Exam 14: Performance Evaluation for Decentralized Operations

The primary accounting tool for controlling and reporting for cost centers is a budget performance report.

The balanced scorecard attempts to evaluate the underlying financial drivers of nonfinancial performance.

The following financial information was summarized from the accounting records of Block Corporation for the current year ended December 31: -The gross profit for the Hardware Division is

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

Assume that Division X has generated sales revenue of $3,025,000 and achieved income from operations of $242,000 using $1,800,000 of invested assets.If management desires a minimum rate of return of 12%,the profit margin is

If divisional income from operations is $100,000,invested assets are $850,000,and the minimum rate of return on invested assets is 8%,the residual income is $32,000.

In a profit center,the manager has responsibility and authority for making decisions that affect

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

If the profit margin for a division is 8% and the investment turnover is 1.20,the rate of return on investment is 6.7%.

Espinosa Corporation had $220,000 in invested assets,sales of $242,000,income from operations amounting to $48,400,and a desired minimum rate of return of 3%.The rate of return on investment for Espinosa is

Division I of Norris Company has a rate of return on investment of 28% and a profit margin of 20%.What is the investment turnover?

If divisional income from operations is $75,000,invested assets are $637,500,and the minimum rate of return on invested assets is 6%,the residual income is $36,750.

The following data are taken from the management accounting reports of Dancer Co.: If an incentive bonus is paid to the manager who achieved the highest income from operations before service department charges,it follows that

The major advantage of the rate of return on investment over income from operations as a divisional performance measure is that divisional investment is directly considered and thus comparability of divisions is facilitated.

In large businesses,decentralization is often advantageous because

The minimum amount of desired divisional income from operations is set by top management by establishing a minimum rate of return considered acceptable for invested assets.

The best measure of managerial efficiency in the use of investments in assets is

A responsibility center in which the department manager has responsibility for and authority over costs and revenues is called a(n)

The minimum amount of desired divisional income from operations is set by top management by establishing a maximum rate of return considered acceptable for invested assets.

The service department will determine its service department charge rate and charge the company's divisions or departments according to their use of that particular service department.