Question 1

The formula to calculate EVA is

Accepted Answer

A) Net operating profit - invested capital x weighted average cost of capital. 
B) Contribution margin - invested capital x weighted average cost of capital. 
C) Net operating profit - average capital assets x internal rate of return. 
D) Contribution margin - average capital assets x internal rate of return. 
A) Net operating profit - invested capital x weighted average cost of capital. 
B) Contribution margin - invested capital x weighted average cost of capital. 
C) Net operating profit - average capital assets x internal rate of return. 
D) Contribution margin - average capital assets x internal rate of return.

Question 2

In preparing a segment margin income statement,instead of looking for a certain phrase that describes the cost,look for the reason the cost was incurred.

Accepted Answer

A) True 
 B)False

Question 3

Ruhlen Corporation's Small Craft division reported a net operating loss of $2,300,000 in the most recent reporting period.The division absorbed common fixed corporate expenses of $2,500,000.The division's segment margin is
a.$2,500,000.
b.$2,300,000.
c.$200,000.
d.$4,800,000.

Accepted Answer

$2,500,000

Question 4

A profit center manager's performance is typically measured based on the

Accepted Answer

A) Direct material and direct labor variances only. 
B) Overall profit compared to the flexible budget. 
C) ROI. 
D) None of these answer choices are correct. 
A) Direct material and direct labor variances only. 
B) Overall profit compared to the flexible budget. 
C) ROI. 
D) None of these answer choices are correct.

Question 5

Lakeside Industries' operates as a decentralized organization.Its fishing gear division manufactures fishing lures.The fiberglass division manufactures one component needed by the fishing gear division.The fishing gear division has been purchasing the component from an outside supplier,but top management has suggested that all purchases be made from another Lakeside division if possible.Detailed
a.What is the transfer price if Lakeside uses the cost-based price?
b.What is the minimum transfer price?

Accepted Answer

a.$1.60 b.

Question 6

Generally accepted accounting principles require companies to report selected information about operating segments in the annual report.

Accepted Answer

A) True 
 B)False

Question 7

Gil Jargon Corporation makes lawn mowers.The Battery division makes a battery that the Electric Motor division needs for a new product.The Battery division's variable cost of manufacturing the battery is $16 per
a.If the Battery Division has adequate excess capacity to supply the 50,000 batteries what is the minimum transfer price?
b.If the Battery Division has adequate excess capacity to supply the 50,000 batteries,what is the range of prices that is likely to be acceptable to both the Battery division and the Electric Motor division?

Accepted Answer

a.$16 + $0

Question 8

Which of the following is not a step in calculating EVA?

Accepted Answer

A) Calculate net operating profit 
B) Calculate invested capital 
C) Calculate average operating assets 
D) Calculate the weighted average cost of capital 
A) Calculate net operating profit 
B) Calculate invested capital 
C) Calculate average operating assets 
D) Calculate the weighted average cost of capital

Question 9

When evaluating managerial actions,which of the following alternate measures overcomes many of the problems with ROI?

Accepted Answer

A) Residual Income 
B) EVA 
C) Both Residual Income and EVA. 
D) Neither Residual Income nor EVA. 
A) Residual Income 
B) EVA 
C) Both Residual Income and EVA. 
D) Neither Residual Income nor EVA.

Question 10

Common fixed costs are most likely the responsibility of

Accepted Answer

A) Top management only. 
B) Managers who have no control of them. 
C) Investment center managers only. 
D) Cost center managers only. 
A) Top management only. 
B) Managers who have no control of them. 
C) Investment center managers only. 
D) Cost center managers only.

Question 11

A manager who is responsible for both the revenue and the cost incurred in generating a product is managing an investment center.

Accepted Answer

A) True 
 B)False

Question 12

Cody Corporation's Southern region operates as an investment center.The division's director is considering investing in machinery which costs of $100,000 and is expected to generate $32,000 in additional operating income.If the residual income for the equipment is $12,000,what is the division's required rate of return?

Accepted Answer

A) 12% 
B) 20% 
C) 32% 
D) None of these answer choices are correct 
A) 12% 
B) 20% 
C) 32% 
D) None of these answer choices are correct

Question 13

The Logan Company reported the following operating data for the past year:
   Required: 
a.Calculate Logan's margin.
b.Calculate Logan's asset turnover.
c.Calculate Logan's ROI.

Accepted Answer

a.$30,000/$600,000 =

Question 14

When a small business begins,it is generally simple for the owner or manager to stay on top of everything going on in the business.However,as the business adds more product lines and locations and hires more employees,it becomes more and more difficult for top management to remain informed about the company's activities.
Required:
a.What is decentralization?
b.What are four advantages of decentralization?
c.Identify and describe the three organizational centers of responsibility under a unit manager's control.

