Question 1

The best measure of managerial efficiency in the use of investments in assets is

Accepted Answer

A) return on stockholders' equity 
B) investment turnover 
C) operating income 
D) inventory turnover

Question 2

Which of the following is a measure of a manager's performance working in a profit center?

Accepted Answer

A) a balance sheet 
B) the return on investment and residual income measures 
C) a budget performance report 
D) the divisional income statements

Question 3

The minimum accepted divisional operating income is set by top management by establishing a maximum return considered acceptable on invested assets.

Accepted Answer

A) True 
 B)False

Question 4

If the profit margin for a division is 11% and the investment turnover is 1.5, the return on investment is 7.3%.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A) 20% 
B) 80% 
C) 44.4% 
D) 18%

Question 6

The Central Division of Nebraska Company has a return on investment of 28% and a profit margin of 14%. The investment turnover is

Accepted Answer

A) 0.2 
B) 2.0 
C) 5.0 
D) 0.5

Question 7

In evaluating the profit center manager, the operating income should be compared

Accepted Answer

A) across profit centers 
B) to a budget 
C) to the competitor's net income 
D) to the total company earnings per share

Question 8

Data for Divisions A, B, C, D, and E are as follows:  
a.Determine the missing items, identifying each by letter (a-o).Round percentage and turnover values to one decimal place.
b.Which division is most profitable in terms of operating income?
c.Which division is most profitable in terms of return on investment?

Accepted Answer

The answer of Data for Divisions A, B, C, D,...

Question 9

Division A reported operating income of $975,000 and total support department allocations of $675,000. As a result,

Accepted Answer

A) net income was $300,000 
B) the gross profit was $300,000 
C) operating income before support department allocations was $1,650,000 
D) consolidated net income was $300,000

Question 10

Responsibility accounting reports that are given to lower-level managers are usually very detailed, while higher-level managers will be given a summary report.

Accepted Answer

A) True 
 B)False

Question 11

Division D of Saunders Company has sales of $350,000, cost of goods sold of $120,000, operating expenses of $58,000, and invested assets of $150,000.​
-The profit margin for Division D is

Accepted Answer

A) 42.9% 
B) 83.4% 
C) 49.1% 
D) 65.7%

Question 12

Using the data below for Coffee & Cocoa Company, determine the divisional operating income for the three regions by allocating the support department expenses proportional to the sales of the regions. Round final allocation amounts to the nearest whole dollar.​

Accepted Answer

The answer of Using the data below for Coffee &...

Question 13

Division D of Saunders Company has sales of $350,000, cost of goods sold of $120,000, operating expenses of $58,000, and invested assets of $150,000.​
-The return on investment (ROI) for Division D is

Accepted Answer

A) 153.3% 
B) 114.7% 
C) 87.2% 
D) 233%

Question 14

The cost price approach for transfer pricing is most often used between responsibility centers organized as cost centers that are not concerned with the revenue.

Accepted Answer

A) True 
 B)False

Question 15

The ratio of sales to invested assets is termed the investment turnover component of the return on investment.

Accepted Answer

A) True 
 B)False

Question 16

If operating income for a division is $30,000, sales are $263,750, and invested assets are $187,500, the investment turnover is 1.3.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A) 56% 
B) 20% 
C) 45% 
D) 25%

Question 18

By using the return on investment as a divisional performance measure, divisional managers will always be motivated to invest in proposals that will increase the overall return on investment for the company.

Accepted Answer

A) True 
 B)False

Question 19

Several items are missing from the following table of return on investment and residual income. Determine the missing items, identifying each item by the appropriate letter (a-l). Round percentages to one decimal place.

Accepted Answer

The answer of Several items are missing from the following...

Question 20

Responsibility accounting reports for profit centers will include

Accepted Answer

A) costs only 
B) revenues only 
C) expenses and fixed assets 
D) revenues, expenses, and operating income or loss

Exam 24: Evaluating Decentralized Operations

The best measure of managerial efficiency in the use of investments in assets is

Which of the following is a measure of a manager's performance working in a profit center?

The minimum accepted divisional operating income is set by top management by establishing a maximum return considered acceptable on invested assets.

