Question 1

A segment of a business responsible for both revenues and expenses would be called:

Accepted Answer

A)  a cost center. 
B)  an investment center. 
C)  a profit center. 
D)  residual income. 
A)  a cost center. 
B)  an investment center. 
C)  a profit center. 
D)  residual income.

Question 2

Verkamp Corporation has two divisions: the YDI Division and the QCC Division. The corporation's net operating income is $31,800. The YDI Division's divisional segment margin is $111,800 and the QCC Division's divisional segment margin is $152,800. What is the amount of the common fixed expense not traceable to the individual divisions?

Accepted Answer

A)  $143,600 
B)  $184,600 
C)  $264,600 
D)  $232,800 
A)  $143,600 
B)  $184,600 
C)  $264,600 
D)  $232,800

Question 3

The following information relates to the Cranberry Division of Innovative Bologna Corporation for last year:  
-What was the Cranberry Division's residual income for last year?

Accepted Answer

A)  $26,400 
B)  $36,000 
C)  $41,400 
D)  $51,000 
A)  $26,400 
B)  $36,000 
C)  $41,400 
D)  $51,000

Question 4

All other things the same, if a division's traceable fixed expenses decrease the division's segment margin will increase.

Accepted Answer

A) True 
 B)False

Question 5

Ahina Industries is a division of a major corporation. Data concerning the most recent year appears below:  
-The division's turnover is closest to:

Accepted Answer

A)  2.84 
B)  10.64 
C)  2.24 
D)  0.27 
A)  2.84 
B)  10.64 
C)  2.24 
D)  0.27

Question 6

The Holmes Division recorded operating data as follows for the past year:  
-For the past year, the minimum required rate of return was:

Accepted Answer

A)  11% 
B)  12% 
C)  13% 
D)  14% 
A)  11% 
B)  12% 
C)  13% 
D)  14%

Question 7

When used in return on investment (ROI) calculations, operating assets include investments in land held for future use and investments in other companies.

Accepted Answer

A) True 
 B)False

Question 8

Kaighn Corporation has two divisions: the West Division and the East Division. The corporation's net operating income is $18,500. The West Division's divisional segment margin is $27,700 and the East Division's divisional segment margin is $49,400. What is the amount of the common fixed expense not traceable to the individual divisions?

Accepted Answer

A)  $46,200 
B)  $67,900 
C)  $77,100 
D)  $58,600 
A)  $46,200 
B)  $67,900 
C)  $77,100 
D)  $58,600

Question 9

Ieso Company has two stores: J and K. During November, Ieso Company reported a net operating income of $30,000 and sales of $450,000. The contribution margin in Store J was $100,000, or 40% of sales. The segment margin in Store K was $30,000, or 15% of sales. Traceable fixed expenses are $60,000 in Store J, and $40,000 in Store K.
-The segment margin ratio in Store J was:

Accepted Answer

A)  16% 
B)  24% 
C)  40% 
D)  60% 
A)  16% 
B)  24% 
C)  40% 
D)  60%

Question 10

The Axle Division of LaBate Company makes and sells only one product. Annual data on the Axle Division's single product follow:  
-Suppose the manager of Axle desires a return on investment of 22%. In order to achieve this goal, Axle must sell how many units per year?

Accepted Answer

A)  14,500 
B)  16,750 
C)  18,250 
D)  19,500 
A)  14,500 
B)  16,750 
C)  18,250 
D)  19,500

Question 11

Seebach Corporation has two major business segments-Apparel and Accessories. Data concerning those segments for June appear below:   
Common fixed expenses totaled $292,000 and were allocated as follows: $155,000 to the Apparel business segment and $137,000 to the Accessories business segment.
Required:
Prepare a segmented income statement in the contribution format for the company. Omit percentages; show only dollar amounts.

Accepted Answer

The answer of Seebach Corporation has two major business segments-Apparel...

Question 12

A balanced scorecard is an integrated set of performance measures that should be designed to support management's strategy throughout the organization.

Accepted Answer

A) True 
 B)False

Question 13

The Casket Division of Roybal Corporation had average operating assets of $750,000 and net operating income of $86,700 in March. The company uses residual income to evaluate the performance of its divisions, with a minimum required rate of return of 13%.
Required:
What was the Casket Division's residual income in March?

Accepted Answer

The answer of The Casket Division of Roybal Corporation had...

Question 14

Ieso Company has two stores: J and K. During November, Ieso Company reported a net operating income of $30,000 and sales of $450,000. The contribution margin in Store J was $100,000, or 40% of sales. The segment margin in Store K was $30,000, or 15% of sales. Traceable fixed expenses are $60,000 in Store J, and $40,000 in Store K.
-Variable expenses in Store K totaled:

Accepted Answer

A)  $70,000 
B)  $110,000 
C)  $200,000 
D)  $130,000 
A)  $70,000 
B)  $110,000 
C)  $200,000 
D)  $130,000

Question 15

A decentralized organization is one in which decisions are made by top management and then implemented by managers at lower operating levels.

