Question 1

​Which of the following formulas measures turnover?

Accepted Answer

A)  After-tax Operating Income / Total Capital Employed 
B)  Average Operating Assets / Residual Income 
C)  (Beginning Operating Assets + Ending Operating Assets) / Total Capital Employed 
D)  Sales / Average Operating Assets 
E)  Total Capital Employed / Operating Income 
A)  After-tax Operating Income / Total Capital Employed 
B)  Average Operating Assets / Residual Income 
C)  (Beginning Operating Assets + Ending Operating Assets) / Total Capital Employed 
D)  Sales / Average Operating Assets 
E)  Total Capital Employed / Operating Income

Question 2

Transfer pricing is a complex issue.

Accepted Answer

A) True 
 B)False

Question 3

Quinn Inc.has a number of divisions.One division, Style, makes zippers that are used in the manufacture of boots.Another division, LeatherStuff, makes boots that use the zippers and needs 90,000 zippers per year.Style incurs the following costs for one zipper:
 
 Quinn has capacity to make 950,000 zippers per year, but due to a soft market, only plans to produce and sell 620,000 zippers next year.LeatherStuff currently buys zippers from an outside supplier for $3.50 each (the same price that Style receives)
- Assume that Style and LeatherStuff have agreed on a transfer price of $3.25.What is the total benefit for Style?

Accepted Answer

A)  $243,000 
B)  $292,500 
C)  $168,300 
D)  $69,000 
E)  $81,000 
A)  $243,000 
B)  $292,500 
C)  $168,300 
D)  $69,000 
E)  $81,000

Question 4

Elite Inc.has many divisions that are evaluated on the basis of return on investment (ROI).One division, Beta, makes boxes.A second division, Lambda, makes chocolates and needs 90,000 boxes per year.Beta incurs the following costs for one box:
 
 Beta has the capacity to make 720,000 boxes per year.Lambda currently buys its boxes from an outside supplier for $2.00 each (the same price that Beta receives).
- Assume that Elite Inc.allows division managers to negotiate transfer price.Beta is producing 720,000 boxes.If Beta and Lambda agree to transfer boxes, what is the floor of the bargaining range and which division sets it?

Accepted Answer

A)  $2.00; Beta 
B)  $1.35; Beta 
C)  $1.48; Lambda 
D)  $1.35; Lambda 
E)  $1.80; Lambda 
A)  $2.00; Beta 
B)  $1.35; Beta 
C)  $1.48; Lambda 
D)  $1.35; Lambda 
E)  $1.80; Lambda

Question 5

Which of the following is true of revenue centers?

Accepted Answer

A)  These are responsibility centers wherein managers are responsible for costs and quantity sold. 
B)  These are responsibility centers wherein managers are responsible for price and quantity sold. 
C)  These are responsibility centers wherein managers are responsible for revenues. 
D)  These are responsibility centers wherein managers are responsible for investments. 
E)  None of these 
A)  These are responsibility centers wherein managers are responsible for costs and quantity sold. 
B)  These are responsibility centers wherein managers are responsible for price and quantity sold. 
C)  These are responsibility centers wherein managers are responsible for revenues. 
D)  These are responsibility centers wherein managers are responsible for investments. 
E)  None of these

Question 6

Atlas Company provided the following information for last year:
 
- Which of the following is Atlas's return on investment (ROI) for last year? (Note: Round answer to two decimal places.)

Accepted Answer

A)  0.41 
B)  0.22 
C)  0.32 
D)  0.50 
E)  0.15 
A)  0.41 
B)  0.22 
C)  0.32 
D)  0.50 
E)  0.15

Question 7

Atlas Company provided the following information for last year:
 
-  Calculate Atlas's turnover ratio for last year.(Note: Round answer to two decimal places.)

Accepted Answer

A)  2.15 
B)  0.46 
C)  0.55 
D)  0.32 
E)  0.10 
A)  2.15 
B)  0.46 
C)  0.55 
D)  0.32 
E)  0.10

Question 8

Select the appropriate definition for each of the items listed below.
-The dollar difference between operating income and minimum required return on a company's operating assets.

Accepted Answer

A) Turnover 
B) Margin 
C) ROI 
D) Residual income 
A) Turnover 
B) Margin 
C) ROI 
D) Residual income

Question 9

Division A had ROI of 15% last year.The manager of Division A is considering an additional investment for the coming year.What step will the manager likely choose to take?

