Question 1

Which of the following can increase a company's return on investment?

Accepted Answer

A) decrease in operating income 
B) decrease in total assets 
C) decrease in asset turnover ratio 
D) decrease in residual income 
A) decrease in operating income 
B) decrease in total assets 
C) decrease in asset turnover ratio 
D) decrease in residual income

Question 2

Communicating top management's expectations to segment managers improves goal congruence.

Accepted Answer

A) True 
 B)False

Question 3

In many cases,the amount of the transfer price does not affect overall company profits.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is a key performance indicator of the customer perspective in a balanced scorecard?

Accepted Answer

A) defect rate 
B) employee satisfaction 
C) gross margin growth 
D) number of repeat customers 
A) defect rate 
B) employee satisfaction 
C) gross margin growth 
D) number of repeat customers

Question 5

Erwin Plumbing Materials Company has a sales office that sells water pipes to construction companies.The sales office is a revenue center and prepares a monthly responsibility report.The partially completed responsibility report is provided. $$\begin{array}{l}
\text { Revenue Center Responsibility Report }\
\begin{array} { | c | c | c | c | c | c | c | c | } 
\hline \begin{array} { c } 
\text { Product } \
\text { Type }
\end{array} & \begin{array} { c } 
\text { Actual } \
\text { Sales } \
\text { Revenue }
\end{array} & \begin{array} { c } 
\text { Flexible } \
\text { Budget } \
\text { Variance }
\end{array} & \text { U/F } & \begin{array} { c } 
\text { Flexible } \
\text { Budget }
\end{array} & \begin{array} { c } 
\text { Sales } \
\text { Volume } \
\text { Variance }
\end{array} & \text { U/F } & \begin{array} { c } 
\text { Static } \
\text { Budget }
\end{array} \
\hline 40 \text { inch } & \$ 31,700 & & & \$ 30,750 & & & \$ 40,800 \
\hline 36 \text { inch long } & 40,150 & & & 42,200 & & & 33,000 \
\hline 36 \text { inch short } & 36,200 & & & 33,100 & & & 31,000 \
\hline 32 \text { inch } & 19,100 & & & 20,000 & & & 28,400 \
\hline
\end{array}
\end{array}$$ The company uses management by exception to address flexible budget variances.On which product type would the company first focus?

Accepted Answer

A) 40 inch 
B) 36 inch long 
C) 36 inch short 
D) 32 inch 
A) 40 inch 
B) 36 inch long 
C) 36 inch short 
D) 32 inch

Question 6

Residual income indicates how ________.

Accepted Answer

A) efficiently a division uses its financial leverage to generate sales and thereby profits 
B) much operating income the division earns on every dollar of sales 
C) much return a division generates on average assets 
D) much extra operating income a division generates above the minimum acceptable level 
A) efficiently a division uses its financial leverage to generate sales and thereby profits 
B) much operating income the division earns on every dollar of sales 
C) much return a division generates on average assets 
D) much extra operating income a division generates above the minimum acceptable level

Question 7

Cost center responsibility reports generally focus on the static budget variance.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is most likely to appear on the responsibility report for a manufacturing production supervisor?

Accepted Answer

A) direct labor costs 
B) factory rent 
C) advertising costs 
D) depreciation 
A) direct labor costs 
B) factory rent 
C) advertising costs 
D) depreciation

Question 9

The term "goal congruence" refers to the ________.

Accepted Answer

A) matching of financial goals of the company with its nonfinancial goals 
B) aligning the goals of business segment managers with the goals of top management 
C) achievement of the goals set by the management by utilizing the resources available 
D) duplication of costs as a result of decentralization 
A) matching of financial goals of the company with its nonfinancial goals 
B) aligning the goals of business segment managers with the goals of top management 
C) achievement of the goals set by the management by utilizing the resources available 
D) duplication of costs as a result of decentralization

Question 10

Step Up Ladders Company provides the following financial information: $$\begin{array} { | l | r | } 
\hline \text { Income from operations } & \$ 400,000 \
\hline \text { Interest expense } & 47,000 \
\hline \text { Gains/(losses) on sale of equipment } & 3000 \
\hline \text { Net income } & 350,000 \
\hline \text { Total assets at Jan. 1 } & 2,600,000 \
\hline \text { Total assets at Dec . 31 } & 3,400,000 \
\hline
\end{array}$$ Calculate return on investment based on the information given above.(Round your answer to two decimal places.)

Accepted Answer

A) 15.38% 
B) 11.67% 
C) 13.33% 
D) 11.76% 
A) 15.38% 
B) 11.67% 
C) 13.33% 
D) 11.76%

Question 11

A company's "climate for action" is a corporate culture ________.

Accepted Answer

A) that encourages communication,change,and growth 
B) that is focused on strong,top-down command and control 
C) that is aimed exclusively at period earnings 
D) that discourages physical activity,sports,and recreation to improve employee health and morale 
A) that encourages communication,change,and growth 
B) that is focused on strong,top-down command and control 
C) that is aimed exclusively at period earnings 
D) that discourages physical activity,sports,and recreation to improve employee health and morale

