Exam 17: Responsibility Accounting, Performance Evaluation and Transfer Pricing

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A segment with an ROI of 30% has a profit of $84,000. The company's required rate of return on segment investments is 18%. The segment's residual income is

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D

Division A produces a component for Honda Ltd's main product - motor vehicles. The division operates as a profit centre. It also sells to outsiders. The present selling price is $75 per component. The company buys 600,000 units of a similar component per year from outside sources. The external purchase price is $73 as a result of a quantity discount. Division A has adequate capacity to supply the needs of the Assembly division. The following data are for Division A: Division A produces a component for Honda Ltd's main product - motor vehicles. The division operates as a profit centre. It also sells to outsiders. The present selling price is $75 per component. The company buys 600,000 units of a similar component per year from outside sources. The external purchase price is $73 as a result of a quantity discount. Division A has adequate capacity to supply the needs of the Assembly division. The following data are for Division A:   The price range within which A would sell components to the Assembly Division is The price range within which A would sell components to the Assembly Division is

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B

Return on investment can be decomposed into two ratios: investment turnover and return on sales.

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THN Pty Ltd reported operating profit of $30,000, revenue of $50,000, and average operating assets of $40,000 for a recent year. Which of the following is true?

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Which of the following best describes "general knowledge" in a decision-making context?

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Specific knowledge is Specific knowledge is

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Economic value added can be measured so that it reduces most of the problems that arise under residual income.

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Which of the following transfer pricing systems potentially takes the most time to establish?

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Problems with market-based transfer prices include

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Responsibility accounting is the process of using financial information to justify pay increases and promotions for managers.

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Division A produces a component for Honda Ltd's main product - motor vehicles. The division operates as a profit centre. It also sells to outsiders. The present selling price is $75 per component. The company buys 600,000 units of a similar component per year from outside sources. The external purchase price is $73 as a result of a quantity discount. Division A has adequate capacity to supply the needs of the Assembly division. The following data are for Division A: Division A produces a component for Honda Ltd's main product - motor vehicles. The division operates as a profit centre. It also sells to outsiders. The present selling price is $75 per component. The company buys 600,000 units of a similar component per year from outside sources. The external purchase price is $73 as a result of a quantity discount. Division A has adequate capacity to supply the needs of the Assembly division. The following data are for Division A:   The minimum price at which A would sell components internally is The minimum price at which A would sell components internally is

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Which type of knowledge is most costly to transfer within an organisation?

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An advantage of centralised decision making is

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In a profit centre, managers' primary goal is to maximise revenues.

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If a supplying division has excess capacity, the best transfer price is the product's variable cost.

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Which of the following is an advantage of cost-based transfer prices? Which of the following is an advantage of cost-based transfer prices?

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Choices about decision-making authority and about organisational structure are often related.

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Responsibility accounting includes Responsibility accounting includes

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Dual-rate transfer pricing systems are appropriate when the

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Decision-making based on general knowledge is more likely to occur in this type of organisation

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