Accepted Answer

A)  Accept the investment as long as it provides positive operating income. 
B)  Accept the investment as long as its ROI is positive. 
C)  Reject the investment if it returns more than 15% ROI. 
D)  Reject the investment if it returns less than 15% ROI. 
E)  Reject the investment if it returns an ROI equal to 15%. 
A)  Accept the investment as long as it provides positive operating income. 
B)  Accept the investment as long as its ROI is positive. 
C)  Reject the investment if it returns more than 15% ROI. 
D)  Reject the investment if it returns less than 15% ROI. 
E)  Reject the investment if it returns an ROI equal to 15%.

Question 10

The Engine Division provides engines for the Tractor Division of a company.The standard unit costs for the Engine Division are: 
 
-
What is the transfer price based on full cost plus a markup of 35%?

Accepted Answer

A)  $3,375 
B)  $585 
C)  $2,760 
D)  $2,730 
A)  $3,375 
B)  $585 
C)  $2,760 
D)  $2,730

Question 11

Several transfer pricing policies are used in practice.These transfer pricing policies include

Accepted Answer

A)  transfer at market price. 
B)  transfer at negotiated price. 
C)  transfer at cost. 
D)  All of these. 
A)  transfer at market price. 
B)  transfer at negotiated price. 
C)  transfer at cost. 
D)  All of these.

Question 12

A transfer price is the price charged for a component by the selling division to the buying division of the same company.

Accepted Answer

A) True 
 B)False

Question 13

If there is a competitive outside market for the transferred product, then the best transfer price is the cost-based transfer price.

Accepted Answer

A) True 
 B)False

Question 14

The following information pertains to the three divisions of Yang Company:
 
-  What are the sales for Division B?

Accepted Answer

A)  $18,000 
B)  $1,250,000 
C)  $1,200,000 
D)  $208,333 
A)  $18,000 
B)  $1,250,000 
C)  $1,200,000 
D)  $208,333

Question 15

Select the appropriate definition for each of the items listed below.
-The ratio of sales to average operating assets.

Accepted Answer

A) Turnover 
B) Margin 
C) ROI 
D) Residual income 
A) Turnover 
B) Margin 
C) ROI 
D) Residual income

Question 16

_________________ is found by dividing sales by average operating assets.

Accepted Answer

The answer of _________________ is found by dividing sales by...

Question 17

Full Serve Inc.has a number of divisions.One division, Gamma, makes zippers that are used in the manufacture of boots.Another division, Delta, makes boots that use the zippers and needs 95,000 zippers per year.Gamma incurs the following costs for one zipper:
  
Full Serve has the capacity to make 960,000 zippers per year, but due to a soft market, it only plans to produce and sell 630,000 zippers next year.Delta currently buys zippers from an outside supplier for $4.00 each (the same price that Gamma receives).
- 
Assume that Full Serve allows negotiated transfer pricing.What is the floor of the bargaining range and which division sets it?

Accepted Answer

A)  $3.50; Gamma 
B)  $2.70; Delta 
C)  $2.70; Gamma 
D)  $1.75; Delta 
E)  $1.44; Gamma 
A)  $3.50; Gamma 
B)  $2.70; Delta 
C)  $2.70; Gamma 
D)  $1.75; Delta 
E)  $1.44; Gamma

Question 18

Planet Company had the following historical accounting data per unit: 
 
The units are normally transferred internally from Division A to Division B.The units also may be sold externally for $220 per unit.The minimum profit level accepted by the company is a markup of 35%.There were no beginning or ending inventories.
What would be the transfer price if Division A uses full cost plus markup?

Accepted Answer

A)  $216 
B)  $198 
C)  $136 
D)  $129 
A)  $216 
B)  $198 
C)  $136 
D)  $129

Question 19

Which of the following ratios is equal to margin?

Accepted Answer

A)  Operating Income / Sales 
B)  After-tax Operating Income / Total Capital Employed 
C)  Operating Income / Average Operating Assets 
D)  Residual Income / Sales 
E)  Total Capital Employed / Operating Income 
A)  Operating Income / Sales 
B)  After-tax Operating Income / Total Capital Employed 
C)  Operating Income / Average Operating Assets 
D)  Residual Income / Sales 
E)  Total Capital Employed / Operating Income

Question 20

Return on investment (ROI) can be calculated by multiplying margin times turnover.