Accepted Answer

a.Decentralization is an organizational

Question 15

What is really needed to measure a segment's performance is an income statement that highlights

Accepted Answer

A) Variable versus fixed costs. 
B) Product versus period costs. 
C) All the elements under the segment manager's control. 
D) None of these answer choices are correct. 
A) Variable versus fixed costs. 
B) Product versus period costs. 
C) All the elements under the segment manager's control. 
D) None of these answer choices are correct.

Question 16

An investment center manager's performance is typically measured based on the

Accepted Answer

A) True 
 B)False

Question 17

Breton Corporation's Longboat division's segment margin as a percentage of net sales is 12% for the current reporting period.The division has net sales revenue of $2,500,000.Operating assets were $800,000 at the beginning of the period and $1,200,000 at the end.What is the division's asset turnover?

Accepted Answer

A) 2.08 
B) 2.8 
C) 2.5 
D) 3.13 
A) 2.08 
B) 2.8 
C) 2.5 
D) 3.13

Question 18

What is EVA and how is it calculated?

Accepted Answer

Economic Value Added EVA is a performanc

Question 19

Which of the following is the formula for calculating residual income?

Accepted Answer

A) Operating income - average assets 
B) Operating income plus interest and depreciation expense 
C) Operating income - average assets x required minimum rate of return 
D) None of these answer choices are correct. 
A) Operating income - average assets 
B) Operating income plus interest and depreciation expense 
C) Operating income - average assets x required minimum rate of return 
D) None of these answer choices are correct.

Question 20

An income statement presented in a functional format is not very helpful in managerial decision making because

Accepted Answer

A) It does not show which expenses are fixed and which are variable. 
B) It does not show which expenses are direct and which are indirect. 
C) It does not show which expenses are product costs and which are period costs. 
D) It does not show which expenses are common and which are allocated. 
A) It does not show which expenses are fixed and which are variable. 
B) It does not show which expenses are direct and which are indirect. 
C) It does not show which expenses are product costs and which are period costs. 
D) It does not show which expenses are common and which are allocated.

The formula to calculate EVA is

In preparing a segment margin income statement,instead of looking for a certain phrase that describes the cost,look for the reason the cost was incurred.

Ruhlen Corporation's Small Craft division reported a net operating loss of $2,300,000 in the most recent reporting period.The division absorbed common fixed corporate expenses of $2,500,000.The division's segment margin is a.$2,500,000. b.$2,300,000. c.$200,000. d.$4,800,000.

A profit center manager's performance is typically measured based on the

Generally accepted accounting principles require companies to report selected information about operating segments in the annual report.

Which of the following is not a step in calculating EVA?

When evaluating managerial actions,which of the following alternate measures overcomes many of the problems with ROI?

Common fixed costs are most likely the responsibility of

A manager who is responsible for both the revenue and the cost incurred in generating a product is managing an investment center.

The Logan Company reported the following operating data for the past year: Required: a.Calculate Logan's margin. b.Calculate Logan's asset turnover. c.Calculate Logan's ROI.

What is really needed to measure a segment's performance is an income statement that highlights

An investment center manager's performance is typically measured based on the

Breton Corporation's Longboat division's segment margin as a percentage of net sales is 12% for the current reporting period.The division has net sales revenue of $2,500,000.Operating assets were $800,000 at the beginning of the period and $1,200,000 at the end.What is the division's asset turnover?

What is EVA and how is it calculated?

Which of the following is the formula for calculating residual income?

An income statement presented in a functional format is not very helpful in managerial decision making because

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

The formula to calculate EVA is

In preparing a segment margin income statement,instead of looking for a certain phrase that describes the cost,look for the reason the cost was incurred.

Ruhlen Corporation's Small Craft division reported a net operating loss of $2,300,000 in the most recent reporting period.The division absorbed common fixed corporate expenses of $2,500,000.The division's segment margin is a.$2,500,000. b.$2,300,000. c.$200,000. d.$4,800,000.

A profit center manager's performance is typically measured based on the

Generally accepted accounting principles require companies to report selected information about operating segments in the annual report.

Which of the following is not a step in calculating EVA?

When evaluating managerial actions,which of the following alternate measures overcomes many of the problems with ROI?

Common fixed costs are most likely the responsibility of

A manager who is responsible for both the revenue and the cost incurred in generating a product is managing an investment center.

The Logan Company reported the following operating data for the past year: Required: a.Calculate Logan's margin. b.Calculate Logan's asset turnover. c.Calculate Logan's ROI.

What is really needed to measure a segment's performance is an income statement that highlights

An investment center manager's performance is typically measured based on the

What is EVA and how is it calculated?

Which of the following is the formula for calculating residual income?

An income statement presented in a functional format is not very helpful in managerial decision making because

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