Question 1

What is the profit margin for Division D?

Accepted Answer

A)  42.9% 
B)  83.4% 
C)  49.1% 
D)  65.7% 
A)  42.9% 
B)  83.4% 
C)  49.1% 
D)  65.7%

Question 2

The amount of detail presented in a budget performance report for a cost center depends upon the level of management to which the report is directed.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A)  costs only 
B)  revenues only 
C)  assets only 
D)  costs,revenues,and assets 
A)  costs only 
B)  revenues only 
C)  assets only 
D)  costs,revenues,and assets

Question 4

Under the negotiated price approach,the transfer price is the price at which the product or service transferred could be sold to outside buyers.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A)  $0 
B)  $75,000 
C)  $25,000 
D)  $50,000 
A)  $0 
B)  $75,000 
C)  $25,000 
D)  $50,000

Question 6

Determining the transfer price as the price at which the product or service transferred could be sold to outside buyers is known as the

Accepted Answer

A)  cost price approach 
B)  negotiated price approach 
C)  revenue price approach 
D)  market price approach 
A)  cost price approach 
B)  negotiated price approach 
C)  revenue price approach 
D)  market price approach

Question 7

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 8

What is Clydesdale Company's investment turnover?

Accepted Answer

A)  1.80 
B)  2.25 
C)  1.25 
D)  1.4 
A)  1.80 
B)  2.25 
C)  1.25 
D)  1.4

Question 9

The balanced scorecard is a set of financial and nonfinancial measures that reflect the performance of the business.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A)  operating expenses are $1,025,000 
B)  total service department charges are $1,025,000 
C)  noncontrollable charges are $1,025,000 
D)  direct manufacturing charges are $1,025,000 
A)  operating expenses are $1,025,000 
B)  total service department charges are $1,025,000 
C)  noncontrollable charges are $1,025,000 
D)  direct manufacturing charges are $1,025,000

Question 11

Responsibility accounting reports that are given to lower level managers are usually very detailed,in turn,higher level managers will be given a summary report.

Accepted Answer

A) True 
 B)False

Question 12

In rate of return on investment analysis,the investment turnover component focuses on efficiency in the use of assets and indicates the rate at which sales are being generated for each dollar of invested assets.

Accepted Answer

A) True 
 B)False

Question 13

Assume that Division Blue has achieved a yearly income from operations of $110,000 using $900,000 of invested assets.If management has set a minimum acceptable rate of return of 11%,the residual income is

Accepted Answer

A)  $99,000 
B)  $691,000 
C)  $209,000 
D)  $11,000 
A)  $99,000 
B)  $691,000 
C)  $209,000 
D)  $11,000

Question 14

The residual income for Chicks is

Accepted Answer

A)  $165,000 
B)  $302,500 
C)  $137,500 
D)  $191,500 
A)  $165,000 
B)  $302,500 
C)  $137,500 
D)  $191,500

Question 15

The costs of services charged to a profit center on the basis of its use of those services are

Accepted Answer

A)  operating expenses 
B)  noncontrollable charges 
C)  service department charges 
D)  activity charges 
A)  operating expenses 
B)  noncontrollable charges 
C)  service department charges 
D)  activity charges

Question 16

In an investment center,the manager has the responsibility and the authority to make decisions that affect not only costs and revenues,but also the plant assets invested in the center.

Accepted Answer

A) True 
 B)False

Question 17

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%

Question 18

The major advantage of residual income as a performance measure is that it gives consideration to not only a minimum rate of return on investment but also the total magnitude of income from operations earned by each division.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is a measure of a manager's performance working in an investment center?

Accepted Answer

A)  rate of return on investment 
B)  residual income 
C)  divisional income statements 
D)  all of these 
A)  rate of return on investment 
B)  residual income 
C)  divisional income statements 
D)  all of these

Question 20

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%

Exam 23: Evaluating Decentralized Operations

What is the profit margin for Division D?

The amount of detail presented in a budget performance report for a cost center depends upon the level of management to which the report is directed.

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

Under the negotiated price approach,the transfer price is the price at which the product or service transferred could be sold to outside buyers.

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

Determining the transfer price as the price at which the product or service transferred could be sold to outside buyers is known as the

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.

What is Clydesdale Company's investment turnover?

The balanced scorecard is a set of financial and nonfinancial measures that reflect the performance of the business.

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

Responsibility accounting reports that are given to lower level managers are usually very detailed,in turn,higher level managers will be given a summary report.

In rate of return on investment analysis,the investment turnover component focuses on efficiency in the use of assets and indicates the rate at which sales are being generated for each dollar of invested assets.

Assume that Division Blue has achieved a yearly income from operations of $110,000 using $900,000 of invested assets.If management has set a minimum acceptable rate of return of 11%,the residual income is

The residual income for Chicks is

The costs of services charged to a profit center on the basis of its use of those services are

In an investment center,the manager has the responsibility and the authority to make decisions that affect not only costs and revenues,but also the plant assets invested in the center.

The profit margin for Chicks is

The major advantage of residual income as a performance measure is that it gives consideration to not only a minimum rate of return on investment but also the total magnitude of income from operations earned by each division.

Which of the following is a measure of a manager's performance working in an investment center?

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

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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