Question 1

Return on investment can be divided into two separate components

Accepted Answer

A)  margin and profit. 
B)  margin and turnover. 
C)  value and turnover. 
D)  liquidity and margin. 
A)  margin and profit. 
B)  margin and turnover. 
C)  value and turnover. 
D)  liquidity and margin.

Question 2

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 minimum transfer price in Case 2?

Accepted Answer

A)  $58 
B)  $74 
C)  $68 
D)  $75 
A)  $58 
B)  $74 
C)  $68 
D)  $75

Question 3

The right to buy a certain number of shares of a company's stock at a particular price is(are) called:

Accepted Answer

A)  Perquisites 
B)  Cash compensation 
C)  Stock-based compensation 
D)  Stock options 
A)  Perquisites 
B)  Cash compensation 
C)  Stock-based compensation 
D)  Stock options

Question 4

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

Accepted Answer

A)  0.15 
B)  0.10 
C)  4.00 
D)  2.50 
A)  0.15 
B)  0.10 
C)  4.00 
D)  2.50

Question 5

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. Which case should not be transferred internally?

Accepted Answer

A)  Both should be transferred internally. 
B)  Neither should be transferred internally. 
C)  Case 1 
D)  Case 2 
A)  Both should be transferred internally. 
B)  Neither should be transferred internally. 
C)  Case 1 
D)  Case 2

Question 6

__________ limitations make it difficult for any central manager to know everything about all products and markets.

Accepted Answer

The answer of __________ limitations make it difficult for any...

Question 7

The return on investment is computed as

Accepted Answer

A)  operating income divided by sales. 
B)  operating income divided by average operating assets. 
C)  sales divided by average operating assets. 
D)  operating asset turnover divided by the operating income margin. 
A)  operating income divided by sales. 
B)  operating income divided by average operating assets. 
C)  sales divided by average operating assets. 
D)  operating asset turnover divided by the operating income margin.

Question 8

A manufacturing division of a company would most likely be evaluated as a(n)

Accepted Answer

A)  cost center. 
B)  investment center. 
C)  revenue center. 
D)  asset center. 
A)  cost center. 
B)  investment center. 
C)  revenue center. 
D)  asset center.

Question 9

One disadvantage of ROI in evaluating performance is that it encourages managers to slack off.

Accepted Answer

A) True 
 B)False

Question 10

Epsilon Division had the following information:   If the asset base is decreased by $100,000, with no other changes, the return on investment of Epsilon Division will be

Accepted Answer

A)  100.0%. 
B)  600.0%. 
C)  16.7%. 
D)  62.5%. 
A)  100.0%. 
B)  600.0%. 
C)  16.7%. 
D)  62.5%.

Question 11

Responsibility accounting is defined as a system that

Accepted Answer

A)  defines responsibility by function only. 
B)  measures actual results against a flexible budget. 
C)  measures the results of a manager responsible for revenues and costs. 
D)  measures the results of each responsibility center and compares those results with some measure of expected or budgeted outcome. 
A)  defines responsibility by function only. 
B)  measures actual results against a flexible budget. 
C)  measures the results of a manager responsible for revenues and costs. 
D)  measures the results of each responsibility center and compares those results with some measure of expected or budgeted outcome.

Question 12

It is important to separate the evaluation of the manager from the evaluation of the division in a multinational firm. A manager's evaluation should NOT include

Accepted Answer

A)  revenues. 
B)  income taxes. 
C)  operating costs. 
D)  cost of goods sold. 
A)  revenues. 
B)  income taxes. 
C)  operating costs. 
D)  cost of goods sold.

Question 13

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 negotiated price is used, Gunnison Furniture's transfer price should be a

Accepted Answer

A)  maximum of $100.80. 
B)  minimum of $84.00. 
C)  minimum of $80.00. 
D)  maximum of $110.00. 
A)  maximum of $100.80. 
B)  minimum of $84.00. 
C)  minimum of $80.00. 
D)  maximum of $110.00.

Question 14

The following information pertains to the three divisions of Merrymount Company:   What is the residual income for Division X?

Accepted Answer

A)  $36,000 
B)  $45,000 
C)  $(9,000) 
D)  $(36,000) 
A)  $36,000 
B)  $45,000 
C)  $(9,000) 
D)  $(36,000)

Question 15

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 2?

Accepted Answer

A)  $75 
B)  $68 
C)  $74 
D)  $58 
A)  $75 
B)  $68 
C)  $74 
D)  $58

Question 16

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. The part can be purchased externally for $7 each. Transportation costs amount to $1 and the commission of $.50 will not need to be paid. What is the transfer price using the comparable uncontrolled price method?

