Question 1

The profit margin is the ratio of

Accepted Answer

A) income from operations to sales. 
B) income from operations to invested assets. 
C) assets to liabilities. 
D) sales to invested assets. 
A) income from operations to sales. 
B) income from operations to invested assets. 
C) assets to liabilities. 
D) sales to invested assets.

Question 2

PDT Co.has two divisions,East and West.Invested assets and condensed income statement data for each division for the past year ended December 31 are as follows:

Accepted Answer

(a)
 @#IMG-DLM& @#IMG-DLM& @#IMG-DLM&
 ROI = 8.75%

Question 3

How do the responsibilities of a manager in an investment center compare to the responsibilities of a cost or profit center?

Accepted Answer

A) Investment center managers have more authority and responsibility than managers of a cost or profit center. 
B) Investment center managers have more authority and responsibility than managers of a cost center but less than managers of a profit center. 
C) Investment center managers have about the same authority and responsibility than managers of a cost or profit center. 
D) Investment center managers have more authority and responsibility than managers of a profit center but less than managers of a cost center. 
A) Investment center managers have more authority and responsibility than managers of a cost or profit center. 
B) Investment center managers have more authority and responsibility than managers of a cost center but less than managers of a profit center. 
C) Investment center managers have about the same authority and responsibility than managers of a cost or profit center. 
D) Investment center managers have more authority and responsibility than managers of a profit center but less than managers of a cost center.

Question 4

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

Accepted Answer

A) $103,000. 
B) $76,200. 
C) $166,400. 
D) $66,200. 
A) $103,000. 
B) $76,200. 
C) $166,400. 
D) $66,200.

Question 5

Blancher Corporation had $495,000 in invested assets,sales of $660,000,income from operations amounting to $99,000,and a desired minimum rate of return of 15%.The residual income for Stevenson is

Accepted Answer

A) $24,750. 
B) $17,820. 
C) $14,850. 
D) $16,500. 
A) $24,750. 
B) $17,820. 
C) $14,850. 
D) $16,500.

Question 6

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

Accepted Answer

A) the assets invested in the center but not costs and revenues. 
B) costs and assets invested in the center but not revenues. 
C) both costs and revenues for the department or division. 
D) not only costs and revenues but also assets invested in the center. 
A) the assets invested in the center but not costs and revenues. 
B) costs and assets invested in the center but not revenues. 
C) both costs and revenues for the department or division. 
D) not only costs and revenues but also assets invested in the center.

Question 7

A centralized business organization is one in which all major planning and operating decisions are made by top management.

Accepted Answer

A) True 
 B)False

Question 8

The major shortcoming of income from operations as an investment center performance measure is that it ignores the amount of assets invested in the center.

Accepted Answer

A) True 
 B)False

Question 9

The profit margin for Division E is 28% and the investment turnover is 3.0.What is the rate of return on investment for Division E?

Accepted Answer

A) 84% 
B) 28% 
C) 14% 
D) 9% 
A) 84% 
B) 28% 
C) 14% 
D) 9%

Question 10

Two divisions of Crowson Company (Divisions X and Y)have the same profit margins.Division X's investment turnover is larger than that of Division Y (1.2 to 1.0).Income from operations for Division X is $50,000,and income from operations for Division Y is $38,000.Division X has a higher return on investment than Division Y by

Accepted Answer

A) using income from operations as a performance measure. 
B) comparing income from operations. 
C) applying a negotiated price measure. 
D) using its assets more efficiently in generating sales. 
A) using income from operations as a performance measure. 
B) comparing income from operations. 
C) applying a negotiated price measure. 
D) using its assets more efficiently in generating sales.

Question 11

Which component of the balanced scorecard evaluates the economic performance of the responsibility centers?

Accepted Answer

A) Internal process 
B) Financial 
C) Education 
D) Customer 
A) Internal process 
B) Financial 
C) Education 
D) Customer

Question 12

Income from operations for Division B is $150,000,total service department charges are $400,000,and operating expenses are $2,266,000.What are the revenues for Division B?

Accepted Answer

A) $2,416,000 
B) $3,216,000 
C) $2,666,000 
D) $2,816,000 
A) $2,416,000 
B) $3,216,000 
C) $2,666,000 
D) $2,816,000

Question 13

Division T reported income from operations of $900,000 and total service department charges of $575,000.Therefore,

Accepted Answer

A) net income was $325,000. 
B) the gross profit margin was $325,000. 
C) income from operations before service department charges was $1,475,000. 
D) consolidated net income was $325,000. 
A) net income was $325,000. 
B) the gross profit margin was $325,000. 
C) income from operations before service department charges was $1,475,000. 
D) consolidated net income was $325,000.

Question 14

The excess of divisional income from operations over a minimum amount of divisional income from operations is termed

Accepted Answer

A) profit margin. 
B) residual income. 
C) rate of return on investment. 
D) gross profit. 
A) profit margin. 
B) residual income. 
C) rate of return on investment. 
D) gross profit.

