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

The Chasis Division provides frames for the Tractor Division of a company. The standard unit costs for the Chasis Division are as follows: What is the transfer price based on full cost plus a markup of 20 percent?

The following information pertains to the three divisions of Merrymount Company: What are the sales for Division Y?

Worldwide Inc., is a multinational company with divisions around the world. Division A in the United States purchases a part from Division G in China. There is no outside market for the part. The part is sold for $12 and normally receives a 20% markup on cost. What is the transfer price using the resale price method?

Which of the following managerial rewards is NOT a short-term reward?

A manager of a profit center does not control:

The records for the Venusian Division show the following data: Required:

Economic value added (EVA) is after-tax operating income minus the total annual cost of capital.

Which of the following is an economic factor affecting performance evaluation in a multinational firm?

Investments are not controlled by managers of a __________ center.

The Engine Division provides engines for the Truck Division of a company. The standard unit costs for the Engine Division are as follows: What is the transfer price based on full cost plus a markup of 30 percent?

Economic value added is calculated by which of the following formulas?

Firms encourage goal congruence by constructing management early retirement programs.

Which of the following departments would NOT be classified as a profit center?

The Uniforms Division of Baseball Company has just revised its actual cost data for 2014. Uniforms Division transfers goods to the Sport Division. Sport Division can buy the same goods in the open market for $122 each. Uniforms's new cost data are as follows: Current production is 200,000 units, and the Uniforms Division has a capacity of 300,000 units. Required:

Transfer pricing exists when one division of a company produces a product that can be used in the production by a different division.

In the Bombadier Company, Division A has a product that can be sold either to outside customers or to Division B. Information about these divisions is given below: The company uses the opportunity cost approach to transfer pricing. What is the maximum transfer price in Case 1?

If the margin of 0.3 stayed the same and the turnover ratio of 5.0 increased by 10 percent, the ROI would

Decentralization is the practice of delegating decision-making authority to the lower levels of management.

Which of the following changes would increase return on investment (ROI)?

The manager of a cost center is responsible for