Question 1

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

Question 2

Accelerated Logistics provides the following information: $$\begin{array} { | l | r | } 
\hline \text { Operating income } & \$ 1,600,000 \
\hline \text { Net sales } & \$ 14,000,000 \
\hline \text { Average total assets } & \$ 1,900,000 \
\hline \text { Management's target rate of return } & 20 \% \
\hline
\end{array}$$ What is the company's profit margin ratio? (Round your answer to two decimal places.)

Accepted Answer

A)  13.57% 
B)  11.43% 
C)  84.21% 
D)  1.10% 
A)  13.57% 
B)  11.43% 
C)  84.21% 
D)  1.10%

Question 3

Communicating top management's expectations to segment managers improves goal congruence.

Accepted Answer

A) True 
 B)False

Question 4

Return on investment measures the profitability of an investment center but not the efficiency in using its assets.

Accepted Answer

A) True 
 B)False

Question 5

Empowering segment managers to make decisions increases managers' motivation and retention.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following best describes the manager of a profit center?

Accepted Answer

A)  The manager is only responsible for controlling costs. 
B)  The manager is responsible for generating profits and efficiently managing the center's invested capital. 
C)  The manager is only responsible for generating revenues. 
D)  The manager is responsible for generating revenues and controlling costs. 
A)  The manager is only responsible for controlling costs. 
B)  The manager is responsible for generating profits and efficiently managing the center's invested capital. 
C)  The manager is only responsible for generating revenues. 
D)  The manager is responsible for generating revenues and controlling costs.

Question 7

Companies in which owners or top executives make all of the planning, directing and controlling decisions are ________ companies.

Accepted Answer

A)  centralized 
B)  decentralized 
C)  formalized 
D)  segmented 
A)  centralized 
B)  decentralized 
C)  formalized 
D)  segmented

Question 8

Both the sales volume variance and the flexible budget variance help revenue center managers understand why they have exceeded or fallen short of budgeted revenue.

Accepted Answer

A) True 
 B)False

Question 9

Regarding controllable costs, which of the following statements is incorrect?

Accepted Answer

A)  The production manager cannot make the decision to replace older equipment. 
B)  All costs are ultimately controllable at the upper levels of management. 
C)  The production manager is not responsible for avoiding waste of direct materials. 
D)  The production manager cannot control all of the costs in his or her department. 
A)  The production manager cannot make the decision to replace older equipment. 
B)  All costs are ultimately controllable at the upper levels of management. 
C)  The production manager is not responsible for avoiding waste of direct materials. 
D)  The production manager cannot control all of the costs in his or her department.

Question 10

Discuss the difference between a centralized company and a decentralized company.

Accepted Answer

In a small company, the owner or top man

Question 11

The responsibility report for a revenue center would compare ________.

Accepted Answer

A)  actual costs to budgeted costs 
B)  actual revenues to budgeted revenues 
C)  actual revenues and costs to budgeted revenues and costs 
D)  actual profits to budgeted profits 
A)  actual costs to budgeted costs 
B)  actual revenues to budgeted revenues 
C)  actual revenues and costs to budgeted revenues and costs 
D)  actual profits to budgeted profits

Question 12

Which of the following managers is likely to have the least amount of responsibilities?

Accepted Answer

A)  the manager of a cost center 
B)  the manager of a profit center 
C)  the manager of an investment center 
D)  the manager of a transfer pricing center 
A)  the manager of a cost center 
B)  the manager of a profit center 
C)  the manager of an investment center 
D)  the manager of a transfer pricing center

Question 13

Uniox, Inc. intends to increase its profits by 50% in the next fiscal year. Which of the following is most likely to be a lag indicator in Uniox's performance report?

Accepted Answer

A)  return on investment 
B)  number of repeat customers 
C)  rate of on-time deliveries 
D)  defect rate 
A)  return on investment 
B)  number of repeat customers 
C)  rate of on-time deliveries 
D)  defect rate

Question 14

Rosales Enterprises has a forklift division that operates as a profit center. Below is a partially completed responsibility report for the first quarter. Complete the responsibility report. (Round percentages to one decimal place.)
 Rosales Enterprises 
Responsibility Report

Accepted Answer

The answer of Rosales Enterprises has a forklift division that...

Question 15

Fill in the blank with the phrase that best completes the sentence.
-A kiosk that sells sunglasses at a local mall is an example of a(n) ________.

