Question 1

The net income for Train Corporation is

Accepted Answer

A)  $83,180 
B)  $35,940 
C)  $48,390 
D)  $60,840 
A)  $83,180 
B)  $35,940 
C)  $48,390 
D)  $60,840

Question 2

Property tax expense for a department store's store equipment is an example of a direct expense.

Accepted Answer

A) True 
 B)False

Question 3

What is Clydesdale Company's residual income?

Accepted Answer

A)  $252,000 
B)  $900,000 
C)  $1,400,000 
D)  $760,000 
A)  $252,000 
B)  $900,000 
C)  $1,400,000 
D)  $760,000

Question 4

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.

Accepted Answer

A) True 
 B)False

Question 5

The profit center income statement should include only controllable revenues and expenses.

Accepted Answer

A) True 
 B)False

Question 6

Heart Company has two divisions.Division A is interested in purchasing 10,000 units from Division B.Capacity is available for Division B to produce these units.The per-unit market price is $30 per unit,with a variable cost of $25.The manager of Division A has offered to purchase the units at $22 per unit.In an effort to make this transfer price beneficial for the company as a whole,what is the range of prices that should be used during negotiations between the two divisions?

Accepted Answer

A)  $22 to $30 
B)  $22 to $25 
C)  over $30 
D)  $25 to $30 
A)  $22 to $30 
B)  $22 to $25 
C)  over $30 
D)  $25 to $30

Question 7

The profit margin for Central Division is 20% and the investment turnover is 2.8.What is the rate of return on investment for Central Division?

Accepted Answer

A)  20% 
B)  7.1% 
C)  14% 
D)  56% 
A)  20% 
B)  7.1% 
C)  14% 
D)  56%

Question 8

The balanced scorecard measures

Accepted Answer

A)  only financial information 
B)  only nonfinancial information 
C)  both financial and nonfinancial information 
D)  external and internal information 
A)  only financial information 
B)  only nonfinancial information 
C)  both financial and nonfinancial information 
D)  external and internal information

Question 9

Separation of businesses into more manageable operating units is termed decentralization.

Accepted Answer

A) True 
 B)False

Question 10

The formula for the rate of return on investment is

Accepted Answer

A)  Invested assets / Income from operations 
B)  Sales / Invested assets 
C)  Income from operations / Sales 
D)  Income from operations / Invested assets 
A)  Invested assets / Income from operations 
B)  Sales / Invested assets 
C)  Income from operations / Sales 
D)  Income from operations / Invested assets

Question 11

Blaser Corporation had $275,000 in invested assets,sales of $330,000,income from operations amounting to $33,000 and a desired minimum rate of return of 7.5%.The rate of return on investment for Blaser Corporation is

Accepted Answer

A)  8.3% 
B)  10% 
C)  12% 
D)  7.5% 
A)  8.3% 
B)  10% 
C)  12% 
D)  7.5%

Question 12

The manager of the furniture department of a leading retailer does not control the salaries of departmental personnel.

Accepted Answer

A) True 
 B)False

Question 13

Sales commission expense for a department store is an example of a direct expense.

Accepted Answer

A) True 
 B)False

Question 14

The gross profit for the Rails Division is

Accepted Answer

A)  $60,800 
B)  $33,600 
C)  $8,700 
D)  $21,150 
A)  $60,800 
B)  $33,600 
C)  $8,700 
D)  $21,150

Question 15

Which of the following expressions is termed the profit margin factor as used in determining the rate of return on investment?

Accepted Answer

A)  Sales / Income from operations 
B)  Income from operations / Sales 
C)  Invested assets / Sales 
D)  Sales / Invested assets 
A)  Sales / Income from operations 
B)  Income from operations / Sales 
C)  Invested assets / Sales 
D)  Sales / Invested assets

Question 16

How much will Square Yard Products total income from operations increase?

Accepted Answer

A)  $32,000 
B)  $112,000 
C)  $80,000 
D)  $150,000 
A)  $32,000 
B)  $112,000 
C)  $80,000 
D)  $150,000

Question 17

The Central Division of the Nebraska Company has a rate of return on investment of 28% and a profit margin of 14%.What is the investment turnover?

Accepted Answer

A)  0.2 
B)  2.0 
C)  5.0 
D)  0.5 
A)  0.2 
B)  2.0 
C)  5.0 
D)  0.5

Question 18

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.

Accepted Answer

A)  internal process 
B)  financial 
C)  innovation and learning 
D)  employees 
A)  internal process 
B)  financial 
C)  innovation and learning 
D)  employees

Question 19

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

Accepted Answer

A)  $305,000 
B)  $650,000 
C)  $345,000 
D)  $610,000 
A)  $305,000 
B)  $650,000 
C)  $345,000 
D)  $610,000

Question 20

How much service department cost will be allocated to the Micro Division?

Accepted Answer

A)  $200,000 
B)  $145,000 
C)  $60,000 
D)  $345,000 
A)  $200,000 
B)  $145,000 
C)  $60,000 
D)  $345,000

Exam 23: Evaluating Decentralized Operations

The net income for Train Corporation is

Property tax expense for a department store's store equipment is an example of a direct expense.

What is Clydesdale Company's residual income?

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.

The profit center income statement should include only controllable revenues and expenses.

The profit margin for Central Division is 20% and the investment turnover is 2.8.What is the rate of return on investment for Central Division?

The balanced scorecard measures

Separation of businesses into more manageable operating units is termed decentralization.

The formula for the rate of return on investment is

Blaser Corporation had $275,000 in invested assets,sales of $330,000,income from operations amounting to $33,000 and a desired minimum rate of return of 7.5%.The rate of return on investment for Blaser Corporation is

The manager of the furniture department of a leading retailer does not control the salaries of departmental personnel.

Sales commission expense for a department store is an example of a direct expense.

The gross profit for the Rails Division is

Which of the following expressions is termed the profit margin factor as used in determining the rate of return on investment?

How much will Square Yard Products total income from operations increase?

The Central Division of the Nebraska Company has a rate of return on investment of 28% and a profit margin of 14%.What is the investment turnover?

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.

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

How much service department cost will be allocated to the Micro Division?

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Inventories

Internal Control and Cash

Receivables

Long-Term Assets: Fixed and Intangible

Liabilities: Current,installment Notes,and Contingencies

Liabilities: Bonds Payable

Corporations: Organization, stock Transactions, and Dividends

Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Cost Systems

Activity-Based Costing

Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Evaluating Variances From Standard Costs

Differential Analysis and Product Pricing

Capital Investment Analysis

Lean Manufacturing and Activity Analysis

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