Question 1

The three common types of responsibility centers are referred to as cost centers,profit centers,and segment centers.

Accepted Answer

A) True 
 B)False

Question 2

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 profit margin for Stevenson is

Accepted Answer

A) 16%. 
B) 20%. 
C) 18%. 
D) 15%. 
A) 16%. 
B) 20%. 
C) 18%. 
D) 15%.

Question 3

To calculate income from operations,total service department charges are

Accepted Answer

A) subtracted from income from operations before service department charges. 
B) subtracted from operating expenses. 
C) added to income from operations before service department charges. 
D) subtracted from gross profit margin. 
A) subtracted from income from operations before service department charges. 
B) subtracted from operating expenses. 
C) added to income from operations before service department charges. 
D) subtracted from gross profit margin.

Question 4

Under the cost 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

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

Accepted Answer

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

Question 6

Which of the following is NOT a disadvantage of decentralized operation?

Accepted Answer

A) Competition among managers decreases profits 
B) Duplication of operations 
C) Price cutting by departments that are competing in the same product market 
D) Top management freed from everyday tasks to do strategic planning 
A) Competition among managers decreases profits 
B) Duplication of operations 
C) Price cutting by departments that are competing in the same product market 
D) Top management freed from everyday tasks to do strategic planning

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Responsibility accounting reports for a profit center typically show

Accepted Answer

A) revenues,expenses,and profit controlled by the manager of the center. 
B) only the controllable revenues. 
C) revenues,expenses,profit,and investment in assets controlled by the manager of the center. 
D) all revenues and expenses of the profit center. 
A) revenues,expenses,and profit controlled by the manager of the center. 
B) only the controllable revenues. 
C) revenues,expenses,profit,and investment in assets controlled by the manager of the center. 
D) all revenues and expenses of the profit center.

Question 9

The rate of return on investment may be computed by dividing investment turnover by the profit margin.

Accepted Answer

A) True 
 B)False

Question 10

The profit margin component of rate of return on investment analysis focuses on profitability by indicating the rate of profit earned on each sales dollar.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

The profit center income statement should include ONLY revenues and expenses that are controlled by the manager.

Accepted Answer

A) True 
 B)False

Question 13

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 rate of return on investment for Stevenson is

Accepted Answer

A) 16%. 
B) 20%. 
C) 18%. 
D) 15%. 
A) 16%. 
B) 20%. 
C) 18%. 
D) 15%.

Question 14

Service department charges are similar to the expenses of a profit center that purchased services from a source outside the company.

Accepted Answer

A) True 
 B)False

Question 15

Businesses that are separated into two or more manageable units in which managers have authority and responsibility for operations are said to be

Accepted Answer

A) centralized. 
B) consolidated. 
C) diversified. 
D) decentralized. 
A) centralized. 
B) consolidated. 
C) diversified. 
D) decentralized.

Question 16

If income from operations for a division is $6,000,invested assets are $25,000,and sales are $30,000,the investment turnover is 5.0.

Accepted Answer

A) True 
 B)False

Question 17

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 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

By use of the rate of return on investment as a divisional performance measure,divisional managers will always be motivated to invest in proposals that will increase the overall rate of return for the company.

Accepted Answer

A) True 
 B)False

Question 20

If income from operations for a division is $6,000,invested assets are $25,000,and sales are $30,000,the profit margin is 24%.

Accepted Answer

A) True 
 B)False

The three common types of responsibility centers are referred to as cost centers,profit centers,and segment centers.

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 profit margin for Stevenson is

To calculate income from operations,total service department charges are

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

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

Which of the following is NOT a disadvantage of decentralized operation?

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

Responsibility accounting reports for a profit center typically show

The rate of return on investment may be computed by dividing investment turnover by the profit margin.

The profit margin component of rate of return on investment analysis focuses on profitability by indicating the rate of profit earned on each sales dollar.

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

The profit center income statement should include ONLY revenues and expenses that are controlled by the manager.

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 rate of return on investment for Stevenson is

Service department charges are similar to the expenses of a profit center that purchased services from a source outside the company.

Businesses that are separated into two or more manageable units in which managers have authority and responsibility for operations are said to be

If income from operations for a division is $6,000,invested assets are $25,000,and sales are $30,000,the investment turnover is 5.0.

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.

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.

By use of the rate of return on investment as a divisional performance measure,divisional managers will always be motivated to invest in proposals that will increase the overall rate of return for the company.

If income from operations for a division is $6,000,invested assets are $25,000,and sales are $30,000,the profit margin is 24%.

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 three common types of responsibility centers are referred to as cost centers,profit centers,and segment centers.

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 profit margin for Stevenson is

To calculate income from operations,total service department charges are

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

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

Which of the following is NOT a disadvantage of decentralized operation?

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

Responsibility accounting reports for a profit center typically show

The rate of return on investment may be computed by dividing investment turnover by the profit margin.

The profit margin component of rate of return on investment analysis focuses on profitability by indicating the rate of profit earned on each sales dollar.

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

The profit center income statement should include ONLY revenues and expenses that are controlled by the manager.

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 rate of return on investment for Stevenson is

Service department charges are similar to the expenses of a profit center that purchased services from a source outside the company.

Businesses that are separated into two or more manageable units in which managers have authority and responsibility for operations are said to be

If income from operations for a division is $6,000,invested assets are $25,000,and sales are $30,000,the investment turnover is 5.0.

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.

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.

By use of the rate of return on investment as a divisional performance measure,divisional managers will always be motivated to invest in proposals that will increase the overall rate of return for the company.

If income from operations for a division is $6,000,invested assets are $25,000,and sales are $30,000,the profit margin is 24%.

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