Accepted Answer

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

Question 16

A company may prefer to use residual income over return on investment for performance evaluation because ________.

Accepted Answer

A)  residual income is a ratio but return on investment is an absolute figure 
B)  residual income is more likely to lead to goal congruence than return on investment 
C)  residual income is easier to calculate than return on investment 
D)  residual income considers three elements but return on investment considers only two elements 
A)  residual income is a ratio but return on investment is an absolute figure 
B)  residual income is more likely to lead to goal congruence than return on investment 
C)  residual income is easier to calculate than return on investment 
D)  residual income considers three elements but return on investment considers only two elements

Question 17

Which of the following is the correct formula for the profit margin ratio?

Accepted Answer

A)  Net profit / Sales 
B)  Net sales / Average total assets 
C)  Net profit × Capital invested 
D)  Operating income / Net sales 
A)  Net profit / Sales 
B)  Net sales / Average total assets 
C)  Net profit × Capital invested 
D)  Operating income / Net sales

Question 18

The responsibility report for a profit center would compare ________.

Accepted Answer

A)  actual costs to budgeted costs 
B)  actual revenues to budgeted revenues 
C)  actual revenues and costs to budgeted revenues and costs 
D)  actual profits to budgeted profits 
A)  actual costs to budgeted costs 
B)  actual revenues to budgeted revenues 
C)  actual revenues and costs to budgeted revenues and costs 
D)  actual profits to budgeted profits

Question 19

Evergreen Corporation has two major divisions: Agricultural Products and Industrial Products. It provides the following information for the year. $$\begin{array} { | l | r | r | } 
\hline & \text { Agriculture Division } & \text { Industrial Division } \
\hline \text { Net sales } & \$ 140,000 & \$ 1,250,000 \
\hline \text { Operating income } & \$ 17,600 & \$ 218,000 \
\hline \text { Average assets } & \$ 340,000 & \$ 5,500,000 \
\hline
\end{array}$$ Calculate the profit margin ratio for the Industrial Division of the company. (Round your answer to two decimal places.)

Accepted Answer

A)  3.96% 
B)  5.18% 
C)  17.44% 
D)  12.57% 
A)  3.96% 
B)  5.18% 
C)  17.44% 
D)  12.57%

Question 20

One part of the balanced scorecard helps management answer the question, "How do we look to investors and creditors?" Which of the four perspectives is being described with this statement?

Accepted Answer

A)  financial 
B)  customer 
C)  internal business 
D)  learning and growth 
A)  financial 
B)  customer 
C)  internal business 
D)  learning and growth

Exam 24: Responsibility Accounting and Performance Evaluation

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

Accelerated Logistics provides the following information: Operating income \ 1,600,000 Net sales \ 14,000,000 Average total assets \ 1,900,000 Management's target rate of return 20\% What is the company's profit margin ratio? (Round your answer to two decimal places.)

Communicating top management's expectations to segment managers improves goal congruence.

Return on investment measures the profitability of an investment center but not the efficiency in using its assets.

Empowering segment managers to make decisions increases managers' motivation and retention.

Which of the following best describes the manager of a profit center?

Companies in which owners or top executives make all of the planning, directing and controlling decisions are ________ companies.

Both the sales volume variance and the flexible budget variance help revenue center managers understand why they have exceeded or fallen short of budgeted revenue.

Regarding controllable costs, which of the following statements is incorrect?

Discuss the difference between a centralized company and a decentralized company.

The responsibility report for a revenue center would compare ________.

Which of the following managers is likely to have the least amount of responsibilities?

Uniox, Inc. intends to increase its profits by 50% in the next fiscal year. Which of the following is most likely to be a lag indicator in Uniox's performance report?

Rosales Enterprises has a forklift division that operates as a profit center. Below is a partially completed responsibility report for the first quarter. Complete the responsibility report. (Round percentages to one decimal place.) Rosales Enterprises Responsibility Report

Fill in the blank with the phrase that best completes the sentence. -A kiosk that sells sunglasses at a local mall is an example of a(n) ________.

A company may prefer to use residual income over return on investment for performance evaluation because ________.

Which of the following is the correct formula for the profit margin ratio?

The responsibility report for a profit center would compare ________.

One part of the balanced scorecard helps management answer the question, "How do we look to investors and creditors?" Which of the four perspectives is being described with this statement?

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