Exam 23: Evaluating Decentralized Operations

Operating expenses incurred for the entire business as a unit that are not subject to the control of individual department managers are called indirect expenses.

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

Budget performance reports prepared for the vice president of production would generally contain less detail than reports prepared for the various plant managers.

The excess of divisional income from operations over a minimum acceptable income from operations is termed the residual income.

The profit margin for Division C is 6% and the investment turnover is 1.2.What is the rate of return on investment for Division B?

Which of the following is not a measure that management can use in evaluating and controlling investment center performance?

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

The gross profit for the Locomotive Division is

For higher levels of management,responsibility accounting reports

If income from operations for a division is $6,000,invested assets are $25,000,and sales are $30,000,the investment turnover is 1.2.

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

Income from operations for Division H is $220,000,and income from operations before service department charges is $975,000.As a result,

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?

Responsibility accounting reports for profit centers will include

The ratio of income from operations to sales is termed the profit margin component of the rate of return on investment.

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

Service department charges are similar to the expenses of a profit center that purchased services from a source outside the company.

Which of the following expenses incurred by the sporting goods department of a department store is a direct expense?

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

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