveries are indicators of the ________ perspective.

Accepted Answer

A) quality management 
B) internal business 
C) customer 
D) learning and growth 
A) quality management 
B) internal business 
C) customer 
D) learning and growth

Question 14

Which of the following best describes the manager of a profit center?

Accepted Answer

A) The manager is only responsible for controlling costs. 
B) The manager is responsible for generating profits and efficiently managing the center's invested capital. 
C) The manager is only responsible for generating revenues. 
D) The manager is responsible for generating revenues and controlling costs. 
A) The manager is only responsible for controlling costs. 
B) The manager is responsible for generating profits and efficiently managing the center's invested capital. 
C) The manager is only responsible for generating revenues. 
D) The manager is responsible for generating revenues and controlling costs.

Question 15

Which of the following internal business perspective key performance indicators (KPIs)is commonly used to assess the innovation process?

Accepted Answer

A) number of new products developed 
B) number of warranty claims 
C) employee turnover rate 
D) rate of on-time deliveries 
A) number of new products developed 
B) number of warranty claims 
C) employee turnover rate 
D) rate of on-time deliveries

Question 16

The following is divisional information for Randolph Enterprises:
 $$\begin{array} { | l | r | r | } 
\hline & \text { East Division } & { \text { West Division } } \
\hline \text { Operating income } & \$ 250,000 & \$ 200,000 \
\hline \text { Net sales } & 2,225,000 & 1,575,000 \
\hline \text { Total assets at Jan. 1 } & 1,500,000 & 840,000 \
\hline \text { Total assets at Dec . 31 } & 1,200,000 & 1,000,000 \
\hline
\end{array}$$ The target rate of return is 12% for the East Division and is 10% for the West Division.
Compute the return on investment for each division.(Round to one decimal place.)

Accepted Answer

Average assets: (Beginning assets + Endi

Question 17

In an investment center,the manager is primarily responsible for ________.

Accepted Answer

A) controlling costs 
B) generating revenues 
C) generating revenues and controlling costs 
D) generating profits and efficiently managing invested capital 
A) controlling costs 
B) generating revenues 
C) generating revenues and controlling costs 
D) generating profits and efficiently managing invested capital

Question 18

A company uses a balanced scorecard and has established a key performance indicator for product quality.If the actual warranty claims are higher than expected,there is an indication that the quality standards have been met.

Accepted Answer

A) True 
 B)False

Question 19

A high rate of employee turnover indicates that ________.

Accepted Answer

A) employees of the organization leave their jobs frequently 
B) pay packages of employees are at par with that of the industry 
C) the employee retention ratio is also high 
D) employees also participate in the decision-making process 
A) employees of the organization leave their jobs frequently 
B) pay packages of employees are at par with that of the industry 
C) the employee retention ratio is also high 
D) employees also participate in the decision-making process

Question 20

The primary objective in setting transfer prices is to

Accepted Answer

A) maximize profits for the company as a whole. 
B) maximize profits for the selling division. 
C) minimize the cost to the purchasing division. 
D) maximize profits for the purchasing division. 
A) maximize profits for the company as a whole. 
B) maximize profits for the selling division. 
C) minimize the cost to the purchasing division. 
D) maximize profits for the purchasing division.

List and briefly discuss the two limitations of financial performance measures.

The balanced scorecard system requires management to consider ________.

Dantone,Inc.provides the following information: Profit margin ratio 5\% Asset turnover ratio 2 times Net sales \ 450,000 Target rate of return 9\% Calculate the return on investment.

Sales revenue growth,gross margin growth,and return on investment are the key performance indicators for the ________.

A company may prefer to use residual income over return on investment for performance evaluation because ________.

The performance evaluation system should provide incentives to segment managers for coordinating the activities of the subunits and directing them toward the overall company goals.Which of the following performance measurement goals has been described by this statement?

In a decentralized company,segment managers may not fully understand the big picture when making decisions.

To create goal congruence,some firms prefer calculating ROI based on the gross book value of asset.

List the four types of responsibility centers.For each center,state the responsibility of the manager. Type of responsibility center Responsibility of the manager

Raven,Inc.has a division that manufactures a component that sells for $190 and has a variable cost of $35.Another division of the company wants to purchase the component.Fixed cost per unit of the component is $22.What is the minimum transfer price if the division is operating below its capacity?

Percentage of market share and rate of on-time deliveries are indicators of the ________ perspective.

Which of the following best describes the manager of a profit center?

Which of the following internal business perspective key performance indicators (KPIs)is commonly used to assess the innovation process?

In an investment center,the manager is primarily responsible for ________.

A company uses a balanced scorecard and has established a key performance indicator for product quality.If the actual warranty claims are higher than expected,there is an indication that the quality standards have been met.

A high rate of employee turnover indicates that ________.

The primary objective in setting transfer prices is to

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

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Exam 24: Responsibility Accounting and Performance Evaluation

List and briefly discuss the two limitations of financial performance measures.

The balanced scorecard system requires management to consider ________.

Dantone,Inc.provides the following information: Profit margin ratio 5\% Asset turnover ratio 2 times Net sales \ 450,000 Target rate of return 9\% Calculate the return on investment.

Sales revenue growth,gross margin growth,and return on investment are the key performance indicators for the ________.

A company may prefer to use residual income over return on investment for performance evaluation because ________.

The performance evaluation system should provide incentives to segment managers for coordinating the activities of the subunits and directing them toward the overall company goals.Which of the following performance measurement goals has been described by this statement?

In a decentralized company,segment managers may not fully understand the big picture when making decisions.

To create goal congruence,some firms prefer calculating ROI based on the gross book value of asset.

List the four types of responsibility centers.For each center,state the responsibility of the manager. Type of responsibility center Responsibility of the manager

Raven,Inc.has a division that manufactures a component that sells for $190 and has a variable cost of $35.Another division of the company wants to purchase the component.Fixed cost per unit of the component is $22.What is the minimum transfer price if the division is operating below its capacity?

Percentage of market share and rate of on-time deliveries are indicators of the ________ perspective.

Which of the following best describes the manager of a profit center?

Which of the following internal business perspective key performance indicators (KPIs)is commonly used to assess the innovation process?

In an investment center,the manager is primarily responsible for ________.

A company uses a balanced scorecard and has established a key performance indicator for product quality.If the actual warranty claims are higher than expected,there is an indication that the quality standards have been met.

A high rate of employee turnover indicates that ________.

The primary objective in setting transfer prices is to

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