Exam 8: Performance Evaluation for Decentralized Operations

Match each of the following phrases as describing a an advantage, b a disadvantage, or c neither of decentralization. -Operational issues are made by managers closest to the operations

How much service department cost would be allocated to the Super Division?

The major shortcoming of income from operations as an investment center performance measure is that it ignores the amount of revenues earned by the center.

What is Clydesdale Company's residual income?

How much will Division A's income from operations increase?

Some organizations use internal service departments to provide like services to several divisions or departments within an organization.Which of the following would probably not lend itself as a service department?

Income from operations of the Pierce Automobile Division is $2,225,000.If income from operations before service department charges is $3,250,000,

The profit margin for Mason is

The underlying principle of allocating direct operating expenses to departments is to assign to each department an amount of expense proportional to the revenues of that department.

Match each definition that follows with the term a-e it defines. -Income from operations minus minimum acceptable income from operations

Which of the following is a disadvantage of decentralization?

Materials used by the Layton Company's Division 1 are currently purchased from outside supplier at $58 per unit.Division 2 is able to supply Division 1 with 22,000 units at a variable cost of $46 per unit.The two divisions have recently negotiated a transfer price of $50 per unit for the 20,000 units. a By how much will each division's income increase as a result of this transfer? b What is the total increase in income for Layton?

Match each definition that follows with the term a-e it defines. -Ratio of sales to invested assets

What will the income of the Macro Division be after all service department allocations?

The balanced scorecard measures four areas of financial and nonfinancial performance of a business.Identify one of the following that is not included as a performance measurement.

Two divisions of Oregano Company Divisions TX and OY have the same profit margins.Division TX's investment turnover is larger than that of Division OY 1.2 to 1.0.Income from operations for Division TX is $55,000, and income from operations for Division OY is $43,000.Division TX has a higher return on investment than Division OY by

In an investment center, the manager has the responsibility for and the authority to make decisions that affect

Which of the following would not be considered an internal centralized service department?