Question 1

Which of the following items is often mostdifficult to allocate to a particular segment?

Accepted Answer

A)  Traceable fixed costs 
B)  Sales revenue 
C)  Common fixed costs 
D)  Variable costs 
A)  Traceable fixed costs 
B)  Sales revenue 
C)  Common fixed costs 
D)  Variable costs

Question 2

Which of the following statements about the balanced scorecard approach is true?

Accepted Answer

A)  It helps management focus on only nonfinancial measures of performance. 
B)  It helps management focus on critical success factors which may be financial and nonfinancial in nature. 
C)  It helps management ignore short-term operating performance in favor of long-term operating performance. 
D)  It helps management focus on only financial measures of performance. 
A)  It helps management focus on only nonfinancial measures of performance. 
B)  It helps management focus on critical success factors which may be financial and nonfinancial in nature. 
C)  It helps management ignore short-term operating performance in favor of long-term operating performance. 
D)  It helps management focus on only financial measures of performance.

Question 3

Return on investment (ROI) is calculated by:

Accepted Answer

A)  multiplying the margin by the turnover. 
B)  dividing the margin by the turnover. 
C)  dividing the turnover by the margin. 
D)  adding the margin and the turnover. 
A)  multiplying the margin by the turnover. 
B)  dividing the margin by the turnover. 
C)  dividing the turnover by the margin. 
D)  adding the margin and the turnover.

Question 4

Austin Inc. has a return on investment (ROI) of 240%. The company's margin was 20% and its turnover was 12.
How do margin and turnover relate back to ROI and what kinds of information do each of them provide?

Accepted Answer

ROI measures the rate of return generate

Question 5

Which of the following statements is true regarding the allocation of a company's indirect fixed costs?

Accepted Answer

A)  Indirect fixed costs should always be traced to a particular segment. 
B)  If the indirect fixed cost would go away should a particular segment be eliminated, then the indirect fixed cost should be traced to that particular segment. 
C)  Indirect fixed costs should never be allocated to a particular segment. 
D)  Indirect fixed costs should not benefit more than one particular segment. 
A)  Indirect fixed costs should always be traced to a particular segment. 
B)  If the indirect fixed cost would go away should a particular segment be eliminated, then the indirect fixed cost should be traced to that particular segment. 
C)  Indirect fixed costs should never be allocated to a particular segment. 
D)  Indirect fixed costs should not benefit more than one particular segment.

Question 6

Throughput would be a measure of performance under which perspective of the balanced scorecard?

Accepted Answer

A)  Internal business 
B)  Customer 
C)  Financial 
D)  Learning and growth 
A)  Internal business 
B)  Customer 
C)  Financial 
D)  Learning and growth

Question 7

Hedding Inc. has two divisions: classic and modern. In the most recent year, the classic division reported sales of $900,000 and an asset turnover of 4.0. The rate of return on average invested assets was 16%.
Required: What was the classic division's margin?

Accepted Answer

The margin is 4% calculated as

Question 8

When defining net operating income for return on investment (ROI) purposes, which of the following items should not be included?

Accepted Answer

A)  Sales revenue 
B)  Cost of goods sold 
C)  Interest expense 
D)  Salaries expense 
A)  Sales revenue 
B)  Cost of goods sold 
C)  Interest expense 
D)  Salaries expense

Question 9

Which of the following statements is true regarding a company's segment margin?

Accepted Answer

A)  It is primarily used to make short-term decisions such as cost-volume-profit (CVP) analysis and special order decisions. 
B)  It ignores all fixed costs. 
C)  It is primarily a measure of long-term profitability. 
D)  It should not be used to make decisions on whether or not to drop a product line. 
A)  It is primarily used to make short-term decisions such as cost-volume-profit (CVP) analysis and special order decisions. 
B)  It ignores all fixed costs. 
C)  It is primarily a measure of long-term profitability. 
D)  It should not be used to make decisions on whether or not to drop a product line.

Question 10

Which of the following statements about stock-based managerial compensation is correct?

Accepted Answer

A)  It may cause dysfunctional behavior in the short-run as managers try to drive up the company's stock price. 
B)  Exercising the option as soon as it is granted will leave the manager better off from a cash standpoint. 
C)  Stock options are always guaranteed to increase in value over time. 
D)  Managers always prefer to receive stock options instead of year-end bonuses. 
A)  It may cause dysfunctional behavior in the short-run as managers try to drive up the company's stock price. 
B)  Exercising the option as soon as it is granted will leave the manager better off from a cash standpoint. 
C)  Stock options are always guaranteed to increase in value over time. 
D)  Managers always prefer to receive stock options instead of year-end bonuses.

