Question 1

Uniox Inc.intends to increase its profits by 50% in the next financial year.Which of the following is most likely to be a lag indicator in Uniox's performance report?

Accepted Answer

A) return on investment 
B) number of repeat customers 
C) rate of on-time deliveries 
D) defect rate

Question 2

If a company allows division managers to negotiate a cost-based transfer price,it is better to use actual costs rather than standard costs.Otherwise,the selling division has no motivation to control costs.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is a key performance indicator of the customer perspective in a balanced scorecard?

Accepted Answer

A) defect rate 
B) employee satisfaction 
C) gross margin growth 
D) number of repeat customers

Question 4

Which of the following four perspectives of the balanced scorecard enables the management to answer the question,"How can we continue to improve and create value?"

Accepted Answer

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

Question 5

Residual Income (RI)considers both the division's operating income and its average total assets.In addition,it also incorporates another piece of information known as top management's target rate of return.

Accepted Answer

A) True 
 B)False

Question 6

Moon Beverages Corporation provides the following financial information:  
-Calculate the residual income (RI)of Moon Corp.

Accepted Answer

A) $1,156,000 
B) $300,000 
C) $151,800 
D) $58,200

Question 7

Which of the following managers is likely to have the least amount of responsibilities for a company?

Accepted Answer

A) the manager of a cost center 
B) the manager of a profit center 
C) the manager of an investment center 
D) the manager of a transfer pricing center

Question 8

Key performance indicators (KPIs)are summary performance measures that help managers assess whether the company is achieving its goals.

Accepted Answer

A) True 
 B)False

Question 9

Kurtz Logistics provides the following information: 
- What is the company's asset turnover ratio?

Accepted Answer

A) 3.8 
B) 4.6 
C) 11.5 
D) 7.2

Question 10

Residual income is used as a key performance indicator for evaluating an investment center's financial performance.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is most likely a key performance indicator of the internal business perspective of the balanced scorecard?

Accepted Answer

A) number of units produced per hour 
B) employee turnover 
C) cash flow 
D) number of cross-trained employees

Question 12

In many cases,the amount of transfer price does not affect the overall company profits.

Accepted Answer

A) True 
 B)False

Question 13

Huang Consumer Products has a small car division that operates as a profit center.Below is a partially completed performance report for the first quarter. 
- How much is the percentage variance for the flexible budget variance for traceable fixed expenses?

Accepted Answer

A) 0.8 % F 
B) 0.8 % U 
C) 0.3 % U 
D) 0.3 % F

Question 14

A company that uses a balanced scorecard has established a KPI for product quality.If the actual warranty claims are higher than expected it indicates that the quality standards have been met.

Accepted Answer

A) True 
 B)False

Question 15

The manager of a cost center is responsible for controlling costs and generating revenues of the company.

Accepted Answer

A) True 
 B)False

Question 16

A good balanced scorecard focuses only on lead indicators,because lag indicators are not important for the scorecard.

Accepted Answer

A) True 
 B)False

Question 17

Qvoware Inc.sells cosmetic products in the United States.Which one of the following is most likely to be a cost center for Qvoware?

Accepted Answer

A) a Qvoware retail store in Dallas 
B) the Qvoware HR department 
C) a Qvoware kiosk at a mall for selling its products 
D) the Qvoware product lines

Question 18

WAX-D Inc.has a division that manufactures a component that sells for $150 and has a variable cost of $45.Another division of the company wants to purchase the component.Fixed cost per unit of component is $25.What is the minimum transfer price if the division is operating at capacity?

Accepted Answer

A) $150 
B) $45 
C) $55 
D) $140

Question 19

The responsibility report of Keith Parker,the manager of one of the divisions of an auto parts manufacturing company,includes profits as well as return on investment and residual income.Keith is most likely the manager of a(n)________.

Accepted Answer

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

Question 20

Which of the following best describes the manager of a profit center?

Accepted Answer

A) The manager is only responsible for controlling costs. 
B) The manager is responsible for generating profits and efficiently managing the center's invested capital. 
C) The manager is only responsible for generating revenues. 
D) The manager is responsible for generating revenues and controlling costs.

Exam 24: Responsibility Accounting and Performance Evaluation

Uniox Inc.intends to increase its profits by 50% in the next financial year.Which of the following is most likely to be a lag indicator in Uniox's performance report?

If a company allows division managers to negotiate a cost-based transfer price,it is better to use actual costs rather than standard costs.Otherwise,the selling division has no motivation to control costs.

Which of the following is a key performance indicator of the customer perspective in a balanced scorecard?

Which of the following four perspectives of the balanced scorecard enables the management to answer the question,"How can we continue to improve and create value?"

Residual Income (RI)considers both the division's operating income and its average total assets.In addition,it also incorporates another piece of information known as top management's target rate of return.

Moon Beverages Corporation provides the following financial information: -Calculate the residual income (RI) of Moon Corp.

Which of the following managers is likely to have the least amount of responsibilities for a company?

Key performance indicators (KPIs)are summary performance measures that help managers assess whether the company is achieving its goals.

Kurtz Logistics provides the following information: - What is the company's asset turnover ratio?

Residual income is used as a key performance indicator for evaluating an investment center's financial performance.

Which of the following is most likely a key performance indicator of the internal business perspective of the balanced scorecard?

In many cases,the amount of transfer price does not affect the overall company profits.

Huang Consumer Products has a small car division that operates as a profit center.Below is a partially completed performance report for the first quarter. - How much is the percentage variance for the flexible budget variance for traceable fixed expenses?

A company that uses a balanced scorecard has established a KPI for product quality.If the actual warranty claims are higher than expected it indicates that the quality standards have been met.

The manager of a cost center is responsible for controlling costs and generating revenues of the company.

A good balanced scorecard focuses only on lead indicators,because lag indicators are not important for the scorecard.

Qvoware Inc.sells cosmetic products in the United States.Which one of the following is most likely to be a cost center for Qvoware?

WAX-D Inc.has a division that manufactures a component that sells for $150 and has a variable cost of $45.Another division of the company wants to purchase the component.Fixed cost per unit of component is $25.What is the minimum transfer price if the division is operating at capacity?

The responsibility report of Keith Parker,the manager of one of the divisions of an auto parts manufacturing company,includes profits as well as return on investment and residual income.Keith is most likely the manager of a(n) ________.

Which of the following best describes the manager of a profit center?