Question 1

In a responsibility accounting environment,which of the following managers has his or her performance typically measured based on the

Accepted Answer

A) Cost center manager 
B) Profit center manager 
C) Investment center manager 
D) Revenue center manager 
A) Cost center manager 
B) Profit center manager 
C) Investment center manager 
D) Revenue center manager

Question 2

Bethel Corporation's Ambulance division reported net operating profits of $1,500,000 during the year.The division absorbed common fixed corporate expenses of $900,000.The division's segment margin is
a.$600,000.
b.$900,000.
c.$600,000.
d.$2,400,000.

Accepted Answer

$1,500,000

Question 3

-In a decentralized organization,upper managers need a way to evaluate the performance of

Accepted Answer

The answer of  
-In a decentralized organization,upper managers need...

Question 4

Holding all other things equal,the ROI is affected by a change in:

Accepted Answer

The answer of Holding all other things equal,the ROI is...

Question 5

For a small business producing a single product,having one location and few employees,the organizational structure that is most appropriate is

Accepted Answer

A) Centralized. 
B) Decentralized. 
C) Divisional stability. 
D) Segmented decision making. 
A) Centralized. 
B) Decentralized. 
C) Divisional stability. 
D) Segmented decision making.

Question 6

To increase both margin and asset turnover

Accepted Answer

A) Increase sales revenue. 
B) Decrease expenses. 
C) Both increase sales revenue and decrease expenses. 
D) Neither increase sales revenue nor decrease expenses. 
A) Increase sales revenue. 
B) Decrease expenses. 
C) Both increase sales revenue and decrease expenses. 
D) Neither increase sales revenue nor decrease expenses.

Question 7

Which of the following is not a measure on which transfer prices can be based?

Accepted Answer

A) Market-based price 
B) Cost-based price 
C) Negotiated price 
D) All of these answer choices are measures on which transfer prices can be based. 
A) Market-based price 
B) Cost-based price 
C) Negotiated price 
D) All of these answer choices are measures on which transfer prices can be based.

Question 8

Just because a project's residual income is positive,that does not mean that it is earning a return in excess of the corporate minimum.

Accepted Answer

A) True 
 B)False

Question 9

Jumbo Industries is considering the purchase of equipment costing $80,000.The company has a 12% required minimum rate of return.The equipment is expected to generate $20,000 in additional operating income.Jumbo's tax rate is 25% and its weighted-average cost of capital is 12%.What is the equipment's EVA?

Accepted Answer

A) $2,400 
B) $5,400 
C) $7,200 
D) $9,600 
A) $2,400 
B) $5,400 
C) $7,200 
D) $9,600

Question 10

The Sphinx division of Shepherd Corporation generated net revenues of $12,000,000 and variable expenses of $7,700,000.If common corporate fixed costs were $1,000,000 and the segment margin was $1,300,000,what are the division's direct fixed expenses?
a.$4,300,000
b.$3,000,000
c.$300,000
d.The answer cannot be determined from the information given.

Accepted Answer

$12,000,000 - $7,700

Question 11

-In a decentralized organization,upper managers need a way to evaluate the performance of

Accepted Answer

The answer of  
-In a decentralized organization,upper managers need...

Question 12

Which of the following is the most unbiased transfer price?

Accepted Answer

A) Market-based price 
B) Cost-based price 
C) Negotiated price 
D) Intercompany relay price 
A) Market-based price 
B) Cost-based price 
C) Negotiated price 
D) Intercompany relay price

Question 13

The organizational structure in which decision-making authority is dispersed throughout the organization is called

Accepted Answer

A) Centralized. 
B) Decentralized. 
C) Divisional stability. 
D) Segmented decision making. 
A) Centralized. 
B) Decentralized. 
C) Divisional stability. 
D) Segmented decision making.

Question 14

University Hospital provided the following income statement for two of its divisions: Diagnostic and Outpatient.Both divisions are structured as investment centers.
   The average assets for Diagnostic and Outpatient divisions total $400,000 and $600,000,respectively.The required minimum rate of return for both divisions is 10%.
Required: 
a.Calculate the current residual income for each division.
b.Why is residual income a better measure of performance for managers of investment centers than the overall profit compared to the flexible budget?

Accepted Answer

a.Residual income calculations: Diagnost

Question 15

A cost center manager's performance is measured largely by comparing the actual costs incurred to the flexible budget.

Accepted Answer

A) True 
 B)False

Question 16

Chute Company's Extract division has collected the following information: Normal selling price $2.90 per bottle
Variable product costs 1.25 per bottle
Fixed product costs .50 per bottle
Variable selling and administrative costs .25 per bottle
Production capacity 1,500,000 bottles
Assuming that the division has excess capacity of 300,000 and the Baked Goods division wants to buy 250,000 bottles,the minimum transfer price would be

Accepted Answer

A) $2.90 
B) $2.00 
C) $1.50 
D) $1.15 
A) $2.90 
B) $2.00 
C) $1.50 
D) $1.15

Question 17

Finance theory says that the rate of return required by creditors is the same as the return required by investors.

