Exam 11: Responsibility Accounting Systems

The following data are for the Akron Division of Consolidated Rubber, Incorporated: For the past year, the margin used in return on investment calculations was:

The West Division of Cecchetti Corporation had average operating assets of $240,000 and net operating income of $42,200 in August. The minimum required rate of return for performance evaluation purposes is 19%.What was the West Division's residual income in August?

Dacker Products is a division of a major corporation. The following data are for the most recent year of operations: The division's margin used to compute return on investment is closest to:

Leete Incorporated reported the following results from last year's operations: Last year's margin was closest to:

Tommasino Products, Incorporated, has a Motor Division that manufactures and sells a number of products, including a standard motor that could be used by another division in the company, the Automotive Division, in one of its products. Data concerning that motor appear below: The Automotive Division is currently purchasing 9,000 of these motors per year from an overseas supplier at a cost of $72 per motor.Assume that the Motor Division is selling all of the motors it can produce to outside customers. Does there exist a transfer price that would make both the Motor and Automotive Division financially better off than if the Automotive Division were to continue buying its motors from the outside supplier?

Last year a company had sales of $600,000, a turnover of 3.6, and a return on investment of 18%. The company's net operating income for the year was:

All other things equal, which of the following would increase a division's residual income?

Cabell Products is a division of a major corporation. Last year the division had total sales of $25,320,000, net operating income of $1,924,320, and average operating assets of $6,000,000. The company's minimum required rate of return is 10%.The division's margin is closest to:

The following data has been provided for a company's most recent year of operations: The residual income for the year was closest to:

Stokan Products, Incorporated, has a Antennae Division that manufactures and sells a number of products, including a standard antennae that could be used by another division in the company, the Aircraft Products Division, in one of its products. Data concerning that antennae appear below: The Aircraft Products Division is currently purchasing 5,000 of these antennaes per year from an overseas supplier at a cost of $57 per antennae.Assume that the Antennae Division is selling all of the antennaes it can produce to outside customers. What should be the minimum acceptable transfer price for the antennaes from the standpoint of the Antennae Division?

Babak Industries is a division of a major corporation. Last year the division had total sales of $20,560,000, net operating income of $1,887,760, and average operating assets of $7,000,000.The division's turnover is closest to:

The Millard Division's operating data for the past two years are provided below: Millard Division's margin in Year 2 was 150% of the margin in Year 1.The turnover for Year 1 was:

Liapis Products, Incorporated, has a Valve Division that manufactures and sells a number of products, including a standard valve that could be used by another division, the Pump Division, in one of its products. Data concerning that valve appear below: The Pump Division is currently purchasing 12,000 of these valves per year from an overseas supplier at a cost of $62 per valve. Required: a. Assume that the Valve Division has enough idle capacity to handle all of the Pump Division's needs. What is the acceptable range, if any, for the transfer price between the two divisions? b. Assume that the Valve Division is selling all of the valves it can produce to outside customers. What is the acceptable range, if any, for the transfer price between the two divisions? c. Assume again that the Valve Division is selling all of the valves it can produce to outside customers. Also assume that $7 in variable expenses can be avoided on transfers within the company due to reduced shipping and selling costs. What is the acceptable range, if any, for the transfer price between the two divisions?

Schabel Corporation has two operating divisions-a Consumer Division and a Commercial Division. The company's Customer Service Department provides services to both divisions. The variable costs of the Customer Service Department are budgeted at $72 per order. The Customer Service Department's fixed costs are budgeted at $695,400 for the year. The fixed costs of the Customer Service Department are determined based on the peak period orders. At the end of the year, actual Customer Service Department variable costs totaled $891,089 and fixed costs totaled $709,820. The Consumer Division had a total of 2,610 orders and the Commercial Division had a total of 9,580 orders for the year. For performance evaluation purposes, how much actual Customer Service Department cost should NOT be charged to the operating divisions at the end of the year?

Azotea Corporation has two operating divisions-a Consumer Division and a Commercial Division. The company's Order Fulfillment Department provides services to both divisions. The variable costs of the Order Fulfillment Department are budgeted at $68 per order. The Order Fulfillment Department's fixed costs are budgeted at $239,700 for the year. The fixed costs of the Order Fulfillment Department are budgeted based on the peak-period orders. At the end of the year, actual Order Fulfillment Department variable costs totaled $249,390 and fixed costs totaled $251,140. The Consumer Division had a total of 1,840 orders and the Commercial Division had a total of 3,460 orders for the year.How much Order Fulfillment Department cost should be allocated to the Commercial Division at the end of the year?