Question 1

A manager is responsible for costs only in a(n)

Accepted Answer

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

Question 2

In rate of return on investment analysis, the investment turnover component focuses on efficiency in the use of assets and indicates the rate at which sales are being generated for each dollar of invested assets.

Accepted Answer

A) True 
 B)False

Question 3

Materials used by Best Bread Company in producing Division A's product are currently purchased from outside suppliers at a cost of $30 per unit. However, the same materials are available from Division B. Division B has unused capacity and can produce the materials needed by Division A at a variable cost of $20 per unit. 
(a) If a transfer price of $25 per unit is established and 60,000 units of material are transferred, with no reductions in Division B's current sales, how much would Best Bread Company's total income from operations increase? 
(b) Assuming transfer price of $25 per unit is established and 60,000 units of material are transferred, with no reductions in Division B's current sales, how much would the income from operations of Division A increase? 
(c) Assuming transfer price of $25 per unit is established and 60,000 units of material are transferred, with no reductions in Division B's current sales, how much would the income from operations of Division B increase? 
(d) If the negotiated price approach is used, what would be the range of acceptable transfer prices?

Accepted Answer

(a) $600,000 
Increase in Division A's I

Question 4

The profit center income statement should include only controllable revenues and expenses.

Accepted Answer

A) True 
 B)False

Question 5

The excess of divisional income from operations over a minimum acceptable amount of divisional income from operations is

Accepted Answer

A)  profit margin 
B)  residual income 
C)  rate of return on investment 
D)  gross profit 
A)  profit margin 
B)  residual income 
C)  rate of return on investment 
D)  gross profit

Question 6

For higher levels of management, responsibility accounting reports

Accepted Answer

A)  are more detailed than for lower levels of management 
B)  are more summarized than for lower levels of management 
C)  contain about the same level of detail as reports for lower levels of management 
D)  are rarely provided or reviewed 
A)  are more detailed than for lower levels of management 
B)  are more summarized than for lower levels of management 
C)  contain about the same level of detail as reports for lower levels of management 
D)  are rarely provided or reviewed

Question 7

The DuPont formula uses financial information to measure the performance of a business.

Accepted Answer

A) True 
 B)False

Question 8

In an investment center, the manager has the responsibility and the authority to make decisions that affect not only costs and revenues, but also the plant assets invested in the center.

Accepted Answer

A) True 
 B)False

Question 9

Using the data below for the Coffee & Cocoa Company, 
(a) determine the divisional income from operations for the three regions by allocating the service department expenses proportional to the sales of the regions. 
(b) determine the increase or decrease in net income if C Region did not operate.

Accepted Answer

(a) @#IMG-DLM& 
(b)

Question 10

If Division Q's yearly income from operations was $30,000 on invested assets of $200,000, the rate of return on investment is 15%.

Accepted Answer

A) True 
 B)False

Question 11

If divisional income from operations is $75,000, invested assets are $737,500, and the minimum rate of return on invested assets is 6%, the residual income is $36,750.

Accepted Answer

A) True 
 B)False

Question 12

Some organizations use internal service departments to provide like services to several divisions or departments within an organization. Which of the following would probably not lend itself as a service department?

Accepted Answer

A)  inventory control 
B)  payroll accounting 
C)  information systems 
D)  human resources 
A)  inventory control 
B)  payroll accounting 
C)  information systems 
D)  human resources

Question 13

The Central Division of the Nebraska Company has a rate of return on investment of 28% and a profit margin of 14%. What is the investment turnover?

Accepted Answer

A)  0.2 
B)  2.0 
C)  5.0 
D)  0.5 
A)  0.2 
B)  2.0 
C)  5.0 
D)  0.5

Question 14

By using the rate of return on investment as a divisional performance measure, divisional managers will always be motivated to invest in proposals which will increase the overall rate of return for the company.

Accepted Answer

A) True 
 B)False

Question 15

If income from operations for a division is $120,000, sales are $975,000, and invested assets are $750,000, the investment turnover is 1.3.

Accepted Answer

A) True 
 B)False

Question 16

In an investment center, the manager has responsibility and authority for making decisions that affect

Accepted Answer

A)  costs only 
B)  revenues only 
C)  assets only 
D)  costs, revenues, and assets 
A)  costs only 
B)  revenues only 
C)  assets only 
D)  costs, revenues, and assets

Question 17

Miller's Quarter Horse Company has sales of $4,500,000. It also has invested assets of $2,500,000 and operating expenses of $3,800,000. The company has established a minimum rate of return of 7%. 
(a) What is Miller's profit margin? 
(b) What is the investment turnover? 
(c) What is the rate of return on investment? 
(d) What is Miller's residual income?