If the profit margin for a division is 11% and the investment turnover is 1.5, the return on investment is 7.3%.

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

The Central Division of Nebraska Company has a return on investment of 28% and a profit margin of 14%. The investment turnover is

In evaluating the profit center manager, the operating income should be compared

Division A reported operating income of $975,000 and total support department allocations of $675,000. As a result,

Responsibility accounting reports that are given to lower-level managers are usually very detailed, while higher-level managers will be given a summary report.

Division D of Saunders Company has sales of $350,000, cost of goods sold of $120,000, operating expenses of $58,000, and invested assets of $150,000. -The profit margin for Division D is

Using the data below for Coffee & Cocoa Company, determine the divisional operating income for the three regions by allocating the support department expenses proportional to the sales of the regions. Round final allocation amounts to the nearest whole dollar.

Division D of Saunders Company has sales of $350,000, cost of goods sold of $120,000, operating expenses of $58,000, and invested assets of $150,000. -The return on investment (ROI) for Division D is

The cost price approach for transfer pricing is most often used between responsibility centers organized as cost centers that are not concerned with the revenue.

The ratio of sales to invested assets is termed the investment turnover component of the return on investment.

If operating income for a division is $30,000, sales are $263,750, and invested assets are $187,500, the investment turnover is 1.3.

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

By using the return on investment as a divisional performance measure, divisional managers will always be motivated to invest in proposals that will increase the overall return on investment for the company.

Several items are missing from the following table of return on investment and residual income. Determine the missing items, identifying each item by the appropriate letter (a-l). Round percentages to one decimal place.

Responsibility accounting reports for profit centers will include

Exam 24: Evaluating Decentralized Operations

The best measure of managerial efficiency in the use of investments in assets is

Which of the following is a measure of a manager's performance working in a profit center?

The minimum accepted divisional operating income is set by top management by establishing a maximum return considered acceptable on invested assets.

If the profit margin for a division is 11% and the investment turnover is 1.5, the return on investment is 7.3%.

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

The Central Division of Nebraska Company has a return on investment of 28% and a profit margin of 14%. The investment turnover is

In evaluating the profit center manager, the operating income should be compared

Division A reported operating income of $975,000 and total support department allocations of $675,000. As a result,

Responsibility accounting reports that are given to lower-level managers are usually very detailed, while higher-level managers will be given a summary report.

Division D of Saunders Company has sales of $350,000, cost of goods sold of $120,000, operating expenses of $58,000, and invested assets of $150,000.​ -The profit margin for Division D is

Using the data below for Coffee & Cocoa Company, determine the divisional operating income for the three regions by allocating the support department expenses proportional to the sales of the regions. Round final allocation amounts to the nearest whole dollar.​

Division D of Saunders Company has sales of $350,000, cost of goods sold of $120,000, operating expenses of $58,000, and invested assets of $150,000.​ -The return on investment (ROI) for Division D is

The cost price approach for transfer pricing is most often used between responsibility centers organized as cost centers that are not concerned with the revenue.

The ratio of sales to invested assets is termed the investment turnover component of the return on investment.

If operating income for a division is $30,000, sales are $263,750, and invested assets are $187,500, the investment turnover is 1.3.

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

By using the return on investment as a divisional performance measure, divisional managers will always be motivated to invest in proposals that will increase the overall return on investment for the company.

Several items are missing from the following table of return on investment and residual income. Determine the missing items, identifying each item by the appropriate letter (a-l). Round percentages to one decimal place.

Responsibility accounting reports for profit centers will include

Division D of Saunders Company has sales of $350,000, cost of goods sold of $120,000, operating expenses of $58,000, and invested assets of $150,000. -The profit margin for Division D is

Using the data below for Coffee & Cocoa Company, determine the divisional operating income for the three regions by allocating the support department expenses proportional to the sales of the regions. Round final allocation amounts to the nearest whole dollar.

Division D of Saunders Company has sales of $350,000, cost of goods sold of $120,000, operating expenses of $58,000, and invested assets of $150,000. -The return on investment (ROI) for Division D is