Borraw Company The following information pertains to the three divisions of Borraw Company: $\begin{array}{lll}&\text { Division } A & \text { Division } B\\ \text { Sales } & ? & 1,250,000 \\ \text { Net operating income } & \$ 25,000 & \$ 75,000 \\ \text { Average operating assets } & ? & ? \\ \text { Rebum on investment } & 20 \% & 15 \% \\ \text { Margin } & 0.05 & ? \\ \text { Tumover } & ? & ? \\ \text { Target ROI } & 12 \% & 10 \% \end{array}$ -Refer to Borraw Company. What is the turnover for Division B?

A) 0.150 B) 1.500 C) 2.500 D) 6.670 A) 0.150 B) 1.500 C) 2.500 D) 6.670

Engine Division Engine Division provides engines for Tractor Division of a company. The standard unit costs for Engine Division are as follows: \[\begin{array} { l l } \text { Direct materials } & \$ 700 \\ \text { Direct labour } & 1,300 \\ \text { Variable overhead } & 400 \\ \text { Fixed overhead } & 250 \\ \text { Market price per unit } & 2,730 \end{array}\] -What is the transfer price that is based on full cost plus a markup of 35%?

A) $585.00 B) $2,730.50 C) $2,760.00 D) $3,577.50 A) $585.00 B) $2,730.50 C) $2,760.00 D) $3,577.50

Borraw Company The following information pertains to the three divisions of Borraw Company: $\begin{array}{lll}&\text { Division } A & \text { Division } B\\ \text { Sales } & ? & 1,250,000 \\ \text { Net operating income } & \$ 25,000 & \$ 75,000 \\ \text { Average operating assets } & ? & ? \\ \text { Rebum on investment } & 20 \% & 15 \% \\ \text { Margin } & 0.05 & ? \\ \text { Tumover } & ? & ? \\ \text { Target ROI } & 12 \% & 10 \% \end{array}$ -Refer to Borraw Company. What are the average operating assets for Division B?

A) $75,000 B) $187,500 C) $500,000 D) $1,250,000 A) $75,000 B) $187,500 C) $500,000 D) $1,250,000

Exam 12: Performance Evaluation and Decentralization

Borraw Company The following information pertains to the three divisions of Borraw Company: Division A Division B Sales ? 1,250,000 Net operating income \ 25,000 \ 75,000 Average operating assets ? ? Rebum on investment 20\% 15\% Margin 0.05 ? Tumover ? ? Target ROI 12\% 10\% -Refer to Borraw Company. What is the turnover for Division B?

(Multiple Choice)

4.9/5

(29)

Question 81

Which of the following is NOT a reason for decentralization?

(Multiple Choice)

4.9/5

(38)

Question 82

Match each of the following terms with their correct description from the items listed below.* Each term may be used more than once, and it is possible that one or more of the classifications may not be used at all. -A Balanced Scorecard viewpoint that defines the capabilities that an organization needs to create long-term improvement

(Multiple Choice)

4.8/5

(36)

Question 83

How is return on investment (ROI) calculated?

(Multiple Choice)

4.8/5

(39)

Question 84

Match each of the following terms with their correct description from the items listed below.* Each term may be used more than once, and it is possible that one or more of the classifications may not be used at all. -The dollar difference between operating income and minimum required return

(Multiple Choice)

4.9/5

(34)

Question 85

Match each of the following terms with their correct description from the items listed below.* Each term may be used more than once, and it is possible that one or more of the classifications may not be used at all. -A responsibility centre in which a manager is responsible for sales, costs, and investments

(Multiple Choice)

4.9/5

(30)

Question 86

In the negotiated transfer pricing, the buying division sets the ceiling (maximum possible transfer price) for the bargaining range.

(True/False)

4.9/5

(40)

Question 87

Match each of the following terms with their correct description from the items listed below.* Each term may be used more than once, and it is possible that one or more of the classifications may not be used at all. -The ratio of sales to average operating assets

(Multiple Choice)

4.8/5

(42)

Question 88

Which positive result does the use of return on investment (ROI) encourage managers to focus on?

(Multiple Choice)

4.8/5

(33)

Question 89

Last night, Rebecca worked on her accounting homework for two and a half hours. During that time, she completed eight problems. What is Rebecca's cycle time for one problem?

(Multiple Choice)

4.9/5

(36)

Question 90

Which Balanced Scorecard perspective details the economic consequences of actions taken in the other three perspectives?

(Multiple Choice)

4.8/5

(35)

Question 91

Engine Division Engine Division provides engines for Tractor Division of a company. The standard unit costs for Engine Division are as follows: Direct materials \ 700 Direct labour 1,300 Variable overhead 400 Fixed overhead 250 Market price per unit 2,730 -What is the transfer price that is based on full cost plus a markup of 35%?