Question 15

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?

Accepted Answer

A) Inventory Control 
B) Payroll Accounting 
C) Information Systems 
D) Human Resources 
A) Inventory Control 
B) Payroll Accounting 
C) Information Systems 
D) Human Resources

Question 16

What is a strength of the balanced scorecard?

Accepted Answer

A) The overall emphasis is on the financial measures of the company,which keeps management abreast of the company's financial position. 
B) It has the ability to reveal the underlying nonfinancial drivers of financial performance. 
C) It provides a method for departmental managers to evaluate top management. 
D) All of these are strengths of the balanced scorecard. 
A) The overall emphasis is on the financial measures of the company,which keeps management abreast of the company's financial position. 
B) It has the ability to reveal the underlying nonfinancial drivers of financial performance. 
C) It provides a method for departmental managers to evaluate top management. 
D) All of these are strengths of the balanced scorecard.

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

In evaluating the profit center manager,the income from operations should be compared

Accepted Answer

A) across profit centers. 
B) to historical performance or budget. 
C) to the competition's net income. 
D) to the total company earnings per share. 
A) across profit centers. 
B) to historical performance or budget. 
C) to the competition's net income. 
D) to the total company earnings per share.

Question 19

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.

Accepted Answer

A) True 
 B)False

Question 20

Responsibility accounting reports for profit centers are normally in the form of balance sheets.

Accepted Answer

A) True 
 B)False

The profit margin is the ratio of

PDT Co.has two divisions,East and West.Invested assets and condensed income statement data for each division for the past year ended December 31 are as follows:

How do the responsibilities of a manager in an investment center compare to the responsibilities of a cost or profit center?

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

Blancher Corporation had $495,000 in invested assets,sales of $660,000,income from operations amounting to $99,000,and a desired minimum rate of return of 15%.The residual income for Stevenson is

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

A centralized business organization is one in which all major planning and operating decisions are made by top management.

The major shortcoming of income from operations as an investment center performance measure is that it ignores the amount of assets invested in the center.

The profit margin for Division E is 28% and the investment turnover is 3.0.What is the rate of return on investment for Division E?

Which component of the balanced scorecard evaluates the economic performance of the responsibility centers?

Income from operations for Division B is $150,000,total service department charges are $400,000,and operating expenses are $2,266,000.What are the revenues for Division B?

Division T reported income from operations of $900,000 and total service department charges of $575,000.Therefore,

The excess of divisional income from operations over a minimum amount of divisional income from operations is termed

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?

What is a strength of the balanced scorecard?

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

In evaluating the profit center manager,the income from operations should be compared

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.

Responsibility accounting reports for profit centers are normally in the form of balance sheets.

The Role of Accounting in Business

Basic Accounting Concepts

Accrual Accounting Concepts

Accounting for Merchandising Businesses

Sarbanes-Oxley,internal Control,and Cash

Receivables and Inventories

Fixed Assets and Intangible Assets

Liabilities and Stockholders Equity

Financial Statement Analysis

Accounting Systems for Manufacturing Businesses

Cost Behavior and Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Cost Systems

Capital Investment Analysis

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Exam 14: Performance Evaluation for Decentralized Operations

The profit margin is the ratio of

PDT Co.has two divisions,East and West.Invested assets and condensed income statement data for each division for the past year ended December 31 are as follows:

How do the responsibilities of a manager in an investment center compare to the responsibilities of a cost or profit center?

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

Blancher Corporation had $495,000 in invested assets,sales of $660,000,income from operations amounting to $99,000,and a desired minimum rate of return of 15%.The residual income for Stevenson is

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

A centralized business organization is one in which all major planning and operating decisions are made by top management.

The major shortcoming of income from operations as an investment center performance measure is that it ignores the amount of assets invested in the center.

The profit margin for Division E is 28% and the investment turnover is 3.0.What is the rate of return on investment for Division E?

Which component of the balanced scorecard evaluates the economic performance of the responsibility centers?

Income from operations for Division B is $150,000,total service department charges are $400,000,and operating expenses are $2,266,000.What are the revenues for Division B?

Division T reported income from operations of $900,000 and total service department charges of $575,000.Therefore,

The excess of divisional income from operations over a minimum amount of divisional income from operations is termed

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?

What is a strength of the balanced scorecard?

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

In evaluating the profit center manager,the income from operations should be compared

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.

Responsibility accounting reports for profit centers are normally in the form of balance sheets.

The Role of Accounting in Business

Basic Accounting Concepts

Accrual Accounting Concepts

Accounting for Merchandising Businesses

Sarbanes-Oxley,internal Control,and Cash

Receivables and Inventories

Fixed Assets and Intangible Assets

Liabilities and Stockholders Equity

Financial Statement Analysis

Accounting Systems for Manufacturing Businesses

Cost Behavior and Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Cost Systems

Capital Investment Analysis

Filters