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

A responsibility center is a part of a business whose workers are accountable for specified activities.

Cognitive limitations mean it is difficult for central managers to be fully knowledgeable about all products and markets.

Omikron Division had the following information: What is EVA for Omikron Division?

Return on investment (ROI) refers to earnings before interest and income taxes.

If the turnover increased by 30 percent and the margin decreased by 30 percent, the ROI would

Gunnison Furniture had the following historical accounting data, per hundred board feet, concerning one of its products: The shelving is normally transferred internally from the Cutting Division to the Finishing Division. It also may be sold externally for $110 per hundred board feet. The minimum profit level accepted by the company is a markup of 20 percent. If the variable manufacturing cost transfer price method is used without a fixed fee, Gunnison Furniture's transfer price will be

The __________ transfer price is the minimum price acceptable when transferring a product.

The delegation of decision-making authority to successively lower management levels is called __________ .

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

Negotiated prices are transfer prices

Which of the following is NOT an environmental factor affecting performance evaluation in the multinational firm?

The transfer price that would leave the selling division no worse off if the good is sold to an internal division is(are) called:

If the operating asset turnover increased by 50 percent and the margin increased by 50 percent, the ROI would increase by

When there is an outside market for an intermediate product that is perfectly competitive, the most equitable method of transfer pricing is

Panther 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 $210 per unit. The minimum profit level accepted by the company is a markup of 30 percent. There were no beginning or ending inventories. If variable manufacturing costs without a fixed fee are used as the transfer price, Division A's transfer price would be

If the Southern Division of American Products Company had a turnover ratio of 4.2 and a margin of 0.10, the return on investment would be

Mako Division had the following information: What is the turnover ratio for Mako Division?

The following information pertains to the three divisions of Merrymount Company: What is the turnover for Division Z?

Rags-to-Riches Corporation has two divisions, X and Y. Division X sells its product to Division Y. Standard costs for Division X are as follows: What is the transfer price for Division X based on standard variable cost plus a markup of 25 percent?

Panther 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 $210 per unit. The minimum profit level accepted by the company is a markup of 30 percent. There were no beginning or ending inventories. If the negotiated price is used, Division A's transfer price should be a