Question 1

Which of the following managers is likely to have the most different responsibilities for a company?

Accepted Answer

A) the manager of a cost center 
B) the manager of a profit center 
C) the manager of an investment center 
D) the manager of a revenue center 
A) the manager of a cost center 
B) the manager of a profit center 
C) the manager of an investment center 
D) the manager of a revenue center C

Question 2

Which of the following is the correct formula for calculating residual income (RI)?

Accepted Answer

A) Weighted average cost of capital - Net operating profit after tax 
B) Operating income - Minimum acceptable operating income 
C) Historical cost of assets - Accumulated depreciation 
D) Operating income ÷ Average assets 
A) Weighted average cost of capital - Net operating profit after tax 
B) Operating income - Minimum acceptable operating income 
C) Historical cost of assets - Accumulated depreciation 
D) Operating income ÷ Average assets B

Question 3

Kurtz Logistics provides the following information:  
- What is the company's residual income (RI)?

Accepted Answer

A) $(900,000) 
B) $950,000 
C) $(450,000) 
D) $1,050,000 
A) $(900,000) 
B) $950,000 
C) $(450,000) 
D) $1,050,000 D

Question 4

Responsibility report for revenue centers shows all costs incurred by the department and is useful when management needs to know the total cost of operating the department.

Accepted Answer

A) True 
 B)False

Question 5

In a ________,the manager is responsible for generating revenues and controlling costs.

Accepted Answer

A) cost center 
B) profit center 
C) revenue center 
D) transfer pricing center 
A) cost center 
B) profit center 
C) revenue center 
D) transfer pricing center

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

Opportunity cost is the benefit ________.

Accepted Answer

A) received by selling goods on behalf of another division 
B) received by selling goods to one of the other divisions within the company 
C) foregone by purchasing goods at a price lower than its total manufacturing cost 
D) foregone by choosing an alternate course of action 
A) received by selling goods on behalf of another division 
B) received by selling goods to one of the other divisions within the company 
C) foregone by purchasing goods at a price lower than its total manufacturing cost 
D) foregone by choosing an alternate course of action

Question 8

Uniox Inc.intends to increase its profits by 50% in the next financial year.Which of the following is most likely to be a lead indicator in Uniox's performance report?

Accepted Answer

A) return on investment 
B) number of repeat customers 
C) net profit margin 
D) sales revenue growth 
A) return on investment 
B) number of repeat customers 
C) net profit margin 
D) sales revenue growth

Question 9

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

Question 10

The transfer price is the transaction amount of one unit of goods when the transaction occurs between the company and its customers.

Accepted Answer

A) True 
 B)False

Question 11

Kurtz Logistics provides the following information:  
- What is the company's return on investment (ROI)?

Accepted Answer

A) 95.6% 
B) 75.4% 
C) 83.3% 
D) 65.5% 
A) 95.6% 
B) 75.4% 
C) 83.3% 
D) 65.5%

Question 12

Which of the following perspectives of the balanced scorecard focuses on revenue growth and productivity?

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 13

To adequately evaluate an investment center's financial performance,summary performance measures that include both the division's operating income and its assets are required.

Accepted Answer

A) True 
 B)False

Question 14

Milliken Inc.provides the following information:   Calculate the sales volume variance.

Accepted Answer

A) $31,500 F 
B) $31,500 U 
C) $75,000 U 
D) $106,500 F 
A) $31,500 F 
B) $31,500 U 
C) $75,000 U 
D) $106,500 F

Question 15

A market-based transfer price considers the ________ when determining the transfer price.

Accepted Answer

A) variable costs 
B) sales price of goods 
C) cost of the goods 
D) contribution margin 
A) variable costs 
B) sales price of goods 
C) cost of the goods 
D) contribution margin

Question 16

Huntswell Corporation has two major divisions-Agricultural Products and Industrial Products.It provides the following information for the year 2014.   Calculate the residual income for the Agriculture division.

Accepted Answer

A) $5,500 
B) $4,400 
C) $2,500 
D) $1,800 
A) $5,500 
B) $4,400 
C) $2,500 
D) $1,800

Question 17

Sales revenue growth,gross margin growth,and return on investment are the key performance indicators (KPIs)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 18

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 19

When a division is operating at full capacity,the transfer price can be any of variable cost,full cost or cost plus a mark-up.

Accepted Answer

A) True 
 B)False

Question 20

A cost-based transfer price considers the cost of the producing the goods when determining the price.

Accepted Answer

A) True 
 B)False

Exam 24: Responsibility Accounting and Performance Evaluation

Which of the following managers is likely to have the most different responsibilities for a company?

Which of the following is the correct formula for calculating residual income (RI)?

Kurtz Logistics provides the following information: - What is the company's residual income (RI)?

Responsibility report for revenue centers shows all costs incurred by the department and is useful when management needs to know the total cost of operating the department.

In a ________,the manager is responsible for generating revenues and controlling costs.

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

Opportunity cost is the benefit ________.

Uniox Inc.intends to increase its profits by 50% in the next financial year.Which of the following is most likely to be a lead indicator in Uniox's performance report?

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

The transfer price is the transaction amount of one unit of goods when the transaction occurs between the company and its customers.

Kurtz Logistics provides the following information: - What is the company's return on investment (ROI)?

Which of the following perspectives of the balanced scorecard focuses on revenue growth and productivity?

To adequately evaluate an investment center's financial performance,summary performance measures that include both the division's operating income and its assets are required.

Milliken Inc.provides the following information: Calculate the sales volume variance.

A market-based transfer price considers the ________ when determining the transfer price.

Huntswell Corporation has two major divisions-Agricultural Products and Industrial Products.It provides the following information for the year 2014. Calculate the residual income for the Agriculture division.

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

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.

When a division is operating at full capacity,the transfer price can be any of variable cost,full cost or cost plus a mark-up.

A cost-based transfer price considers the cost of the producing the goods when determining the price.

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Internal Control and Cash

Receivables

Plant Assets, natural Resources, and Intangibles

Investments

Current Liabilities and Payroll

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

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

Accounting Information Systems

Filters