Exam 24: Responsibility Accounting and Performance Evaluation

Revenue center responsibility reports show all costs incurred by the department and are useful when management needs to know the full cost of operating the department.

The performance evaluation system should provide incentives to segment managers for coordinating the activities of the subunits and directing them toward the overall company goals. Which of the following performance measurement goals has been described by this statement?

Fill in the blank with the phrase that best completes the sentence. -The gift shop at the local aquarium is a(n) ________.

Divine, Inc. sells cosmetic products in the United States. Which one of the following is most likely to be a cost center for Divine?

The financial perspective of the balanced scorecard is concerned with ________.

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

A cost-based transfer price considers the cost of producing the goods when determining the price.

The primary objective in setting transfer prices is to

Raven, Inc. has a division that manufactures a component that sells for $190 and has a variable cost of $35. Another division of the company wants to purchase the component. Fixed cost per unit of the component is $22. What is the minimum transfer price if the division is operating below its capacity?

Operating income alone does not indicate how efficiently a segment is using its assets.

The performance reports of ________ contain actual and budgeted information on both their revenues and costs.

A profit center performance report includes both revenues and expenses.

Goal congruence can be achieved when ________.

In addition to considering both the division's operating income and its average total assets, residual income incorporates top management's target rate of return.

An effective performance evaluation system will ________.

Sales revenue growth, gross margin growth, and return on investment are the key performance indicators for the ________.

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

Flexible budgets use budgeted (or standard) costs at the actual level of activity.

Which of the following is NOT an advantage of decentralization?

Barrera Corporation provides the following financial information: Minimum acceptable operating income \ 556,600 Average total assets \ 2,000,000 Operating income \ 708,000 Return on investment 35.40\% Net sales \ 900,000 Calculate the target rate of return. (Round your answer to two decimal places.)