Question 1

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

Question 2

List the two factors that the financial evaluation of investment centers must measure.

Accepted Answer

1.	How much operating income t

Question 3

Ryota Products has an industrial mower division that operates as a profit center. Below is a partially completed responsibility report for the first quarter.  $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\text { Responsibility Revort }$
$$\begin{array} { |c | c | c | c | c | c | c| } 
\hline & \text { Actual } & \begin{array} { c } 
\text { Flexible } \
\text { Budget }
\end{array} & \begin{array} { c } 
\text { Flexible } \
\text { Budget } \
\text { Variance }
\end{array} & \text { U/F } & \begin{array} { c } 
\text { Percentage } \
\text { Variance }
\end{array} & \text { U/F } \
\hline \begin{array} { c } 
\text { Sales } \
\text { Revenue }
\end{array} & \$ 688,000 & \$ 703,000 & & & & \
\hline \begin{array} { c } 
\text { Variable } \
\text { Expenses }
\end{array} & \underline { 309,000 } & \underline { 320,000 } & & & & \
\hline \begin{array} { c } 
\text { Contribution } \
\text { Margin }
\end{array} & 379,000 & 383,000 & & & & \
\hline \begin{array} { c } 
\text { Traceable } \
\text { Fixed } \
\text { Expenses }
\end{array} & \underline { 371,000 } & \underline { 368,000 } & & & & \
\hline \begin{array} { c } 
\text { Division } \
\text { Margin }
\end{array} & \$ 8000 & \underline { \$ 15,000 } & & & & \
\hline
\end{array}$$ Compute the percentage variance for the flexible budget variance for traceable fixed expenses. (Round your answer to two decimal places.)

Accepted Answer

A)  0.82% F 
B)  0.82% U 
C)  1.04% U 
D)  1.04% F 
A)  0.82% F 
B)  0.82% U 
C)  1.04% U 
D)  1.04% F

Question 4

Which of the following is an advantage of decentralization?

Accepted Answer

A)  Managers' motivation and retention can be increased by empowering segment managers to make decisions. 
B)  Certain costs of activities may be duplicated. 
C)  Customer response time is generally decreased. 
D)  Top management can concentrate on decisions that relate to day-to-day operations of segments. 
A)  Managers' motivation and retention can be increased by empowering segment managers to make decisions. 
B)  Certain costs of activities may be duplicated. 
C)  Customer response time is generally decreased. 
D)  Top management can concentrate on decisions that relate to day-to-day operations of segments.

Question 5

Define market-based transfer price. When should market-based transfer pricing be used? Explain your answer.

Accepted Answer

Market-based transfer price is a transfe

Question 6

Step Up Ladders Company provides the following financial information: $$\begin{array} { | l | r | } 
\hline \text { Income from operations } & \$ 400,000 \
\hline \text { Interest expense } & 47,000 \
\hline \text { Gains/(losses) on sale of equipment } & 3000 \
\hline \text { Net income } & 350,000 \
\hline \text { Total assets at Jan. 1 } & 2,600,000 \
\hline \text { Total assets at Dec .31 } & 3,400,000 \
\hline
\end{array}$$ Calculate return on investment based on the information given above. (Round your answer to two decimal places.)

Accepted Answer

A)  15.38% 
B)  11.67% 
C)  13.33% 
D)  11.76% 
A)  15.38% 
B)  11.67% 
C)  13.33% 
D)  11.76%

Question 7

The limitations of financial performance measures reinforce the importance of the balanced scorecard.

Accepted Answer

A) True 
 B)False

Question 8

Trendables, a manufacturer of electronic jewelry, had the following results from its Subunit W:
 $$\begin{array} { | l | r | r | r | l | } 
\hline \text { Subunit W } & \begin{array} { c } 
\text { Actual } \
\text { Results }
\end{array} & \begin{array} { c } 
\text { Flexible } \
\text { Budget }
\end{array} & \begin{array} { c } 
\text { Flexible } \
\text { Budget } \
\text { Variance } \
\text { (F or U) }
\end{array} & \begin{array} { c } 
\text { \% of Variance } \
\text { (F or U) }
\end{array} \
\hline \text { Net Sales Revenue } & \$ 365,000 & \$ 340,000 & & \
\hline \text { Variable Expenses } & \underline { 151,000 } & \underline { 137,000 } & & \
\hline \text { Contribution Margin } & 214,000 & 203,000 & & \
\hline \text { Traceable Fixed Expenses } & \underline { 50,000 } & \underline { 37,000 } & & \
\hline \text { Divisional Segment Margin } & \$ 164,000 & \$ 166,000 & & \
\hline
\end{array}$$ Requirements:
1. Complete the performance evaluation report for this subunit (round to two decimal places).
2. Based on the data presented and your knowledge of the company, what type of responsibility center is this subunit?
3. Which items should be investigated if management's decision criteria is to investigate all variances equal to or exceeding $10,000 and 10% (both criteria must be met)?
4. Is it possible that the variances are due to a higher-than-expected sales volume?
5. Which balanced scorecard perspective is being addressed by this performance report? Is it a lead or lag indicator?

Accepted Answer

Requirement 1:
 \[\begin{array} { | l |

Which of the following is a disadvantage of decentralization?

List the two factors that the financial evaluation of investment centers must measure.

Which of the following is an advantage of decentralization?

Define market-based transfer price. When should market-based transfer pricing be used? Explain your answer.

The limitations of financial performance measures reinforce the importance of the balanced scorecard.

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

Cost Volume Profit Analysis

Variable Costing

Master Budgets

Flexible Budgets and Standard Cost Systems

Short-Term Business Decisions

Capital Investment Decisions

Understanding Accounting Information Systems and their Components

Filters

Exam 24: Responsibility Accounting and Performance Evaluation

Which of the following is a disadvantage of decentralization?

List the two factors that the financial evaluation of investment centers must measure.

Which of the following is an advantage of decentralization?

Define market-based transfer price. When should market-based transfer pricing be used? Explain your answer.

The limitations of financial performance measures reinforce the importance of the balanced scorecard.

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

Cost Volume Profit Analysis

Variable Costing

Master Budgets

Flexible Budgets and Standard Cost Systems

Short-Term Business Decisions

Capital Investment Decisions

Understanding Accounting Information Systems and their Components

Filters