Exam 10: Decentralization: Responsibility Accounting, Performance Evaluation, and Transfer Pricing

Cornwall Company has two divisions, A and B. Information for each division is as follows: What is the return on investment for A?

The price charged for goods produced in one division to another division within the company is called the __________ price.

__________ is after-tax operating profit minus the total annual cost of capital. or or

The Hampton Division of Long Island Company sells all of its output to the Finishing Division of the company. The only product of the Hampton Division is chair legs that are used by the Finishing Division. The retail price of the legs is $20 per leg. Each chair completed by the Finishing Division requires four legs. Production quantity and cost data for 2014 are as follows: Required: Compute the transfer price for a chair leg using:

Which of the following departments would NOT be a cost center?

Which of the following would be a reason why managers would NOT provide good service?

A transfer price is the price charged by one division of a company to another company.

Lowellson Company had sales of $200,000, net income of $10,000, and an asset base of $300,000. Its margin is

Which of the following responsibility centers would have a manager responsible for revenues, costs, and investments?

When top management controls the major functions of an organization it is called:

Multiple measures of performance are beneficial if they

Responsibility accounting is a system that measures the results of each responsibility center and compares those results with some expected or budgeted outcome.

A type of fringe benefit received over and above salary is(are) called:

The transfer price that would leave the buying division no worse off if an input is purchased from an internal division is(are) called:

Patron Corporation had sales of $350,000, income of $10,000, and an asset base of $100,000. The turnover is

Local managers can make better decisions using distant information and outside managers can provide more timely responses to changing conditions.

If the operating asset turnover ratio increased by 40 percent and the margin increased by 30 percent, the divisional ROI

Division 'A' produces a component and wants to sell it to Division 'B'. The transfer price is

In an investment responsibility center, the manager is only responsible for costs.

Which of the following is NOT an advantage of ROI?