Question 1

Central Division for Chemical Company has a rate of return on investment of 22% and an investment turnover of 1.4.What is the profit margin?

Accepted Answer

A) 20% 
B) 15.7% 
C) 14% 
D) 6.36% 
A) 20% 
B) 15.7% 
C) 14% 
D) 6.36%

Question 2

Developing and retaining quality managers are advantages of decentralization.

Accepted Answer

A) True 
 B)False

Question 3

The Bottlebrush Company has income from operations of $60,000, invested assets of $345,000, and sales of $786,000.Use the DuPont formula to calculate the rate of return on investment, and show a the profit margin, b the investment turnover, and c rate of return on investment.Round the profit margin percentage to two decimal places and the investment turnover to three decimal places.

Accepted Answer

a Profit margin = $60,000/$786

Question 4

The manager of a profit center does not make decisions concerning the fixed assets invested in the center.

Accepted Answer

A) True 
 B)False

Question 5

Investment turnover as used in determining the rate of return on investment focuses on the rate of profit earned on each sales dollar.

Accepted Answer

A) True 
 B)False

Question 6

An activity base is used to charge service department expenses.Match each of the following activity bases with the appropriate department a-h.
-Number of computers in department

Accepted Answer

A) Purchasing 
B) Payroll accounting 
C) Human resources 
D) Maintenance 
E) Information systems
F)Marketing
G)President's Office
H)Transportation 
A) Purchasing 
B) Payroll accounting 
C) Human resources 
D) Maintenance 
E) Information systems
F)Marketing
G)President's Office
H)Transportation

Question 7

The term used to describe expenses that are incurred by a specific department is

Accepted Answer

A) indirect expenses 
B) margin expenses 
C) departmental expenses 
D) direct expenses 
A) indirect expenses 
B) margin expenses 
C) departmental expenses 
D) direct expenses

Question 8

A decentralized business organization is one in which all major planning and operating decisions are made by top management.

Accepted Answer

A) True 
 B)False

Question 9

Operating expenses directly traceable to or incurred for the sole benefit of a specific department and usually subject to the control of the department manager are

Accepted Answer

A) miscellaneous administrative expenses 
B) direct operating expenses 
C) indirect expenses 
D) fixed expenses 
A) miscellaneous administrative expenses 
B) direct operating expenses 
C) indirect expenses 
D) fixed expenses

Question 10

Match each definition that follows with the term a-e it defines.
-Income from operations divided by invested assets

Accepted Answer

A) Controllable revenues 
B) Profit margin 
C) Investment turnover 
D) Rate of return on investments 
E) Residual income 
A) Controllable revenues 
B) Profit margin 
C) Investment turnover 
D) Rate of return on investments 
E) Residual income

Question 11

The minimum accepted divisional income from operations is set by top management by establishing a maximum rate of return considered acceptable for invested assets.

Accepted Answer

A) True 
 B)False

Question 12

The materials used by the Holly Company's Division A are currently purchased from an outside supplier.Division B is able to supply Division A with 20,000 units at a variable cost of $42 per unit.The normal price that Division B normally sells its units is $53 per unit.What is the range of transfer prices within which the two division managers should negotiate?

Accepted Answer

The answer of The materials used by the Holly Company's...

Question 13

The ratio of sales to invested assets is termed the investment turnover component of the rate of return on investment.

Accepted Answer

A) True 
 B)False

Question 14

Responsibility accounting reports for profit centers will include

Accepted Answer

A) costs only 
B) revenues only 
C) expenses and fixed assets 
D) revenues, expenses, net income or loss from operations 
A) costs only 
B) revenues only 
C) expenses and fixed assets 
D) revenues, expenses, net income or loss from operations

Question 15

If divisional income from operations is $75,000, invested assets are $737,500, and the minimum rate of return on invested assets is 6%, the residual income is $36,750.

Accepted Answer

A) True 
 B)False

Question 16

The investment turnover for Chicks is

Accepted Answer

A) 1.3 
B) 1.5 
C) 1.0 
D) 1.1 
A) 1.3 
B) 1.5 
C) 1.0 
D) 1.1

Question 17

What is the rate of return on investment for Division A?

Accepted Answer

A) 9.3% 
B) 99.3% 
C) 74.6% 
D) 4.6% 
A) 9.3% 
B) 99.3% 
C) 74.6% 
D) 4.6%

Question 18

Piano Company's costs were over budget by $47,000.The Piano Company is divided in two regions.The first region's costs were over budget by $5,000.Determine the amount that the second region's cost was over or under budget.

