Question 1

The ratio of sales to investment is termed the rate of return on investment.

Accepted Answer

A) True 
 B)False  False

Question 2

Central Division for Chemical Company has a rate of return on investment of 22% and an investment turnover of 1.4. What is the profit margin?

Accepted Answer

A)  20% 
B)  15.7% 
C)  14% 
D)  6.36% 
A)  20% 
B)  15.7% 
C)  14% 
D)  6.36% B

Question 3

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

Accepted Answer

A) True 
 B)False  False

Question 4

Match between columns
                        Premises: Income from operations minus minimum acceptable income from operations
Ratio of sales to invested assets
Income from operations divided by invested assets
Earned by profit centers
Ratio of income from operations to sales

Accepted Answer

The Answer of Rate of return on investments and Controllable is...

Question 5

Budget performance reports prepared for the vice president of production would generally contain less detail than reports prepared for the various plant managers.

Accepted Answer

A) True 
 B)False

Question 6

A centralized business organization is one in which all major planning and operating decisions are made by top management.

Accepted Answer

A) True 
 B)False

Question 7

The following financial information was summarized from the accounting records of Train Corporation for the current year ended December 31:   The income from operations for the Rails Division is

Accepted Answer

A)  $60,800 
B)  $33,600 
C)  $8,700 
D)  $21,150 
A)  $60,800 
B)  $33,600 
C)  $8,700 
D)  $21,150

Question 8

Depreciation expense on store equipment for a department store is an indirect expense.

Accepted Answer

A) True 
 B)False

Question 9

The ratio of income from operations to sales, which is also a factor in the DuPont formula for determining the rate of return on investment, is called

Accepted Answer

A)  profit margin 
B)  indirect expenses 
C)  investment turnover 
D)  cost 
A)  profit margin 
B)  indirect expenses 
C)  investment turnover 
D)  cost

Question 10

Division A of Chacha Company has sales of $140,000, cost of goods sold of $83,000, operating expenses of $43,000, and invested assets of $150,000. What is the rate of return on investment for Division A?

Accepted Answer

A)  9.3% 
B)  99.3% 
C)  74.6% 
D)  4.6% 
A)  9.3% 
B)  99.3% 
C)  74.6% 
D)  4.6%

Question 11

Managers of what type of decentralized units have authority and responsibility for revenues, costs, and assets invested in the unit?

Accepted Answer

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

Question 12

Mason Corporation had $650,000 in invested assets, sales of $700,000, income from operations amounting to $99,000, and a desired minimum rate of return of 15%.
The residual income for Mason is

Accepted Answer

A)  $0 
B)  $84,150 
C)  $(6,000) 
D)  $1,500 
A)  $0 
B)  $84,150 
C)  $(6,000) 
D)  $1,500

Question 13

Controllable expenses are those that can be influenced by the decisions of the profit center management.

Accepted Answer

A) True 
 B)False

Question 14

The Bottlebrush Company has income from operations of $60,000, invested assets of $345,000, and sales of $786,000. Use the DuPont formula to calculate the rate of return on investment, and show (a) the profit margin, (b) the investment turnover, and (c) rate of return on investment. Round the profit margin percentage to two decimal places and the investment turnover to three decimal places.

Accepted Answer

(a) Profit margin = $60,000/$7

Question 15

Transfer prices may be used when decentralized units are organized as cost, profit, or investment centers.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is not a disadvantage of decentralized operation?

Accepted Answer

A)  competition among managers 
B)  duplication of operations 
C)  price cutting by departments that are competing in the same product market 
D)  top management freed from everyday tasks to do strategic planning 
A)  competition among managers 
B)  duplication of operations 
C)  price cutting by departments that are competing in the same product market 
D)  top management freed from everyday tasks to do strategic planning

Question 17

Division A of Chacha Company has sales of $140,000, cost of goods sold of $83,000, operating expenses of $43,000, and invested assets of $150,000. What is the profit margin for Division A?

Accepted Answer

A)  11.1% 
B)  10.0% 
C)  9.0% 
D)  0.90% 
A)  11.1% 
B)  10.0% 
C)  9.0% 
D)  0.90%

Question 18

If income from operations 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 19

The rate of return on investment may be computed by multiplying investment turnover by the profit margin.

