Question 1

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 2

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 3

Which of the following would most likely be evaluated using residual income?

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 4

The responsibility of the manager of an investment center is to generate profits and to manage the center's invested capital.

Accepted Answer

A) True 
 B)False

Question 5

Recreation Equipment Company has several divisions that are investment centers.Data for the Boat Division and the Trailer Division are shown here:

Accepted Answer

A) True 
 B)False

Question 6

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 7

Carey Inc.provides the following information:   Calculate the return on investment (ROI).

Accepted Answer

A) 10% 
B) 7% 
C) 20% 
D) 30% 
A) 10% 
B) 7% 
C) 20% 
D) 30%

Question 8

Brad Turret,one of the managers of a multi-national company,is responsible for generating revenues and controlling costs in order to increase the operating income of his division.However,he is not concerned about investment-related decisions.Brad is most likely to be the manager of a(n)________.

Accepted Answer

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

Question 9

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

Accepted Answer

A) hours of employee training 
B) number of warranty claims 
C) percentage of market share 
D) return on investment 
A) hours of employee training 
B) number of warranty claims 
C) percentage of market share 
D) return on investment

Question 10

Johnson Construction Materials Company has a sales office which sells concrete culvert pipes to property developers.The sales office is a revenue center and must prepare a monthly performance report.Below is the partially completed performance report.  
- The company uses management by exception to address flexible budget variances.On which product type would the company focus first?

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 11

Huston Company,a manufacturer of office supplies,provides the following financial information:  
- Calculate the return on investment (ROI)for the pencil division.

Accepted Answer

A) 17.8% 
B) 16.3% 
C) 15.9% 
D) 14.2% 
A) 17.8% 
B) 16.3% 
C) 15.9% 
D) 14.2%

Question 12

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 13

Johnson Construction Materials Company has a sales office which sells concrete culvert pipes to property developers.The sales office is a revenue center and must prepare a monthly performance report.It has provided the following information.  
- What is the flexible budget variance for the 40 inch pipe?

Accepted Answer

A) $1,850 U 
B) $3,000 F 
C) $10,000 U 
D) $1,500 F 
A) $1,850 U 
B) $3,000 F 
C) $10,000 U 
D) $1,500 F

Question 14

Companies evaluate investment centers using the same measures as the profit centers.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

Which of the following statements most accurately describes residual income?

Accepted Answer

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

Question 17

Recreation Equipment Company has several divisions that are investment centers.Data for the Boat Division and the Trailer Division are shown here:   Which of the following statements would be the most meaningful interpretation of this data?

Accepted Answer

A) The Boat Division's performance is better than that of the Trailer Division because it has higher assets. 
B) The Boat Division uses its assets less efficiently than the Trailer Division because it has a lower ROI. 
C) The Boat Division shows a more efficient use of assets than the Trailer Division because it has a higher operating income. 
D) The Boat Division is financially more successful than the Trailer Division because it shows an increase in assets. 
A) The Boat Division's performance is better than that of the Trailer Division because it has higher assets. 
B) The Boat Division uses its assets less efficiently than the Trailer Division because it has a lower ROI. 
C) The Boat Division shows a more efficient use of assets than the Trailer Division because it has a higher operating income. 
D) The Boat Division is financially more successful than the Trailer Division because it shows an increase in assets.

Question 18

Huston Company,a manufacturer of office supplies,provides the following financial information:   
-Calculate the return on investment (ROI)for the pen division.

Accepted Answer

A) 13.4% 
B) 16.3% 
C) 17.9% 
D) 18.2% 
A) 13.4% 
B) 16.3% 
C) 17.9% 
D) 18.2%

Question 19

The return on investment of a company is a measure of profitability and efficiency.

Accepted Answer

A) True 
 B)False

Question 20

To evaluate the performance of an investment center,a business needs key performance indicators that measure ________.

Accepted Answer

A) manufacturing efficiency and product defect rate 
B) operating income and efficient use of assets 
C) customer satisfaction and market share 
D) generation of sales revenues and control of operating expenses 
A) manufacturing efficiency and product defect rate 
B) operating income and efficient use of assets 
C) customer satisfaction and market share 
D) generation of sales revenues and control of operating expenses

Exam 24: Responsibility Accounting and Performance Evaluation

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

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

Which of the following would most likely be evaluated using residual income?

The responsibility of the manager of an investment center is to generate profits and to manage the center's invested capital.

Recreation Equipment Company has several divisions that are investment centers.Data for the Boat Division and the Trailer Division are shown here:

The term goal congruence refers to the ________.

Carey Inc.provides the following information: Calculate the return on investment (ROI).

Brad Turret,one of the managers of a multi-national company,is responsible for generating revenues and controlling costs in order to increase the operating income of his division.However,he is not concerned about investment-related decisions.Brad is most likely to be the manager of a(n)________.

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

Huston Company,a manufacturer of office supplies,provides the following financial information: - Calculate the return on investment (ROI)for the pencil division.

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

Companies evaluate investment centers using the same measures as the profit centers.

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

Which of the following statements most accurately describes residual income?

Recreation Equipment Company has several divisions that are investment centers.Data for the Boat Division and the Trailer Division are shown here: Which of the following statements would be the most meaningful interpretation of this data?

Huston Company,a manufacturer of office supplies,provides the following financial information: -Calculate the return on investment (ROI)for the pen division.

The return on investment of a company is a measure of profitability and efficiency.

To evaluate the performance of an investment center,a business needs key performance indicators that measure ________.

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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