Accepted Answer

A)  $8.50 
B)  $8 
C)  $7 
D)  $7.50 
A)  $8.50 
B)  $8 
C)  $7 
D)  $7.50

Question 17

Sporadic Company has the following data for 2014:
   Sprint Company has a target ROI of 20 percent.
Required:
Calculate the following amounts for each division:

Accepted Answer

Division A

Question 18

Hydroxide Company has two divisions, the Blending Division and Canning Division. The Blending Division sells chemicals to the Canning Division. Standard costs for the Blending Division are as follows:
  The Canning Division uses the following predetermined overhead rate:
  What is the transfer price for the chemicals per gallon based on standard variable cost?

Accepted Answer

A)  $3.00 
B)  $9.00 
C)  $5.40 
D)  $11.40 
A)  $3.00 
B)  $9.00 
C)  $5.40 
D)  $11.40

Question 19

Which of the following changes would NOT change return on investment (ROI)?

Accepted Answer

A)  Decrease sales and expenses by the same percentage. 
B)  Increase total assets. 
C)  Increase sales dollars by the same amount as total assets. 
D)  Decrease sales and expenses by the same dollar amount. 
A)  Decrease sales and expenses by the same percentage. 
B)  Increase total assets. 
C)  Increase sales dollars by the same amount as total assets. 
D)  Decrease sales and expenses by the same dollar amount.

Return on investment can be divided into two separate components

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 minimum transfer price in Case 2?

The right to buy a certain number of shares of a company's stock at a particular price is(are) called:

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

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. Which case should not be transferred internally?

__________ limitations make it difficult for any central manager to know everything about all products and markets.

The return on investment is computed as

A manufacturing division of a company would most likely be evaluated as a(n)

One disadvantage of ROI in evaluating performance is that it encourages managers to slack off.

Epsilon Division had the following information: If the asset base is decreased by $100,000, with no other changes, the return on investment of Epsilon Division will be

Responsibility accounting is defined as a system that

It is important to separate the evaluation of the manager from the evaluation of the division in a multinational firm. A manager's evaluation should NOT include

The following information pertains to the three divisions of Merrymount Company: What is the residual income for Division X?

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 2?

Sporadic Company has the following data for 2014: Sprint Company has a target ROI of 20 percent. Required: Calculate the following amounts for each division:

Which of the following changes would NOT change return on investment (ROI)?

Introduction to Cost Management

Basic Cost Management Concepts

Cost Behavior

Activity-Based Costing

Product and Service Costing: Job-Order System

Process Costing

Allocating Costs of Support Departments and Joint Products

Budgeting for Planning and Control Key

Standard Costing: a Functional-Based Control Approach

Strategic Cost Management

Activity-Based Management

The Balanced Scorecard: Strategic-Based Control

Quality and Environmental Cost Management

Lean Accounting and Productivity Measurement

Cost-Volume-Profit Analysis

Activity Resource Usage Model and Tactical Decision Making

Pricing and Profitability Analysis

Capital Investment

Inventory Management: Economic Order Quantity, Jit, and the Theory of Constraints

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

Return on investment can be divided into two separate components

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 minimum transfer price in Case 2?

The right to buy a certain number of shares of a company's stock at a particular price is(are) called:

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

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. Which case should not be transferred internally?

__________ limitations make it difficult for any central manager to know everything about all products and markets.

The return on investment is computed as

A manufacturing division of a company would most likely be evaluated as a(n)

One disadvantage of ROI in evaluating performance is that it encourages managers to slack off.

Epsilon Division had the following information: If the asset base is decreased by $100,000, with no other changes, the return on investment of Epsilon Division will be

Responsibility accounting is defined as a system that

It is important to separate the evaluation of the manager from the evaluation of the division in a multinational firm. A manager's evaluation should NOT include

The following information pertains to the three divisions of Merrymount Company: What is the residual income for Division X?

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 2?

Sporadic Company has the following data for 2014: Sprint Company has a target ROI of 20 percent. Required: Calculate the following amounts for each division:

Which of the following changes would NOT change return on investment (ROI)?

Introduction to Cost Management

Basic Cost Management Concepts

Cost Behavior

Activity-Based Costing

Product and Service Costing: Job-Order System

Process Costing

Allocating Costs of Support Departments and Joint Products

Budgeting for Planning and Control Key

Standard Costing: a Functional-Based Control Approach

Strategic Cost Management

Activity-Based Management

The Balanced Scorecard: Strategic-Based Control

Quality and Environmental Cost Management

Lean Accounting and Productivity Measurement

Cost-Volume-Profit Analysis

Activity Resource Usage Model and Tactical Decision Making

Pricing and Profitability Analysis

Capital Investment

Inventory Management: Economic Order Quantity, Jit, and the Theory of Constraints

Filters