Question 1

Goal congruence can be defined as

Accepted Answer

A)  an incentive plan arranged so the managers' goals are allied with the shareholders' goals. 
B)  managers operating the business in the best interest of the shareholders. 
C)  tying management rewards to shareholder results. 
D)  all of these are correct. 
A)  an incentive plan arranged so the managers' goals are allied with the shareholders' goals. 
B)  managers operating the business in the best interest of the shareholders. 
C)  tying management rewards to shareholder results. 
D)  all of these are correct.

Question 2

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

Accepted Answer

A)  $25,000 
B)  $125,000 
C)  $500,000 
D)  $208,333 
A)  $25,000 
B)  $125,000 
C)  $500,000 
D)  $208,333

Question 3

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

Question 4

Discuss the differences between centralized and decentralized decision making.Why would a firm decentralize its operations?

Accepted Answer

Decentralization is the delegation of de

Question 5

If the operating asset turnover ratio increased by 30 percent and the margin increased by 20 percent, the divisional ROI

Accepted Answer

A)  would increase by 56 percent. 
B)  would decrease by 60 percent. 
C)  would increase by 20 percent. 
D)  cannot be determined. 
A)  would increase by 56 percent. 
B)  would decrease by 60 percent. 
C)  would increase by 20 percent. 
D)  cannot be determined.

Question 6

The Engine Division provides engines for the Tractor Division of a company.The standard unit costs for the Engine Division are as follows:   What is the transfer price based on variable product costs plus 20 percent?

Accepted Answer

A)  $720 
B)  $2,160 
C)  $2,100 
D)  $2,520 
A)  $720 
B)  $2,160 
C)  $2,100 
D)  $2,520

Question 7

Money 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?

Accepted Answer

A)  $11.00 
B)  $17.50 
C)  $13.75 
D)  $7.50 
A)  $11.00 
B)  $17.50 
C)  $13.75 
D)  $7.50

Question 8

If a company has sales of $2,500,000, net income of $250,000, and an asset base of $1,250,000, its return on investment is

Accepted Answer

A)  20%. 
B)  10%. 
C)  500%. 
D)  200%. 
A)  20%. 
B)  10%. 
C)  500%. 
D)  200%.

Question 9

Both revenue center and profit center managers are responsible for achieving

Accepted Answer

A)  budgeted revenues. 
B)  budgeted net income. 
C)  budgeted costs. 
D)  budgeted contribution margin. 
A)  budgeted revenues. 
B)  budgeted net income. 
C)  budgeted costs. 
D)  budgeted contribution margin.

Question 10

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

Accepted Answer

A)  1.5% 
B)  100.0% 
C)  15.0% 
D)  6.0% 
A)  1.5% 
B)  100.0% 
C)  15.0% 
D)  6.0%

Question 11

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 12

In the Ambros 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?

Accepted Answer

A)  $91 
B)  $90 
C)  $83 
D)  $73 
A)  $91 
B)  $90 
C)  $83 
D)  $73

Question 13

Hasslehoff Inc., is a multinational company with divisions around the world.Division A in the United States purchases a part from Division G in Canada.There is no outside market for the part because it is used to manufacture another product.The manufacturing cost for the part is $5.Transportation is $1 and commissions are $.5 but do not need to be paid. What is the transfer price using the cost-plus method?

Accepted Answer

A)  $5.50 
B)  $6.50 
C)  $5 
D)  $6 
A)  $5.50 
B)  $6.50 
C)  $5 
D)  $6

Question 14

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

Accepted Answer

A)  50 percent. 
B)  25 percent. 
C)  100 percent. 
D)  125 percent. 
A)  50 percent. 
B)  25 percent. 
C)  100 percent. 
D)  125 percent.

Question 15

Beta Division had the following information:   What is the residual income for Beta Division?

Accepted Answer

A)  $60,000 
B)  $48,000 
C)  $7,500 
D)  $(10,000) 
A)  $60,000 
B)  $48,000 
C)  $7,500 
D)  $(10,000)

Question 16

___________________ exists when the major functions of an organization are controlled by top management.

Accepted Answer

A)  Decentralization 
B)  Centralization 
C)  Optimization 
D)  An unfavorable overhead variance 
A)  Decentralization 
B)  Centralization 
C)  Optimization 
D)  An unfavorable overhead variance

Question 17

Transfer prices are the prices charged

Accepted Answer

A)  for distributing goods from one warehouse to another. 
B)  for the goods produced by one division to another division that needs these goods. 
C)  when delivering goods to the customer. 
D)  when transferring goods to international divisions. 
A)  for distributing goods from one warehouse to another. 
B)  for the goods produced by one division to another division that needs these goods. 
C)  when delivering goods to the customer. 
D)  when transferring goods to international divisions.

Question 18

In the Ambros 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 1?

Accepted Answer

A)  $90 
B)  $86 
C)  $83 
D)  $73 
A)  $90 
B)  $86 
C)  $83 
D)  $73

Question 19

The following information pertains to the three divisions of Marlow Company:   
-What are the average operating assets for Division Z?

Accepted Answer

A)  $75,000 
B)  $500,000 
C)  $1,250,000 
D)  $187,500 
A)  $75,000 
B)  $500,000 
C)  $1,250,000 
D)  $187,500

Question 20

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

Accepted Answer

A)  currency restrictions 
B)  economic stability 
C)  impact of foreign policy 
D)  both a and b 
A)  currency restrictions 
B)  economic stability 
C)  impact of foreign policy 
D)  both a and b

Goal congruence can be defined as

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

In the Ambros 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?

Discuss the differences between centralized and decentralized decision making.Why would a firm decentralize its operations?

If the operating asset turnover ratio increased by 30 percent and the margin increased by 20 percent, the divisional ROI

The Engine Division provides engines for the Tractor Division of a company.The standard unit costs for the Engine Division are as follows: What is the transfer price based on variable product costs plus 20 percent?

Money 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?

If a company has sales of $2,500,000, net income of $250,000, and an asset base of $1,250,000, its return on investment is

Both revenue center and profit center managers are responsible for achieving

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

Return on investment can be divided into two separate components

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

Beta Division had the following information: What is the residual income for Beta Division?

___________________ exists when the major functions of an organization are controlled by top management.

Transfer prices are the prices charged

In the Ambros 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 1?

The following information pertains to the three divisions of Marlow Company: -What are the average operating assets for Division Z?

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

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

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

Goal congruence can be defined as

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

In the Ambros 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?

Discuss the differences between centralized and decentralized decision making.Why would a firm decentralize its operations?

If the operating asset turnover ratio increased by 30 percent and the margin increased by 20 percent, the divisional ROI

The Engine Division provides engines for the Tractor Division of a company.The standard unit costs for the Engine Division are as follows: What is the transfer price based on variable product costs plus 20 percent?

Money 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?

If a company has sales of $2,500,000, net income of $250,000, and an asset base of $1,250,000, its return on investment is

Both revenue center and profit center managers are responsible for achieving

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

Return on investment can be divided into two separate components

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

Beta Division had the following information: What is the residual income for Beta Division?

___________________ exists when the major functions of an organization are controlled by top management.

Transfer prices are the prices charged

In the Ambros 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 1?

The following information pertains to the three divisions of Marlow Company: -What are the average operating assets for Division Z?

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

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

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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