Question 1

A manager who is responsible for both the revenue and the costs incurred in generating a product or service is managing a

Accepted Answer

A) Cost center. 
B) Product center. 
C) Profit center. 
D) Investment center.

Question 2

The Sphinx division of Shepherd Corporation generated division generated net revenues of $12,000,000 and variable expenses of $7,700,000.If common corporate fixed costs were $1,000,000 and the segment margin was $1,300,000,what are the division's direct fixed expenses?

Accepted Answer

A)  $4,300,000 
B)  $3,000,000 
C)  $300,000 
D)  The ans cannot be determined from the information given.

Question 3

The DuPont model for calculating ROI contains which of the following components?

Accepted Answer

A) Asset turnover 
B) Internal rate of return 
C) Both asset turnover and internal rate of return. 
D) Neither asset turnover nor internal rate of return.

Question 4

Which of the following is $\textbf{    not       }$a problem associated with residual income?

Accepted Answer

A) It can change without any change in operations because of depreciation. 
B) It is an absolute measure that is stated in absolute dollars. 
C) Using it to compare divisions of different sizes is difficult. 
D) All of these ans choices are problems associated with residual income.

Question 5

If a company desires to increase ROI,it should consider methods that will decrease

Accepted Answer

A) Sales revenue. 
B) Segment margin. 
C) Asset turnover. 
D) Average operating assets.

Question 6

The organizational structure in which decision-making authority for the entire organization rests in the hands of one person or a small group of people in a single location is called

Accepted Answer

A) Responsibility centered. 
B) Centralization. 
C) Decentralization. 
D) Segmentation .

Question 7

Which of the following items would $\textbf{         not}$  appear on a segment margin income statement?

Accepted Answer

A) Direct material 
B) Traceable fixed costs 
C) Selling expense 
D) Common fixed costs

Question 8

Which of the following would $\textbf{   not      }$  be a focus of top managers in a decentralized organizational structure?

Accepted Answer

A) Long-range projections 
B) Corporate goals 
C) Day-to-day operational issues 
D) All of these ans choices would be focuses of top management.

Question 9

Which of the following is $\textbf{   not      }$  a measure on which transfer prices can be based?

Accepted Answer

A) Market-based price 
B) Cost-based price 
C) Negotiated price 
D) All of these ans choices are measures on which transfer prices can be based.

Question 10

The accounting department of a large corporation would be classified as a

Accepted Answer

A) Cost center. 
B) Profit center. 
C) Investment center. 
D) Segment.

Question 11

After an organization implements a certain level of decentralization,it is committed to maintaining that level for the life of the organization.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following activities might you find in retail product segment?

Accepted Answer

A) Selling 
B) Importing 
C) Delivering 
D) All of these ans choices are correct.

Question 13

A segment of an organization is any part of the organization that management wishes to evaluate. Segment margin income statements highlight the elements under the segment manager’s control.

Required:

a.	What is “segment margin” and how is it calculated?

b.	What is the difference between “segment margin” and a segment’s “net operating income?”

c.	Why are common allocated fixed costs an issue in evaluating the performance of a segment manager?

Accepted Answer

The answer of A segment of an organization is any...

Question 14

The packaging department in a large manufacturing company would be classified as a

Accepted Answer

A) Cost center. 
B) Profit center. 
C) Investment center. 
D) Segment.

Question 15

The division director for Natchez Corporation's Mississippi division,which operates as an investment center,is considering investing in machinery which costs of $2,200,000 and is expected to generate $332,000 in additional operating income.If the division's weighted average cost of capital is 11% and its tax rate is 20%,what is the equipment's EVA?

Accepted Answer

A)  $23,600 
B)  $90,000 
C)  $242,000 
D)  $332,000

Question 16

An organizational unit whose manager is responsible only for the costs incurred in the unit is referred to as a

Accepted Answer

A) Expense center. 
B) Cost center. 
C) Product center. 
D) Manufacturing center.

Question 17

As long as EVA is positive,the firm's managers have used the invested capital to create additional value for shareholders.

Accepted Answer

A) True 
 B)False

Question 18

University Hospital provided the following income statement for two of its divisions: Diagnostic and Outpatient. 
  
The CEO of the hospital is not pleased with the division's performance,and he believes that the Diagnostic division is responsible for its dismal result and wants to consider outsourcing diagnostic procedures.