Accepted Answer

(a)  $4,500,000 - $3,800,000 = $700,000

Question 18

The approach that required the transfer price to be less than the market price but greater than the supplying division's variable costs per unit is called the

Accepted Answer

A)  cost price approach 
B)  negotiated cost approach 
C)  standard cost approach 
D)  market price approach 
A)  cost price approach 
B)  negotiated cost approach 
C)  standard cost approach 
D)  market price approach

Question 19

Blaser Corporation had $275,000 in invested assets, sales of $330,000, income from operations amounting to $33,000 and a desired minimum rate of return of 7.5%. The rate of return on investment for Blaser Corporation is

Accepted Answer

A)  8.3% 
B)  10% 
C)  12% 
D)  7.5% 
A)  8.3% 
B)  10% 
C)  12% 
D)  7.5%

Question 20

ABC Corporation has three service departments with the following costs and activity base:     What is the service department charge rate for the Personnel Department?

Accepted Answer

A)  $2,758 
B)  $3,200 
C)  $3,077 
D)  $1,000 
A)  $2,758 
B)  $3,200 
C)  $3,077 
D)  $1,000

A manager is responsible for costs only in a(n)

In rate of return on investment analysis, the investment turnover component focuses on efficiency in the use of assets and indicates the rate at which sales are being generated for each dollar of invested assets.

The profit center income statement should include only controllable revenues and expenses.

The excess of divisional income from operations over a minimum acceptable amount of divisional income from operations is

For higher levels of management, responsibility accounting reports

The DuPont formula uses financial information to measure the performance of a business.

In an investment center, the manager has the responsibility and the authority to make decisions that affect not only costs and revenues, but also the plant assets invested in the center.

Using the data below for the Coffee & Cocoa Company, (a) determine the divisional income from operations for the three regions by allocating the service department expenses proportional to the sales of the regions. (b) determine the increase or decrease in net income if C Region did not operate.

If Division Q's yearly income from operations was $30,000 on invested assets of $200,000, the rate of return on investment is 15%.

If divisional income from operations is $75,000, invested assets are $737,500, and the minimum rate of return on invested assets is 6%, the residual income is $36,750.

Some organizations use internal service departments to provide like services to several divisions or departments within an organization. Which of the following would probably not lend itself as a service department?

The Central Division of the Nebraska Company has a rate of return on investment of 28% and a profit margin of 14%. What is the investment turnover?

By using the rate of return on investment as a divisional performance measure, divisional managers will always be motivated to invest in proposals which will increase the overall rate of return for the company.

If income from operations for a division is $120,000, sales are $975,000, and invested assets are $750,000, the investment turnover is 1.3.

In an investment center, the manager has responsibility and authority for making decisions that affect

The approach that required the transfer price to be less than the market price but greater than the supplying division's variable costs per unit is called the

Blaser Corporation had $275,000 in invested assets, sales of $330,000, income from operations amounting to $33,000 and a desired minimum rate of return of 7.5%. The rate of return on investment for Blaser Corporation is

ABC Corporation has three service departments with the following costs and activity base: What is the service department charge rate for the Personnel Department?

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

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Exam 9: Evaluating Decentralized Operations

A manager is responsible for costs only in a(n)

In rate of return on investment analysis, the investment turnover component focuses on efficiency in the use of assets and indicates the rate at which sales are being generated for each dollar of invested assets.

The profit center income statement should include only controllable revenues and expenses.

The excess of divisional income from operations over a minimum acceptable amount of divisional income from operations is

For higher levels of management, responsibility accounting reports

The DuPont formula uses financial information to measure the performance of a business.

In an investment center, the manager has the responsibility and the authority to make decisions that affect not only costs and revenues, but also the plant assets invested in the center.

Using the data below for the Coffee & Cocoa Company, (a) determine the divisional income from operations for the three regions by allocating the service department expenses proportional to the sales of the regions. (b) determine the increase or decrease in net income if C Region did not operate.

If Division Q's yearly income from operations was $30,000 on invested assets of $200,000, the rate of return on investment is 15%.

If divisional income from operations is $75,000, invested assets are $737,500, and the minimum rate of return on invested assets is 6%, the residual income is $36,750.

Some organizations use internal service departments to provide like services to several divisions or departments within an organization. Which of the following would probably not lend itself as a service department?

The Central Division of the Nebraska Company has a rate of return on investment of 28% and a profit margin of 14%. What is the investment turnover?

By using the rate of return on investment as a divisional performance measure, divisional managers will always be motivated to invest in proposals which will increase the overall rate of return for the company.

If income from operations for a division is $120,000, sales are $975,000, and invested assets are $750,000, the investment turnover is 1.3.

In an investment center, the manager has responsibility and authority for making decisions that affect

The approach that required the transfer price to be less than the market price but greater than the supplying division's variable costs per unit is called the

Blaser Corporation had $275,000 in invested assets, sales of $330,000, income from operations amounting to $33,000 and a desired minimum rate of return of 7.5%. The rate of return on investment for Blaser Corporation is

ABC Corporation has three service departments with the following costs and activity base: What is the service department charge rate for the Personnel Department?

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