Accepted Answer

The answer of Piano Company's costs were over budget by...

Question 19

If income from operations for a division is $30,000, sales are $263,750, and invested assets are $187,500, the investment turnover is 1.3.

Accepted Answer

A) True 
 B)False

Question 20

The profit margin for Chicks is

Accepted Answer

A) 25% 
B) 22% 
C) 15% 
D) 27.5% 
A) 25% 
B) 22% 
C) 15% 
D) 27.5%

Central Division for Chemical Company has a rate of return on investment of 22% and an investment turnover of 1.4.What is the profit margin?

Developing and retaining quality managers are advantages of decentralization.

The manager of a profit center does not make decisions concerning the fixed assets invested in the center.

Investment turnover as used in determining the rate of return on investment focuses on the rate of profit earned on each sales dollar.

An activity base is used to charge service department expenses.Match each of the following activity bases with the appropriate department a-h. -Number of computers in department

The term used to describe expenses that are incurred by a specific department is

A decentralized business organization is one in which all major planning and operating decisions are made by top management.

Operating expenses directly traceable to or incurred for the sole benefit of a specific department and usually subject to the control of the department manager are

Match each definition that follows with the term a-e it defines. -Income from operations divided by invested assets

The minimum accepted divisional income from operations is set by top management by establishing a maximum rate of return considered acceptable for invested assets.

The ratio of sales to invested assets is termed the investment turnover component of the rate of return on investment.

Responsibility accounting reports for profit centers will include

If divisional income from operations is $75,000, invested assets are $737,500, and the minimum rate of return on invested assets is 6%, the residual income is $36,750.

The investment turnover for Chicks is

What is the rate of return on investment for Division A?

Piano Company's costs were over budget by $47,000.The Piano Company is divided in two regions.The first region's costs were over budget by $5,000.Determine the amount that the second region's cost was over or under budget.

If income from operations for a division is $30,000, sales are $263,750, and invested assets are $187,500, the investment turnover is 1.3.

The profit margin for Chicks is

Managerial Accounting Concepts and Principles

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Performance Evaluation Using Variances From Standard Costs

Differential Analysis, Product Pricing, and Activity-Based Costing

Capital Investment Analysis

Cost Allocation and Activity-Based Costing

Lean Principles, Lean Accounting, and Activity Analysis

Statement of Cash Flows

Financial Statement Analysis

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Exam 8: Performance Evaluation for Decentralized Operations

Central Division for Chemical Company has a rate of return on investment of 22% and an investment turnover of 1.4.What is the profit margin?

Developing and retaining quality managers are advantages of decentralization.

The manager of a profit center does not make decisions concerning the fixed assets invested in the center.

Investment turnover as used in determining the rate of return on investment focuses on the rate of profit earned on each sales dollar.

An activity base is used to charge service department expenses.Match each of the following activity bases with the appropriate department a-h. -Number of computers in department

The term used to describe expenses that are incurred by a specific department is

A decentralized business organization is one in which all major planning and operating decisions are made by top management.

Operating expenses directly traceable to or incurred for the sole benefit of a specific department and usually subject to the control of the department manager are

Match each definition that follows with the term a-e it defines. -Income from operations divided by invested assets

The minimum accepted divisional income from operations is set by top management by establishing a maximum rate of return considered acceptable for invested assets.

The ratio of sales to invested assets is termed the investment turnover component of the rate of return on investment.

Responsibility accounting reports for profit centers will include

If divisional income from operations is $75,000, invested assets are $737,500, and the minimum rate of return on invested assets is 6%, the residual income is $36,750.

The investment turnover for Chicks is

What is the rate of return on investment for Division A?

Piano Company's costs were over budget by $47,000.The Piano Company is divided in two regions.The first region's costs were over budget by $5,000.Determine the amount that the second region's cost was over or under budget.

If income from operations for a division is $30,000, sales are $263,750, and invested assets are $187,500, the investment turnover is 1.3.

The profit margin for Chicks is

Managerial Accounting Concepts and Principles

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Performance Evaluation Using Variances From Standard Costs

Differential Analysis, Product Pricing, and Activity-Based Costing

Capital Investment Analysis

Cost Allocation and Activity-Based Costing

Lean Principles, Lean Accounting, and Activity Analysis

Statement of Cash Flows

Financial Statement Analysis

Filters