Accepted Answer

A) True 
 B)False

Question 18

In calculating ROI,the return on investment is based on

Accepted Answer

A) The book value of operating assets. 
B) The fair market value of operating assets. 
C) The historical cost of operating assets. 
D) None of these answer choices are correct. 
A) The book value of operating assets. 
B) The fair market value of operating assets. 
C) The historical cost of operating assets. 
D) None of these answer choices are correct.

Question 19

In calculating EVA,invested capital is the company's total assets minus its total liabilities.

Accepted Answer

A) True 
 B)False

Question 20

A disadvantage of decentralization is that the process does not give lower-level managers practice in developing their decision-making skills.

Accepted Answer

A) True 
 B)False

In a responsibility accounting environment,which of the following managers has his or her performance typically measured based on the

Bethel Corporation's Ambulance division reported net operating profits of $1,500,000 during the year.The division absorbed common fixed corporate expenses of $900,000.The division's segment margin is a.$600,000. b.$900,000. c.$600,000. d.$2,400,000.

-In a decentralized organization,upper managers need a way to evaluate the performance of

Holding all other things equal,the ROI is affected by a change in:

For a small business producing a single product,having one location and few employees,the organizational structure that is most appropriate is

To increase both margin and asset turnover

Which of the following is not a measure on which transfer prices can be based?

Just because a project's residual income is positive,that does not mean that it is earning a return in excess of the corporate minimum.

-In a decentralized organization,upper managers need a way to evaluate the performance of

Which of the following is the most unbiased transfer price?

The organizational structure in which decision-making authority is dispersed throughout the organization is called

A cost center manager's performance is measured largely by comparing the actual costs incurred to the flexible budget.

Finance theory says that the rate of return required by creditors is the same as the return required by investors.

In calculating ROI,the return on investment is based on

In calculating EVA,invested capital is the company's total assets minus its total liabilities.

A disadvantage of decentralization is that the process does not give lower-level managers practice in developing their decision-making skills.

Accounting As a Tool for Management

Cost Behavior and Cost Estimation

Cost-Volume-Profit Analysis and Pricing Decisions

Product Costs and Job Order Costing

Planning and Forecasting

Performance Evaluation: Variance Analysis

Activity-Based Costing and Activity Based Management

Using Accounting Information to Make Managerial Decisions

Capital Budgeting

Performance Evaluation Revisited: a Balanced Approach

Financial Statement Analysis

Statement of Cash Flows

Topic Focus: Process Costing

Topic Focus Variable and Absorption Costing

Topic Focus Standard Costing Systems

Topic Focus Customer Profitability

Filters

Exam 10: Decentralizing and Performance Evaluation

In a responsibility accounting environment,which of the following managers has his or her performance typically measured based on the

Bethel Corporation's Ambulance division reported net operating profits of $1,500,000 during the year.The division absorbed common fixed corporate expenses of $900,000.The division's segment margin is a.$600,000. b.$900,000. c.$600,000. d.$2,400,000.

-In a decentralized organization,upper managers need a way to evaluate the performance of

Holding all other things equal,the ROI is affected by a change in:

For a small business producing a single product,having one location and few employees,the organizational structure that is most appropriate is

To increase both margin and asset turnover

Which of the following is not a measure on which transfer prices can be based?

Just because a project's residual income is positive,that does not mean that it is earning a return in excess of the corporate minimum.

-In a decentralized organization,upper managers need a way to evaluate the performance of

Which of the following is the most unbiased transfer price?

The organizational structure in which decision-making authority is dispersed throughout the organization is called

A cost center manager's performance is measured largely by comparing the actual costs incurred to the flexible budget.

Finance theory says that the rate of return required by creditors is the same as the return required by investors.

In calculating ROI,the return on investment is based on

In calculating EVA,invested capital is the company's total assets minus its total liabilities.

A disadvantage of decentralization is that the process does not give lower-level managers practice in developing their decision-making skills.

Accounting As a Tool for Management

Cost Behavior and Cost Estimation

Cost-Volume-Profit Analysis and Pricing Decisions

Product Costs and Job Order Costing

Planning and Forecasting

Performance Evaluation: Variance Analysis

Activity-Based Costing and Activity Based Management

Using Accounting Information to Make Managerial Decisions

Capital Budgeting

Performance Evaluation Revisited: a Balanced Approach

Financial Statement Analysis

Statement of Cash Flows

Topic Focus: Process Costing

Topic Focus Variable and Absorption Costing

Topic Focus Standard Costing Systems

Topic Focus Customer Profitability

Filters