Accepted Answer

A) True 
 B)False

Question 20

Operating expenses directly traceable to or incurred for the sole benefit of a specific department and usually subject to the control of the department manager are

Accepted Answer

A)  miscellaneous administrative expenses 
B)  direct operating expenses 
C)  indirect expenses 
D)  fixed expenses 
A)  miscellaneous administrative expenses 
B)  direct operating expenses 
C)  indirect expenses 
D)  fixed expenses

The ratio of sales to investment is termed the rate of return on investment.

Central Division for Chemical Company has a rate of return on investment of 22% and an investment turnover of 1.4. What is the profit margin?

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

Budget performance reports prepared for the vice president of production would generally contain less detail than reports prepared for the various plant managers.

A centralized business organization is one in which all major planning and operating decisions are made by top management.

The following financial information was summarized from the accounting records of Train Corporation for the current year ended December 31: The income from operations for the Rails Division is

Depreciation expense on store equipment for a department store is an indirect expense.

The ratio of income from operations to sales, which is also a factor in the DuPont formula for determining the rate of return on investment, is called

Division A of Chacha Company has sales of $140,000, cost of goods sold of $83,000, operating expenses of $43,000, and invested assets of $150,000. What is the rate of return on investment for Division A?

Managers of what type of decentralized units have authority and responsibility for revenues, costs, and assets invested in the unit?

Mason Corporation had $650,000 in invested assets, sales of $700,000, income from operations amounting to $99,000, and a desired minimum rate of return of 15%. The residual income for Mason is

Controllable expenses are those that can be influenced by the decisions of the profit center management.

Transfer prices may be used when decentralized units are organized as cost, profit, or investment centers.

Which of the following is not a disadvantage of decentralized operation?

Division A of Chacha Company has sales of $140,000, cost of goods sold of $83,000, operating expenses of $43,000, and invested assets of $150,000. What is the profit margin for Division A?

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

The rate of return on investment may be computed by multiplying investment turnover by the profit margin.

Operating expenses directly traceable to or incurred for the sole benefit of a specific department and usually subject to the control of the department manager are

Introduction to Managerial Accounting

Job Order Costing

Process Cost Systems

Activity Based Costing

Cost Volume Profit Analysis

Variable Costing for Management Analysis

Budgeting

Evaluating Variances From Standard Costs

Differential Analysis and Product Pricing

Capital Investment Analysis

Lean Manufacturing and Activity Analysis

Statement of Cash Flows

Financial Statement Analysis

Filters

Exam 9: Evaluating Decentralized Operations

The ratio of sales to investment is termed the rate of return on investment.

Central Division for Chemical Company has a rate of return on investment of 22% and an investment turnover of 1.4. What is the profit margin?

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

Budget performance reports prepared for the vice president of production would generally contain less detail than reports prepared for the various plant managers.

A centralized business organization is one in which all major planning and operating decisions are made by top management.

The following financial information was summarized from the accounting records of Train Corporation for the current year ended December 31: The income from operations for the Rails Division is

Depreciation expense on store equipment for a department store is an indirect expense.

The ratio of income from operations to sales, which is also a factor in the DuPont formula for determining the rate of return on investment, is called

Division A of Chacha Company has sales of $140,000, cost of goods sold of $83,000, operating expenses of $43,000, and invested assets of $150,000. What is the rate of return on investment for Division A?

Managers of what type of decentralized units have authority and responsibility for revenues, costs, and assets invested in the unit?

Mason Corporation had $650,000 in invested assets, sales of $700,000, income from operations amounting to $99,000, and a desired minimum rate of return of 15%. The residual income for Mason is

Controllable expenses are those that can be influenced by the decisions of the profit center management.

Transfer prices may be used when decentralized units are organized as cost, profit, or investment centers.

Which of the following is not a disadvantage of decentralized operation?

Division A of Chacha Company has sales of $140,000, cost of goods sold of $83,000, operating expenses of $43,000, and invested assets of $150,000. What is the profit margin for Division A?

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

The rate of return on investment may be computed by multiplying investment turnover by the profit margin.

Operating expenses directly traceable to or incurred for the sole benefit of a specific department and usually subject to the control of the department manager are

Introduction to Managerial Accounting

Job Order Costing

Process Cost Systems

Activity Based Costing

Cost Volume Profit Analysis

Variable Costing for Management Analysis

Budgeting

Evaluating Variances From Standard Costs

Differential Analysis and Product Pricing

Capital Investment Analysis

Lean Manufacturing and Activity Analysis

Statement of Cash Flows

Financial Statement Analysis

Filters