Exam 17: Responsibility Accounting, Performance Evaluation and Transfer Pricing

Technical details about complex manufacturing processes are examples of specific knowledge.

Budgets can be used to evaluate managerial performance in

Residual income is calculated as

Managers are held responsible for revenues in

The National Division of Roboto Ltd is buying 10,000 widgets from an outside supplier at $30 per unit. Roboto's Overseas Division, which is producing and selling at full capacity (12,000 units), has the following sales and cost structure: If the Overseas Division meets the outside supplier's price and sells the 10,000 widgets to National, the effect on overall company profits will be

The Jupiter Division of Space Ltd produces dilithium crystals. One-third of its output is sold to the Antari Division, and the remainder is sold externally. Jupiter's estimated sales and cost data for the coming year are: Assume that Jupiter cannot sell any additional crystals externally. If the Antari Division has an opportunity to buy from an outside supplier at $1.40 per crystal and Jupiter refuses to meet this price, the company as a whole will be

Return on investment is typically calculated as net profit divided by total sales.

Teresa's Taco Ltd had the following results during the most recent year: Sales $500,000; Residual income $5,000; investment turnover 2.5; and a required rate of return of 15%. The capital investment was

KNY Pty Ltd reported operating profit of $80,000 and average operating assets of $120,000 in a recent accounting period. Which of the following transactions would definitely increase KNY's return on investment?

Teresa's Taco Ltd had the following results during the most recent year: Sales $500,000; Residual income $5,000; investment turnover 2.5; and a required rate of return of 15%. The return on investment was

The Gold Coast Division of Vallance Ltd produces and sells a product to outside and internal customers. Per-unit data collected from its operations include: If the Gold Coast division is operating at full capacity and selling solely to outside customers, what price should another division pay for Gold Coast's product?

When decision making is decentralised

When a company uses activity-based transfer prices

Teresa's Taco Ltd had the following results during the most recent year: Sales $500,000; Residual income $5,000; investment turnover 2.5; and a required rate of return of 15%. The return on sales was

If a product has an external market and divisions are treated as profit centres, cost-based transfer prices can often lead to suboptimal decisions.

The National Division of Roboto Ltd is buying 10,000 widgets from an outside supplier at $30 per unit. Roboto's Overseas Division, which is producing and selling at full capacity (12,000 units), has the following sales and cost structure: If the National Division buys its 10,000 widgets from the Overseas Division, the transfer price should be

Which prices are recorded by departments under a dual-rate transfer pricing system?

A corporate accounting department would most often be considered a

If manufacturing departments are only responsible for production decisions, they are considered cost centres.

Transfer pricing policies can affect a company's tax liability, particularly if it does business internationally.