Accepted Answer

A) True 
 B)False

Which of the following formulas measures turnover?

Transfer pricing is a complex issue.

Which of the following is true of revenue centers?

Atlas Company provided the following information for last year: - Which of the following is Atlas's return on investment (ROI) for last year? (Note: Round answer to two decimal places.)

Atlas Company provided the following information for last year: - Calculate Atlas's turnover ratio for last year.(Note: Round answer to two decimal places.)

Select the appropriate definition for each of the items listed below. -The dollar difference between operating income and minimum required return on a company's operating assets.

Division A had ROI of 15% last year.The manager of Division A is considering an additional investment for the coming year.What step will the manager likely choose to take?

The Engine Division provides engines for the Tractor Division of a company.The standard unit costs for the Engine Division are: - What is the transfer price based on full cost plus a markup of 35%?

Several transfer pricing policies are used in practice.These transfer pricing policies include

A transfer price is the price charged for a component by the selling division to the buying division of the same company.

If there is a competitive outside market for the transferred product, then the best transfer price is the cost-based transfer price.

The following information pertains to the three divisions of Yang Company: - What are the sales for Division B?

Select the appropriate definition for each of the items listed below. -The ratio of sales to average operating assets.

_________________ is found by dividing sales by average operating assets.

Which of the following ratios is equal to margin?

Return on investment (ROI) can be calculated by multiplying margin times turnover.

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behavior, Cost Forecasting, and Segmented Income Statements

Job-Order Costing and Normal Cost Overhead Application

Activity-Based Costing and Management

Process Costing

Cost-Volume-Profit Analysis

Tactical Decision-Making and Relevant Costing

Profit Planning and Flexible Budgets

Standard Costing and Variance Analysis

Capital Investment Decisions

Emerging Topics in Managerial Accounting: Sustainability, Quality Cost, Lean Accounting, International Issues, Enterprise Risk Management, the Managerial Accountant in Forensicfraud Accounting

Statement of Cash Flows

Financial Statement Analysis

Filters

Exam 11: Performance Evaluation and Decentralization

​Which of the following formulas measures turnover?

Transfer pricing is a complex issue.

Which of the following is true of revenue centers?

Atlas Company provided the following information for last year: - Which of the following is Atlas's return on investment (ROI) for last year? (Note: Round answer to two decimal places.)

Atlas Company provided the following information for last year: - Calculate Atlas's turnover ratio for last year.(Note: Round answer to two decimal places.)

Select the appropriate definition for each of the items listed below. -The dollar difference between operating income and minimum required return on a company's operating assets.

Division A had ROI of 15% last year.The manager of Division A is considering an additional investment for the coming year.What step will the manager likely choose to take?

The Engine Division provides engines for the Tractor Division of a company.The standard unit costs for the Engine Division are: - What is the transfer price based on full cost plus a markup of 35%?

Several transfer pricing policies are used in practice.These transfer pricing policies include

A transfer price is the price charged for a component by the selling division to the buying division of the same company.

If there is a competitive outside market for the transferred product, then the best transfer price is the cost-based transfer price.

The following information pertains to the three divisions of Yang Company: - What are the sales for Division B?

Select the appropriate definition for each of the items listed below. -The ratio of sales to average operating assets.

_________________ is found by dividing sales by average operating assets.

Which of the following ratios is equal to margin?

Return on investment (ROI) can be calculated by multiplying margin times turnover.

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behavior, Cost Forecasting, and Segmented Income Statements

Job-Order Costing and Normal Cost Overhead Application

Activity-Based Costing and Management

Process Costing

Cost-Volume-Profit Analysis

Tactical Decision-Making and Relevant Costing

Profit Planning and Flexible Budgets

Standard Costing and Variance Analysis

Capital Investment Decisions

Emerging Topics in Managerial Accounting: Sustainability, Quality Cost, Lean Accounting, International Issues, Enterprise Risk Management, the Managerial Accountant in Forensicfraud Accounting

Statement of Cash Flows

Financial Statement Analysis

Filters

Which of the following formulas measures turnover?