Question 1

The human resources department for a steel manufacturer is likely to be classified as a(n)

Accepted Answer

A) investment center. 
B) cost center. 
C) profit center. 
D) revenue center.

Question 2

Selected financial data for the Photocopies Division of Elizabeth's Business Machines is as follows:  What is the Photocopier Division's sales margin?

Accepted Answer

A) 250.00% 
B) 75.00% 
C) 5.15% 
D) 30.00%

Question 3

Goal congruence is more likely to be achieved at a centralized organization rather than a decentralized organization.

Accepted Answer

A) True 
 B)False

Question 4

The local Burger King restaurant is likely to be considered to be a revenue center.

Accepted Answer

A) True 
 B)False

Question 5

The number of on-time deliveries would be an example of measuring which perspective?

Accepted Answer

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

Question 6

In a(n)________ center, managers are accountable for both revenues and costs.

Accepted Answer

A) cost 
B) profit 
C) equity 
D) investment

Question 7

Capital turnover is calculated as operating income divided by total assets.

Accepted Answer

A) True 
 B)False

Question 8

The Top Hat Division of Blandon's Fine Menswear had the following results last year (in thousands).  Management's target rate of return is 12% and the weighted average cost of capital is 9%.
What is the Top Hat Division's Return on Investment (ROI)?

Accepted Answer

A) 22.50% 
B) 15.00% 
C) 150.00% 
D) 5.56%

Question 9

Which of the following financial performance measures can be used to compare potential projects of different sizes?

Accepted Answer

A) ROI 
B) Residual income 
C) Sales revenue 
D) Operating income

Question 10

Sales margin is a component of the Return on Investment (ROI)calculation.

Accepted Answer

A) True 
 B)False

Question 11

Residual income is the difference between revenues and expenses.

Accepted Answer

A) True 
 B)False

Question 12

A performance report compares expected revenues and expenses against budgeted figures for each responsibility center.

Accepted Answer

A) True 
 B)False

Question 13

What will happen to return on investment (ROI)if current assets decrease while everything else remains the same?

Accepted Answer

A) ROI will decrease. 
B) ROI will increase. 
C) ROI will not be affected. 
D) We cannot determine the direction of the effect from the information provided.

Question 14

The difference between the actual revenues and expenses and the master budget is known as a

Accepted Answer

A) capital budget variance. 
B) flexible budget variance. 
C) static budget variance. 
D) master budget variance.

Question 15

Operations is one factor of the financial perspective of the Balanced Scorecard.

Accepted Answer

A) True 
 B)False

Question 16

New product development time would be an example of the

Accepted Answer

A) financial perspective. 
B) customer perspective. 
C) learning and growth perspective. 
D) internal business perspective.

Question 17

Information technology has made many tasks easier, but not all tasks. Which of the following tasks performed by managers requires more critical thinking skills than the others because it is not as dependent upon information technology?

Accepted Answer

A) Sensitivity analysis 
B) Analyzing and investigating the root causes of variances in responsibility center reports 
C) Rolling up individual units' budgets into the companywide budget 
D) Preparing responsibility center performance reports that identify variances between actual and budgeted revenues and costs

Question 18

Most companies consider divisions to be investment centers.

Accepted Answer

A) True 
 B)False

Question 19

Discuss potential problems associated with decentralization.

Accepted Answer

The answer of Discuss potential problems associated with decentralization....

Question 20

Responsibility accounting performance reports capture the financial performance of cost, revenue and profit centers.

Accepted Answer

A) True 
 B)False

Exam 10: Performance Evaluation

The human resources department for a steel manufacturer is likely to be classified as a(n)

Selected financial data for the Photocopies Division of Elizabeth's Business Machines is as follows: What is the Photocopier Division's sales margin?

Goal congruence is more likely to be achieved at a centralized organization rather than a decentralized organization.

The local Burger King restaurant is likely to be considered to be a revenue center.

The number of on-time deliveries would be an example of measuring which perspective?

In a(n) ________ center, managers are accountable for both revenues and costs.

Capital turnover is calculated as operating income divided by total assets.

The Top Hat Division of Blandon's Fine Menswear had the following results last year (in thousands) . Management's target rate of return is 12% and the weighted average cost of capital is 9%. What is the Top Hat Division's Return on Investment (ROI) ?

Which of the following financial performance measures can be used to compare potential projects of different sizes?

Sales margin is a component of the Return on Investment (ROI)calculation.

Residual income is the difference between revenues and expenses.

A performance report compares expected revenues and expenses against budgeted figures for each responsibility center.

What will happen to return on investment (ROI) if current assets decrease while everything else remains the same?

The difference between the actual revenues and expenses and the master budget is known as a

Operations is one factor of the financial perspective of the Balanced Scorecard.

New product development time would be an example of the

Information technology has made many tasks easier, but not all tasks. Which of the following tasks performed by managers requires more critical thinking skills than the others because it is not as dependent upon information technology?

Most companies consider divisions to be investment centers.

Discuss potential problems associated with decentralization.

Responsibility accounting performance reports capture the financial performance of cost, revenue and profit centers.