Question 12

Katsu,Inc.has a small car division that operates as a profit center.Below is a partially completed responsibility report for the first quarter. \[\begin{array}{l}
\text { Responsibility Report }\
\begin{array} { | c | c | c | c | c | c | c | } 
\hline & \text { Actual } & \begin{array} { c } 
\text { F1exible } \
\text { Budget }
\end{array} & \begin{array} { c } 
\text { Flexible } \
\text { Budget } \
\text { Variance }
\end{array} & \text { U/F } & \begin{array} { c } 
\text { Percentage } \
\text { Variance }
\end{array} & \text { U/F } \
\hline \begin{array} { c } 
\text { Sales } \
\text { Revenue }
\end{array} & \$ 688,000 & \$ 700,000 & & & & \
\hline \begin{array} { c } 
\text { Variable } \
\text { Expenses }
\end{array} & \underline { 309,000 } & \underline { 322,000 } & & & & \
\hline \begin{array} { c } 
\text { Contribution } \
\text { Margin }
\end{array} & 379,000 & 378,000 & & & & \
\hline \begin{array} { c } 
\text { Traceable } \
\text { Fixed }
\end{array} & & & & & & \
\text { Expenses } & \underline { 372,000 } & \underline { 369,000 } & & & & \
\hline \begin{array} { c } 
\text { Division } \
\text { Margin }
\end{array} & \underline { \$ 7000 } & \underline { \$ 9000 } & & & & \
\hline
\end{array}
\end{array}\]
Compute the percentage variance for the flexible budget variance for sales revenue.(Round your answer to two decimal places.)

Accepted Answer

A) 1.71% F 
B) 1.71% U 
C) 4.04% U 
D) 4.04% F 
A) 1.71% F 
B) 1.71% U 
C) 4.04% U 
D) 4.04% F

Question 13

Noncontrollable costs are the costs that can be influenced by the decisions of a manager.

Accepted Answer

A) True 
 B)False

Question 14

The manager of which of the following centers has the authority to open new stores or close existing ones?

Accepted Answer

A) cost center 
B) profit center 
C) investment center 
D) revenue center 
A) cost center 
B) profit center 
C) investment center 
D) revenue center

Question 15

Divine,Inc.sells cosmetic products in the United States.Which one of the following is most likely to be a cost center for Divine?

Accepted Answer

A) a Divine retail store in Dallas 
B) the Divine human resource department 
C) a Divine kiosk at a mall for selling its products 
D) the Divine product lines 
A) a Divine retail store in Dallas 
B) the Divine human resource department 
C) a Divine kiosk at a mall for selling its products 
D) the Divine product lines

Question 16

Which of the following is a NOT a decision that management must make before calculating ROI and RI?

Accepted Answer

A) Should nonproductive assets be included in the average total asset calculation? 
B) Should gross book value or net book value of assets be used? 
C) Should a simple average of the beginning and ending total liabilities be used? 
D) Should a short term focus be used? 
A) Should nonproductive assets be included in the average total asset calculation? 
B) Should gross book value or net book value of assets be used? 
C) Should a simple average of the beginning and ending total liabilities be used? 
D) Should a short term focus be used?

Question 17

Which of the following is an expanded form of calculating return on investment?

Accepted Answer

A) Profit margin ratio × Asset turnover ratio 
B) Net profit ratio × Inventory turnover ratio 
C) Gross profit ratio × EVA 
D) Asset turnover ratio × Inventory turnover ratio 
A) Profit margin ratio × Asset turnover ratio 
B) Net profit ratio × Inventory turnover ratio 
C) Gross profit ratio × EVA 
D) Asset turnover ratio × Inventory turnover ratio

Question 18

Decentralization may cause the company to duplicate certain costs or activities.

Accepted Answer

A) True 
 B)False

Question 19

Both the sales volume variance and the flexible budget variance help revenue center managers understand why they have exceeded or fallen short of budgeted revenue.

Accepted Answer

A) True 
 B)False

Question 20

In a decentralized company,all the planning and controlling decisions are made by top management.

Accepted Answer

A) True 
 B)False

Which of the following can increase a company's return on investment?

Communicating top management's expectations to segment managers improves goal congruence.

In many cases,the amount of the transfer price does not affect overall company profits.

Which of the following is a key performance indicator of the customer perspective in a balanced scorecard?

Residual income indicates how ________.

Cost center responsibility reports generally focus on the static budget variance.

Which of the following is most likely to appear on the responsibility report for a manufacturing production supervisor?

The term "goal congruence" refers to the ________.

A company's "climate for action" is a corporate culture ________.

Noncontrollable costs are the costs that can be influenced by the decisions of a manager.

The manager of which of the following centers has the authority to open new stores or close existing ones?

Divine,Inc.sells cosmetic products in the United States.Which one of the following is most likely to be a cost center for Divine?

Which of the following is a NOT a decision that management must make before calculating ROI and RI?

Which of the following is an expanded form of calculating return on investment?

Decentralization may cause the company to duplicate certain costs or activities.

Both the sales volume variance and the flexible budget variance help revenue center managers understand why they have exceeded or fallen short of budgeted revenue.

In a decentralized company,all the planning and controlling decisions are made by top management.

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

Which of the following can increase a company's return on investment?

Communicating top management's expectations to segment managers improves goal congruence.

In many cases,the amount of the transfer price does not affect overall company profits.

Which of the following is a key performance indicator of the customer perspective in a balanced scorecard?

Residual income indicates how ________.

Cost center responsibility reports generally focus on the static budget variance.

Which of the following is most likely to appear on the responsibility report for a manufacturing production supervisor?

The term "goal congruence" refers to the ________.

A company's "climate for action" is a corporate culture ________.

Noncontrollable costs are the costs that can be influenced by the decisions of a manager.

The manager of which of the following centers has the authority to open new stores or close existing ones?

Divine,Inc.sells cosmetic products in the United States.Which one of the following is most likely to be a cost center for Divine?

Which of the following is a NOT a decision that management must make before calculating ROI and RI?

Which of the following is an expanded form of calculating return on investment?

Decentralization may cause the company to duplicate certain costs or activities.

Both the sales volume variance and the flexible budget variance help revenue center managers understand why they have exceeded or fallen short of budgeted revenue.

In a decentralized company,all the planning and controlling decisions are made by top management.

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