Question 1

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 2

The manager of which of the following centers has the authority to open new stores or close old 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 3

Flexible budgets use budgeted costs at the actual level of activity.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following statements most accurately describes the company's "climate for action?"

Accepted Answer

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

Question 5

When a division is operating at full capacity,the transfer price must be ________.

Accepted Answer

A) based on opportunity cost 
B) a market-based transfer price 
C) a cost-based transfer price 
D) total manufacturing cost 
A) based on opportunity cost 
B) a market-based transfer price 
C) a cost-based transfer price 
D) total manufacturing cost

Question 6

The payroll department of a manufacturing company is most likely to be a(n)________.

Accepted Answer

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

Question 7

A system of evaluating the performance of each responsibility center and its manager is known as a responsibility accounting system.

Accepted Answer

A) True 
 B)False

Question 8

The Return on Investment (ROI)formula focuses on the amount of operating income earned before other revenue/expense items such as interest expense.

Accepted Answer

A) True 
 B)False

Question 9

The manager of a revenue center is responsible for generating profits.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is the correct formula for the profit margin ratio?

Accepted Answer

A) Net profit ÷ Sales 
B) Net sales ÷ Average total assets 
C) Net profit × Capital invested 
D) Operating income ÷ Net sales 
A) Net profit ÷ Sales 
B) Net sales ÷ Average total assets 
C) Net profit × Capital invested 
D) Operating income ÷ Net sales

Question 11

WAX-D Inc.has a division that manufactures a component that sells for $150 and has a variable cost of $45.Another division of the company wants to purchase the component.Fixed cost per unit of component is $25.What is the minimum transfer price if the division is operating below its capacity?

Accepted Answer

A) $50 
B) $45 
C) $70 
D) $40 
A) $50 
B) $45 
C) $70 
D) $40

Question 12

Parkinson Ladders Company provides the following financial information:   Calculate return on investment based on the information given above.

Accepted Answer

A) 6.3% 
B) 5.3% 
C) 6.9% 
D) 7.2% 
A) 6.3% 
B) 5.3% 
C) 6.9% 
D) 7.2%

Question 13

One part of the balanced scorecard helps management answer the question,"How do we look to shareholders?" Which of the four perspectives is being described here?

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 14

Which of the following is a responsibility that is common to the managers of cost,profit,and investment centers?

Accepted Answer

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

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

Question 16

WAX-D Inc.has a division that manufactures a component that sells for $150 and has a variable cost of $45.Another division of the company wants to purchase the component.Fixed cost per unit of component is $25.What is the maximum transfer price if the division is operating below its capacity?

Accepted Answer

A) $70 
B) $170 
C) $150 
D) $30 
A) $70 
B) $170 
C) $150 
D) $30

Question 17

The product line of a manufacturing company is most likely to be considered as a(n)________.

Accepted Answer

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

Question 18

The manager of a profit center is responsible for generating revenues and managing the center's invested capital.

Accepted Answer

A) True 
 B)False

Question 19

Return on Investment (ROI)measures the profitability of an investment center,not efficiency.

Accepted Answer

A) True 
 B)False

Question 20

Sun Inc.has average total assets of $500,000.The annual operating income of the company is $100,000.The target rate of return for the company is 18%.Calculate the residual income (RI).

Accepted Answer

A) $90,000 
B) $400,000 
C) $25,000 
D) $10,000 
A) $90,000 
B) $400,000 
C) $25,000 
D) $10,000

Exam 24: Responsibility Accounting and Performance Evaluation

A high rate of employee turnover indicates that ________.

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

Flexible budgets use budgeted costs at the actual level of activity.

Which of the following statements most accurately describes the company's "climate for action?"

When a division is operating at full capacity,the transfer price must be ________.

The payroll department of a manufacturing company is most likely to be a(n)________.

A system of evaluating the performance of each responsibility center and its manager is known as a responsibility accounting system.

The Return on Investment (ROI)formula focuses on the amount of operating income earned before other revenue/expense items such as interest expense.

The manager of a revenue center is responsible for generating profits.

Which of the following is the correct formula for the profit margin ratio?

WAX-D Inc.has a division that manufactures a component that sells for $150 and has a variable cost of $45.Another division of the company wants to purchase the component.Fixed cost per unit of component is $25.What is the minimum transfer price if the division is operating below its capacity?

Parkinson Ladders Company provides the following financial information: Calculate return on investment based on the information given above.

One part of the balanced scorecard helps management answer the question,"How do we look to shareholders?" Which of the four perspectives is being described here?

Which of the following is a responsibility that is common to the managers of cost,profit,and investment centers?

Which of the following is a disadvantage of decentralization?

WAX-D Inc.has a division that manufactures a component that sells for $150 and has a variable cost of $45.Another division of the company wants to purchase the component.Fixed cost per unit of component is $25.What is the maximum transfer price if the division is operating below its capacity?

The product line of a manufacturing company is most likely to be considered as a(n)________.

The manager of a profit center is responsible for generating revenues and managing the center's invested capital.

Return on Investment (ROI)measures the profitability of an investment center,not efficiency.

Sun Inc.has average total assets of $500,000.The annual operating income of the company is $100,000.The target rate of return for the company is 18%.Calculate the residual income (RI).

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

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