Question 1

Which of the following would be most effective in a small owner/manager-operated business?

Accepted Answer

A)  Profit centers 
B)  Centralization 
C)  Investment centers 
D)  Cost centers 
A)  Profit centers 
B)  Centralization 
C)  Investment centers 
D)  Cost centers

Question 2

Which of the following is not one of the common types of responsibility centers?

Accepted Answer

A)  Cost Center 
B)  Profit Center 
C)  Investment Center 
D)  Revenue Center 
A)  Cost Center 
B)  Profit Center 
C)  Investment Center 
D)  Revenue Center

Question 3

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:

Accepted Answer

A)  $57,960 
B)  $14,790 
C)  $27,240 
D)  $47,280 
A)  $57,960 
B)  $14,790 
C)  $27,240 
D)  $47,280

Question 4

A centralized business organization is one in which all major planning and operating decisions are made by top management.

Accepted Answer

A) True 
 B)False

Question 5

Bentz Co. has two divisions, A and B. Invested assets and condensed income statement data for each division for the past year ended December 31 are as follows:

Accepted Answer

The answer of Bentz Co. has two divisions, A and...

Question 6

In an investment center, the manager has responsibility and authority for making decisions that affect:

Accepted Answer

A)  costs 
B)  revenues 
C)  assets 
D)  costs, revenues, and assets 
A)  costs 
B)  revenues 
C)  assets 
D)  costs, revenues, and assets

Question 7

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 profit margin for Mason is:

Accepted Answer

A)  7.1% 
B)  20% 
C)  15.2% 
D)  14.1% 
A)  7.1% 
B)  20% 
C)  15.2% 
D)  14.1%

Question 8

Division X of O'Blarney Company has sales of $300,000, cost of goods sold of $120,000, operating expenses of $58,000, and invested assets of $150,000. What is the profit margin for Division X?

Accepted Answer

A)  81.3% 
B)  20.2% 
C)  40.7% 
D)  60% 
A)  81.3% 
B)  20.2% 
C)  40.7% 
D)  60%

Question 9

To calculate income from operations, total service department charges are:

Accepted Answer

A)  added to income from operations before service department charges 
B)  subtracted from operating expenses 
C)  subtracted from income from operations before service department charges 
D)  subtracted from gross profit margin 
A)  added to income from operations before service department charges 
B)  subtracted from operating expenses 
C)  subtracted from income from operations before service department charges 
D)  subtracted from gross profit margin

Question 10

Which transfer price approach is used when the transfer price is set at the amount sold to outside buyers?

Accepted Answer

A)  Market Price 
B)  Cost Price 
C)  Negotiated Price 
D)  Variable Price 
A)  Market Price 
B)  Cost Price 
C)  Negotiated Price 
D)  Variable Price

Question 11

The objective of transfer pricing is to encourage each division manager to transfer goods and services between divisions if overall company income can be increased by doing so.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A)  operating expenses are $1,025,000 
B)  total service department charges are $1,025,000 
C)  noncontrollable charges are $1,025,000 
D)  direct manufacturing charges are $1,025,000 
A)  operating expenses are $1,025,000 
B)  total service department charges are $1,025,000 
C)  noncontrollable charges are $1,025,000 
D)  direct manufacturing charges are $1,025,000

Question 13

The negotiated price approach allows the managers of decentralized units to agree among themselves as to the transfer price.

Accepted Answer

A) True 
 B)False

Question 14

The following is a measure of a manager's performance working in a cost center.

Accepted Answer

A)  budget performance report 
B)  rate of return and residual income measures 
C)  divisional income statements 
D)  balance sheet 
A)  budget performance report 
B)  rate of return and residual income measures 
C)  divisional income statements 
D)  balance sheet

Question 15

The profit margin for Atlantic Division is 28% and the investment turnover is 2.8. What is the rate of return on investment for Atlantic Division?

Accepted Answer

A)  20% 
B)  28% 
C)  14% 
D)  78.4% 
A)  20% 
B)  28% 
C)  14% 
D)  78.4%

Question 16

Separation of businesses into more manageable operating units is termed decentralization.

Accepted Answer

A) True 
 B)False

Question 17

If divisional income from operations is $100,000, invested assets are $850,000, and the minimum rate of return on invested assets is 8%, the residual income is $68,000.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following expenses incurred by a department store is an indirect expense?