Accepted Answer

A) True 
 B)False

Question 16

Higado Confectionery Corporation has a number of store locations throughout North America. In income statements segmented by store, which of the following would be considered a common fixed cost?

Accepted Answer

A)  store manager salaries 
B)  store building depreciation expense 
C)  the cost of corporate advertising aired during the Super Bowl 
D)  all of these 
A)  store manager salaries 
B)  store building depreciation expense 
C)  the cost of corporate advertising aired during the Super Bowl 
D)  all of these

Question 17

Which of the following performance measures will decrease if there is an increase in the accounts receivable?

Accepted Answer

A)  Choice A 
B)  Choice B 
C)  Choice C 
D)  Choice D 
A)  Choice A 
B)  Choice B 
C)  Choice C 
D)  Choice D

Question 18

Eber Wares is a division of a major corporation. The following data are for the latest year of operations:   
Required:
a. What is the division's margin?
b. What is the division's turnover?
c. What is the division's return on investment (ROI)?
d. What is the division's residual income?

Accepted Answer

a. Margin = Net operating income @#IMG-DLM& Sales

Question 19

A company that has a profit can increase its return on investment by:

Accepted Answer

A)  increasing sales revenue and operating expenses by the same dollar amount. 
B)  increasing average operating assets and operating expenses by the same dollar amount. 
C)  increasing sales revenue and operating expenses by the same percentage. 
D)  decreasing average operating assets and sales by the same percentage. 
A)  increasing sales revenue and operating expenses by the same dollar amount. 
B)  increasing average operating assets and operating expenses by the same dollar amount. 
C)  increasing sales revenue and operating expenses by the same percentage. 
D)  decreasing average operating assets and sales by the same percentage.

Question 20

Niesen Corporation has two major business segments-Consumer and Commercial. Data for the segment and for the company for August appear below:   In addition, common fixed expenses totaled $282,000 and were allocated as follows: $127,000 to the Consumer business segment and $155,000 to the Commercial business segment.
-The contribution margin of the Commercial business segment is:

Accepted Answer

A)  $146,000 
B)  $169,000 
C)  $546,000 
D)  $296,000 
A)  $146,000 
B)  $169,000 
C)  $546,000 
D)  $296,000

Exam 12: Segment Reporting, Decentralization, and the Balanced Scorecard

A segment of a business responsible for both revenues and expenses would be called:

The following information relates to the Cranberry Division of Innovative Bologna Corporation for last year: -What was the Cranberry Division's residual income for last year?

All other things the same, if a division's traceable fixed expenses decrease the division's segment margin will increase.

Ahina Industries is a division of a major corporation. Data concerning the most recent year appears below: -The division's turnover is closest to:

The Holmes Division recorded operating data as follows for the past year: -For the past year, the minimum required rate of return was:

When used in return on investment (ROI) calculations, operating assets include investments in land held for future use and investments in other companies.

The Axle Division of LaBate Company makes and sells only one product. Annual data on the Axle Division's single product follow: -Suppose the manager of Axle desires a return on investment of 22%. In order to achieve this goal, Axle must sell how many units per year?

A balanced scorecard is an integrated set of performance measures that should be designed to support management's strategy throughout the organization.

A decentralized organization is one in which decisions are made by top management and then implemented by managers at lower operating levels.

Higado Confectionery Corporation has a number of store locations throughout North America. In income statements segmented by store, which of the following would be considered a common fixed cost?

Which of the following performance measures will decrease if there is an increase in the accounts receivable?

Eber Wares is a division of a major corporation. The following data are for the latest year of operations: Required: a. What is the division's margin? b. What is the division's turnover? c. What is the division's return on investment (ROI)? d. What is the division's residual income?

A company that has a profit can increase its return on investment by:

Managerial Accounting and the Business Environment

Managerial Accounting and Cost Concepts

Systems Design: Job-Order Costing

Systems Design: Process Costing

Cost Behavior Analysis and Use

Cost-Volume-Profit Relationship

Variable Costing: a Tool for Management

Activity Based Costing: a Tool to Aid Decision-Making

Profit Planning

Flexible Budgets and Performance Analysis

Standard Costs and Operating Performance Measures

Relevant Costs for Decision Making

Capital Budgeting Decisions

How Well Am I Doing Statement of Cash Flows

How Well Am I Doing Financial Statement Analysis

Pricing Products and Services

Profitability Analysis

Further Classification of Labor Costs

Cost of Quality

the Predetermined Overhead Rate and Capacity

Fifo Method

Service Department Allocations

Least-Squares Regression Computations

Abc Action Analysis

Using a Modified Form of Activity-Based Costing to

Predetermined Overhead Rates and Overhead Analysis

Journal Entries to Record Variances

Transfer Pricing

Service Department Charges

The Concept of Present Value

Income Taxes in Capital Budgeting Decisions

The Direct Method of Determining the Net Cash Provided by

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