Exam 23: Performance Evaluation for Decentralized Operations

The following financial information was summarized from the accounting records of Train Corporation for the current year ended December 31: The income from operations for the Locomotive Division is:

The following data are taken from the management accounting reports of Dulcimer Co.: If an incentive bonus is paid to the manager who achieved the highest income from operations before service department charges, it follows that:

What is the term used to describe expenses that are incurred for the benefit of a specific department?

Purchase requisitions for Purchasing and the number of payroll checks for Payroll Accounting are examples of activity bases.

Income from operations of the Commercial Aviation Division is $2,225,000. If income from operations before service department charges is $3,250,000:

Mason Corporation had $650,000 in invested assets, sales of $700,000, income from operations amounting to $99,000, and a desired minimum rate of return of 15%. The residual income for Mason is:

Mason Corporation had $650,000 in invested assets, sales of $700,000, income from operations amounting to $99,000, and a desired minimum rate of return of 15%. The investment turnover for Mason is:

Hamlin Corporation had $220,000 in invested assets, sales of $242,000, income from operations amounting to $70,400, and a desired minimum rate of return of 3%. The rate of return on investment for Hamlin is:

The balanced scorecard measures financial and nonfinancial performance of a business. The balanced scorecard measures four areas. Identify one of the following that is not included as a performance measurement.

All of the following are advantages of decentralization except:

Materials used by Jefferson Company in producing Division C's product are currently purchased from outside suppliers at a cost of $10 per unit. However, the same materials are available from Division A. Division A has unused capacity and can produce the materials needed by Division C at a variable cost of $8.50 per unit. A transfer price of $9.50 per unit is negotiated and 25,000 units of material are transferred, with no reduction in Division A's current sales. How much would Division A's income from operations increase?

Most manufacturing plants are considered cost centers because they have control over

For higher levels of management, responsibility accounting reports:

Which of the following expressions is termed the profit margin factor as used in determining the rate of return on investment?

Income from operations for Division Z is $250,000, total service department charges are $400,000 and operating expenses are $2,266,000. What are the revenues for Division Z?

ABC Corporation has three service departments with the following costs and activity base: ABC has three operating divisions, Micro, Macro and Super. Their revenue, cost and activity information are as follows: How much service department cost would be allocated to the Super Division?

Which of the following is a disadvantage of decentralization?

The Clydesdale Company has sales of $4,500,000. It also has invested assets of $2,000,000 and operating expenses of $3,600,000. The company has established a minimum rate of return of 7%. What is Clydesdale Company's rate of return on investment?

Budget performance reports prepared for the vice-president of production would generally contain less detail than reports prepared for the various plant managers.

A department store apportions payroll costs on the basis of the number of payroll checks issued. Accounting costs are apportioned on the basis of the number of reports. The payroll costs for the year were $231,000 and the accounting costs for the year totaled $75,500. The departments and the number of payroll checks and accounting reports for each are as follows: Determine the amount of (a) payroll cost and (b) accounting cost to be apportioned to each department.