Question 11

Pennington Products Pennington Products has two product lines: R-100 and R-200. Revenue and cost information for each of the product lines are as follows:
  Pennington has common fixed expenses of $380,000 per year. Last year, the company produced and sold 35,000 units of R-100 and 25,000 units of R-200.
Refer to the Pennington Products information above. What is the segment margin of the R-100 product line?

Accepted Answer

A)  $775,000 
B)  $690,000 
C)  $525,000 
D)  $400,000 
A)  $775,000 
B)  $690,000 
C)  $525,000 
D)  $400,000

Question 12

Under what type of situation would return on investment (ROI) be a better performance measure than residual income and vice versa?

Accepted Answer

ROI is better suited as a comp

Question 13

A manager of a cost center would most likely be held responsible for which of the following variances?

Accepted Answer

A)  Flexible budget variance 
B)  Sales volume variance 
C)  Sales price variance 
D)  Direct materials price variance 
A)  Flexible budget variance 
B)  Sales volume variance 
C)  Sales price variance 
D)  Direct materials price variance

Question 14

Ramsey Automotive Ltd. had sales of $3,500,000 and net operating income of $900,000 last year. Operating assets last year averaged $1,500,000. The company's manager is considering the purchase of a new machine which is expected to increase average operating assets by 20%.
Required: Calculate the company's new ROI if the new machine is purchased.

Accepted Answer

The new ROI would be 56.6% cal

Question 15

Classify the following examples of quality costs as prevention (P), appraisal (A), internal failure (IF), and external failure (EF).

Accepted Answer

The answer of Classify the following examples of quality costs...

Question 16

Which type of manager would most likely be held responsible for the return on investment (ROI) of his segment?

Accepted Answer

A)  Investment center manager 
B)  Profit center manager 
C)  Cost center manager 
D)  Revenue center manager 
A)  Investment center manager 
B)  Profit center manager 
C)  Cost center manager 
D)  Revenue center manager

Question 17

Astin Ltd. requires all of its divisions to maintain a return on investment (ROI) of at least 25%. Over the past several years, one of Astin's divisions has consistently had the following information:   In order to achieve the company's ROI goals, this division should do which of the following?

Accepted Answer

A)  Maintain average operating assets of $2,000,000 or more. 
B)  Maintain average operating assets of $2,000,000 or less. 
C)  Maintain average operating assets of $125,000 or more. 
D)  Maintain average operating assets of $125,000 or less. 
A)  Maintain average operating assets of $2,000,000 or more. 
B)  Maintain average operating assets of $2,000,000 or less. 
C)  Maintain average operating assets of $125,000 or more. 
D)  Maintain average operating assets of $125,000 or less.

Question 18

As a new manager of a production division, you have made the decision to incur more quality costs than the previous manager of the division incurred. How can you defend quality costs to executive management?

Accepted Answer

It is often necessary to increase expend

Question 19

Which of the following statements about the balanced scorecard approach is true?

Accepted Answer

A)  The four perspectives of the balanced scorecard revolve around measures of quality, productivity, efficiency and timeliness, and marketing success. 
B)  The balanced scorecard approach requires looking at performance from four different but related perspectives: financial, customer, internal business, and learning and growth. 
C)  The balanced scorecard approach integrates financial and nonfinancial performance measures. 
D)  All of these are true. 
A)  The four perspectives of the balanced scorecard revolve around measures of quality, productivity, efficiency and timeliness, and marketing success. 
B)  The balanced scorecard approach requires looking at performance from four different but related perspectives: financial, customer, internal business, and learning and growth. 
C)  The balanced scorecard approach integrates financial and nonfinancial performance measures. 
D)  All of these are true.

Question 20

Residual income:

Accepted Answer

A)  is most useful as a way to compare individual divisions of different sizes. 
B)  is the amount of income earned in excess of a predetermined minimum rate of return on assets. 
C)  should not be used as a way to evaluate the manager of an investment center. 
D)  is often called economic value added (EV
A) . 
A)  is most useful as a way to compare individual divisions of different sizes. 
B)  is the amount of income earned in excess of a predetermined minimum rate of return on assets. 
C)  should not be used as a way to evaluate the manager of an investment center. 
D)  is often called economic value added (EV
A) .