(Multiple Choice)

4.9/5

(40)

Question 92

Provide the missing data in the following situations: $\begin{array}{llll} &\underline{\text { Northern }} & \underline{\text { Southern }}& \underline{\text { Eastern }} \\& \underline{\text { Division} } & \underline{ \text { Division }} & \underline{\text { Division }}\\\text { Sales } & \$(A) & \$ 250,000 & \$(\mathrm{G}) \\\text { Operating assets } & \$(\mathrm{~B}) & \$(\mathrm{D}) & \$ 800,000 \\\text { Net operating income } & \$ 400,000 & \$ 10,000 & \$ 144,000 \\\text { Margin } & 0.08 & (\mathrm{E}) & 0.12 \\\text { Turnover } & (\mathrm{C}) & (\mathrm{F}) & 1.5 \\\text { Return on investment } & 16 \% & 10 \% & (\mathrm{H})\end{array}$

(Essay)

4.9/5

(46)

Question 93

Borraw Company The following information pertains to the three divisions of Borraw Company: Division A Division B Sales ? 1,250,000 Net operating income \ 25,000 \ 75,000 Average operating assets ? ? Rebum on investment 20\% 15\% Margin 0.05 ? Tumover ? ? Target ROI 12\% 10\% -Refer to Borraw Company. What are the average operating assets for Division B?

(Multiple Choice)

4.8/5

(41)

Question 94

Which term refers to the practice of delegating decision-making authority to the lower levels of management in a company?

(Multiple Choice)

4.8/5

(33)

Question 95

Corrugated, Inc.Corrugated, Inc. has many divisions that are evaluated on the basis of ROI. One division, the Box Division, makes boxes. The Candy Division makes candy and needs 50,000 boxes per year. The Box Division incurs the following costs for one box: Direct materials \ 0.20 Direct labour 0.70 Variable overhead 0.10 Fixed overhead Total The Box Division has capacity to make 500,000 boxes per year. The Candy Division currently buys its boxes from an outside supplier for $1.40 each (the same price that the Box Division receives). -Refer to Corrugated Inc. Assume the company allows division managers to negotiate the transfer price. The Box Division is producing 500,000 boxes. Suppose the Box Division and the Candy Division agree to transfer boxes. What would be the floor of the bargaining range and which division sets it?

(Multiple Choice)

4.7/5

(45)

Question 96

Gamma Division The manager of Gamma Division projects the following for next year: Sales \ 100,000 Operating income \ 30,000 Operating assets \ 200,000 The manager can invest in an additional project that would require $30,000 investment in additional assets and would generate $4,200 of additional income. The company's minimum rate of return is 12%. -Refer to Gamma Division . What will happen to the company if the manager invests in the additional project?

(Multiple Choice)

4.8/5

(29)

Question 97

Transfer pricing can affect the level of after-tax profits earned by a multinational company.

(True/False)

4.9/5

(34)

Question 98

Describe the four perspectives of the Balanced Scorecard.

(Essay)

4.8/5

(33)

Question 99

What is an advantage of the ROI performance measure?

(Multiple Choice)

4.8/5

(31)

Question 100

Which of the following is NOT a reason for decentralization?

How is return on investment (ROI) calculated?

Match each of the following terms with their correct description from the items listed below.* Each term may be used more than once, and it is possible that one or more of the classifications may not be used at all. -The dollar difference between operating income and minimum required return

In the negotiated transfer pricing, the buying division sets the ceiling (maximum possible transfer price) for the bargaining range.

Match each of the following terms with their correct description from the items listed below.* Each term may be used more than once, and it is possible that one or more of the classifications may not be used at all. -The ratio of sales to average operating assets

Which positive result does the use of return on investment (ROI) encourage managers to focus on?

Last night, Rebecca worked on her accounting homework for two and a half hours. During that time, she completed eight problems. What is Rebecca's cycle time for one problem?

Which Balanced Scorecard perspective details the economic consequences of actions taken in the other three perspectives?

Which term refers to the practice of delegating decision-making authority to the lower levels of management in a company?

Transfer pricing can affect the level of after-tax profits earned by a multinational company.

Describe the four perspectives of the Balanced Scorecard.

What is an advantage of the ROI performance measure?

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behaviour

Cost-Volume-Profit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing, and Inventory Management

Budgeting, Production, Cash, and Master Budget

Standard Costing: a Managerial Control Tool

Flexible Budgets and Overhead Analysis

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Filters