Required:

The controller has determined that the hospital’s headquarters allocated $98,000 and $32,000 in common administrative fixed costs, respectively, to Diagnostic and Outpatient divisions.  Prepare a segment margin income statement that will provide the CEO with a better basis for evaluating the two divisions’ performance.

Accepted Answer

The answer of University Hospital provided the following income statement...

Question 19

Before a company makes the decision to change the degree of decentralization,top management must consider the advantages and disadvantages of such a move.
a.List three advantages of decentralization.
b.List three disadvantages of decentralization.

Accepted Answer

The answer of Before a company makes the decision to...

Question 20

Which of the following is the most unbiased transfer price?

Accepted Answer

A) Market-based price 
B) Cost-based price 
C) Negotiated price 
D) Intercompany relay price

Exam 10: Decentralizing and Performance Evaluation

A manager who is responsible for both the revenue and the costs incurred in generating a product or service is managing a

The Sphinx division of Shepherd Corporation generated division generated net revenues of $12,000,000 and variable expenses of $7,700,000.If common corporate fixed costs were $1,000,000 and the segment margin was $1,300,000,what are the division's direct fixed expenses?

The DuPont model for calculating ROI contains which of the following components?

Which of the following is $\textbf{ not }$ a problem associated with residual income?

If a company desires to increase ROI,it should consider methods that will decrease

The organizational structure in which decision-making authority for the entire organization rests in the hands of one person or a small group of people in a single location is called

Which of the following items would $\textbf{ not}$ appear on a segment margin income statement?

Which of the following would $\textbf{ not }$ be a focus of top managers in a decentralized organizational structure?

Which of the following is $\textbf{ not }$ a measure on which transfer prices can be based?

The accounting department of a large corporation would be classified as a

After an organization implements a certain level of decentralization,it is committed to maintaining that level for the life of the organization.

Which of the following activities might you find in retail product segment?

The packaging department in a large manufacturing company would be classified as a

An organizational unit whose manager is responsible only for the costs incurred in the unit is referred to as a

As long as EVA is positive,the firm's managers have used the invested capital to create additional value for shareholders.

Before a company makes the decision to change the degree of decentralization,top management must consider the advantages and disadvantages of such a move. a.List three advantages of decentralization. b.List three disadvantages of decentralization.

Which of the following is the most unbiased transfer price?

Exam 10: Decentralizing and Performance Evaluation

A manager who is responsible for both the revenue and the costs incurred in generating a product or service is managing a

The Sphinx division of Shepherd Corporation generated division generated net revenues of $12,000,000 and variable expenses of $7,700,000.If common corporate fixed costs were $1,000,000 and the segment margin was $1,300,000,what are the division's direct fixed expenses?

The DuPont model for calculating ROI contains which of the following components?

Which of the following is not \textbf{ not } not a problem associated with residual income?

If a company desires to increase ROI,it should consider methods that will decrease

The organizational structure in which decision-making authority for the entire organization rests in the hands of one person or a small group of people in a single location is called

Which of the following items would not\textbf{ not} not appear on a segment margin income statement?

Which of the following would not \textbf{ not } not be a focus of top managers in a decentralized organizational structure?

Which of the following is not \textbf{ not } not a measure on which transfer prices can be based?

The accounting department of a large corporation would be classified as a

After an organization implements a certain level of decentralization,it is committed to maintaining that level for the life of the organization.

Which of the following activities might you find in retail product segment?

The packaging department in a large manufacturing company would be classified as a

An organizational unit whose manager is responsible only for the costs incurred in the unit is referred to as a

As long as EVA is positive,the firm's managers have used the invested capital to create additional value for shareholders.

Before a company makes the decision to change the degree of decentralization,top management must consider the advantages and disadvantages of such a move. a.List three advantages of decentralization. b.List three disadvantages of decentralization.

Which of the following is the most unbiased transfer price?

Which of the following is $\textbf{ not }$ a problem associated with residual income?

Which of the following items would $\textbf{ not}$ appear on a segment margin income statement?

Which of the following would $\textbf{ not }$ be a focus of top managers in a decentralized organizational structure?

Which of the following is $\textbf{ not }$ a measure on which transfer prices can be based?