Which of the following items is often mostdifficult to allocate to a particular segment?

Which of the following statements about the balanced scorecard approach is true?

Return on investment (ROI) is calculated by:

Austin Inc. has a return on investment (ROI) of 240%. The company's margin was 20% and its turnover was 12. How do margin and turnover relate back to ROI and what kinds of information do each of them provide?

Which of the following statements is true regarding the allocation of a company's indirect fixed costs?

Throughput would be a measure of performance under which perspective of the balanced scorecard?

Hedding Inc. has two divisions: classic and modern. In the most recent year, the classic division reported sales of $900,000 and an asset turnover of 4.0. The rate of return on average invested assets was 16%. Required: What was the classic division's margin?

When defining net operating income for return on investment (ROI) purposes, which of the following items should not be included?

Which of the following statements is true regarding a company's segment margin?

Which of the following statements about stock-based managerial compensation is correct?

Under what type of situation would return on investment (ROI) be a better performance measure than residual income and vice versa?

A manager of a cost center would most likely be held responsible for which of the following variances?

Classify the following examples of quality costs as prevention (P), appraisal (A), internal failure (IF), and external failure (EF).

Which type of manager would most likely be held responsible for the return on investment (ROI) of his segment?

Astin Ltd. requires all of its divisions to maintain a return on investment (ROI) of at least 25%. Over the past several years, one of Astin's divisions has consistently had the following information: In order to achieve the company's ROI goals, this division should do which of the following?

As a new manager of a production division, you have made the decision to incur more quality costs than the previous manager of the division incurred. How can you defend quality costs to executive management?

Which of the following statements about the balanced scorecard approach is true?

Residual income:

Introduction to Managerial Accounting

Product Costing: Manufacturing Processes, Cost Terminology, and Cost Flows

Job Costing, Process Costing, and Operations Costing

Activity-Based Costing

Cost Behavior

Cost-Volume-Profit Analysis

Relevant Costs and Product Planning Decisions

Long-Term Capital Investment Decisions

The Use of Budgets in Planning and Decision Making

Variance Analysis A Tool for Cost Control and Performance Evaluation

Financial Statement Analysis

The Statement of Cash Flows

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Exam 11: Decentralization, Performance Evaluation, and the Balanced Scorecard

Which of the following items is often mostdifficult to allocate to a particular segment?

Which of the following statements about the balanced scorecard approach is true?

Return on investment (ROI) is calculated by:

Austin Inc. has a return on investment (ROI) of 240%. The company's margin was 20% and its turnover was 12. How do margin and turnover relate back to ROI and what kinds of information do each of them provide?

Which of the following statements is true regarding the allocation of a company's indirect fixed costs?

Throughput would be a measure of performance under which perspective of the balanced scorecard?

Hedding Inc. has two divisions: classic and modern. In the most recent year, the classic division reported sales of $900,000 and an asset turnover of 4.0. The rate of return on average invested assets was 16%. Required: What was the classic division's margin?

When defining net operating income for return on investment (ROI) purposes, which of the following items should not be included?

Which of the following statements is true regarding a company's segment margin?

Which of the following statements about stock-based managerial compensation is correct?

Under what type of situation would return on investment (ROI) be a better performance measure than residual income and vice versa?

A manager of a cost center would most likely be held responsible for which of the following variances?

Classify the following examples of quality costs as prevention (P), appraisal (A), internal failure (IF), and external failure (EF).

Which type of manager would most likely be held responsible for the return on investment (ROI) of his segment?

Astin Ltd. requires all of its divisions to maintain a return on investment (ROI) of at least 25%. Over the past several years, one of Astin's divisions has consistently had the following information: In order to achieve the company's ROI goals, this division should do which of the following?

As a new manager of a production division, you have made the decision to incur more quality costs than the previous manager of the division incurred. How can you defend quality costs to executive management?

Which of the following statements about the balanced scorecard approach is true?

Residual income:

Introduction to Managerial Accounting

Product Costing: Manufacturing Processes, Cost Terminology, and Cost Flows

Job Costing, Process Costing, and Operations Costing

Activity-Based Costing

Cost Behavior

Cost-Volume-Profit Analysis

Relevant Costs and Product Planning Decisions

Long-Term Capital Investment Decisions

The Use of Budgets in Planning and Decision Making

Variance Analysis A Tool for Cost Control and Performance Evaluation

Financial Statement Analysis

The Statement of Cash Flows

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