Accepted Answer

A)  Insurance on merchandise inventory 
B)  Sales salaries 
C)  Depreciation on store equipment 
D)  Salary of vice-president of finance 
A)  Insurance on merchandise inventory 
B)  Sales salaries 
C)  Depreciation on store equipment 
D)  Salary of vice-president of finance

Question 19

Under the negotiated price approach, the transfer price is the price at which the product or service transferred could be sold to outside buyers.

Accepted Answer

A) True 
 B)False

Question 20

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?

Accepted Answer

A)  $350,000 
B)  $100,000 
C)  $125,000 
D)  $550,000 
A)  $350,000 
B)  $100,000 
C)  $125,000 
D)  $550,000

Which of the following would be most effective in a small owner/manager-operated business?

Which of the following is not one of the common types of responsibility centers?

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:

A centralized business organization is one in which all major planning and operating decisions are made by top management.

Bentz Co. has two divisions, A and B. Invested assets and condensed income statement data for each division for the past year ended December 31 are as follows:

In an investment center, the manager has responsibility and authority for making decisions that affect:

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 profit margin for Mason is:

Division X of O'Blarney Company has sales of $300,000, cost of goods sold of $120,000, operating expenses of $58,000, and invested assets of $150,000. What is the profit margin for Division X?

To calculate income from operations, total service department charges are:

Which transfer price approach is used when the transfer price is set at the amount sold to outside buyers?

The objective of transfer pricing is to encourage each division manager to transfer goods and services between divisions if overall company income can be increased by doing so.

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

The negotiated price approach allows the managers of decentralized units to agree among themselves as to the transfer price.

The following is a measure of a manager's performance working in a cost center.

The profit margin for Atlantic Division is 28% and the investment turnover is 2.8. What is the rate of return on investment for Atlantic Division?

Separation of businesses into more manageable operating units is termed decentralization.

If divisional income from operations is $100,000, invested assets are $850,000, and the minimum rate of return on invested assets is 8%, the residual income is $68,000.

Which of the following expenses incurred by a department store is an indirect expense?

Under the negotiated price approach, the transfer price is the price at which the product or service transferred could be sold to outside buyers.

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?

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Performance Evaluation Using Variances From Standard Costs

Differential Analysis and Product Pricing

Capital Investment Analysis

Cost Allocation and Activity-Based Costing

Cost Management for Just-In-Time Environments

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting Concepts and Principles

Filters

Exam 8: Performance Evaluation for Decentralized Operations

Which of the following would be most effective in a small owner/manager-operated business?

Which of the following is not one of the common types of responsibility centers?

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:

A centralized business organization is one in which all major planning and operating decisions are made by top management.

Bentz Co. has two divisions, A and B. Invested assets and condensed income statement data for each division for the past year ended December 31 are as follows:

In an investment center, the manager has responsibility and authority for making decisions that affect:

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 profit margin for Mason is:

Division X of O'Blarney Company has sales of $300,000, cost of goods sold of $120,000, operating expenses of $58,000, and invested assets of $150,000. What is the profit margin for Division X?

To calculate income from operations, total service department charges are:

Which transfer price approach is used when the transfer price is set at the amount sold to outside buyers?

The objective of transfer pricing is to encourage each division manager to transfer goods and services between divisions if overall company income can be increased by doing so.

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

The negotiated price approach allows the managers of decentralized units to agree among themselves as to the transfer price.

The following is a measure of a manager's performance working in a cost center.

The profit margin for Atlantic Division is 28% and the investment turnover is 2.8. What is the rate of return on investment for Atlantic Division?

Separation of businesses into more manageable operating units is termed decentralization.

If divisional income from operations is $100,000, invested assets are $850,000, and the minimum rate of return on invested assets is 8%, the residual income is $68,000.

Which of the following expenses incurred by a department store is an indirect expense?

Under the negotiated price approach, the transfer price is the price at which the product or service transferred could be sold to outside buyers.

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?

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Performance Evaluation Using Variances From Standard Costs

Differential Analysis and Product Pricing

Capital Investment Analysis

Cost Allocation and Activity-Based Costing

Cost Management for Just-In-Time Environments

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting Concepts and Principles

Filters