Question 1

All of the following are true of market-based transfer prices EXCEPT that they:

Accepted Answer

A) may lead to goods/services being purchased externally. 
B) provide an independent valuation. 
C) exist for all transferred products and services. 
D) provide the proper economic incentives. 
A) may lead to goods/services being purchased externally. 
B) provide an independent valuation. 
C) exist for all transferred products and services. 
D) provide the proper economic incentives.

Question 2

Segment margin is calculated as follows:

Accepted Answer

A) Revenues less flexible costs. 
B) Revenues less expenses. 
C) Revenues less direct costs. 
D) Revenues less variable costs 
A) Revenues less flexible costs. 
B) Revenues less expenses. 
C) Revenues less direct costs. 
D) Revenues less variable costs

Question 3

The management accountant for the Martino Organics has prepared the following segmented income statement for the most current year.
  
-If the Produce department had been eliminated prior to this year,the company would have reported:

Accepted Answer

A) greater corporate profits. 
B) the same amount of corporate profits. 
C) less corporate profits. 
D) resulting profits cannot be determined. 
A) greater corporate profits. 
B) the same amount of corporate profits. 
C) less corporate profits. 
D) resulting profits cannot be determined.

Question 4

The management accountant for Tony's Skateboard Company has prepared the following segmented income statement for each of its three product lines.
   
Required:
a. Do you recommend dropping the Cruise product line? Why or why not?
b. If the Jammer product line had been discontinued,the short-term effect on corporate profits would be a decrease of what amount?
c. Assume that the Flight product line has been discontinued and long-term capacity has had time to adjust.The projected long-term effect of this action on annual corporate profits would be a decrease of what amount?
d. Assume that an advertising campaign could increase revenues for any of the products by $15,000.To maximize corporate profits,which product line should receive the advertising dollars? Why?
e. How would you change the format of the segment margin statement above to make it more understandable?

Accepted Answer

a. No, I would not recommend dropping th

Question 5

If the Assembly Division sells 100,000 pairs of shoes at a price of $120 a pair to customers,what is the operating income of both divisions together?

Accepted Answer

A) $8,800,000 
B) $6,800,000 
C) $6,000,000 
D) indeterminable 
A) $8,800,000 
B) $6,800,000 
C) $6,000,000 
D) indeterminable

Question 6

The primary goal of transfer pricing is to:

Accepted Answer

A) motivate the decision maker to act in the organization's best interests. 
B) obtain a high transfer price for the supplying unit. 
C) obtain a high transfer price for the receiving unit. 
D) agree on a price for external sales. 
A) motivate the decision maker to act in the organization's best interests. 
B) obtain a high transfer price for the supplying unit. 
C) obtain a high transfer price for the receiving unit. 
D) agree on a price for external sales.

Question 7

The return on investment (ROI)is:

Accepted Answer

A) 20%. 
B) 80%. 
C) 25%. 
D) 125%. 
A) 20%. 
B) 80%. 
C) 25%. 
D) 125%.

Question 8

All of the following are true regarding productivity EXCEPT:

Accepted Answer

A) that an example of raw material productivity is the weight of the final product to the weight of the raw materials. 
B) that the most widely accepted definition of productivity is the ratio of operating income over sales. 
C) that an example of machine productivity is a machine's output per hour. 
D) machine productivity is an effective method of relating process results with financial results. 
A) that an example of raw material productivity is the weight of the final product to the weight of the raw materials. 
B) that the most widely accepted definition of productivity is the ratio of operating income over sales. 
C) that an example of machine productivity is a machine's output per hour. 
D) machine productivity is an effective method of relating process results with financial results.

Question 9

For each of the following activities,characteristics,and applications,identify whether they are found in a (C)entralized organization,a (D)ecentralized organization,or (Both)types of organizations.
a.Freedom for managers at lower organizational levels to make decisions (C / D / Both) 
b.Best suited to organizations within stable environments (C / D / Both) 
 c.Greater responsiveness to users' needs (C / D / Both) 
 d.Use the most efficient technologies (C / D / Both) 
e.Maximum constraints and minimum freedom for managers at lowest levels (C / D / Both) 
 f.Maximization of benefits over costs (C / D / Both) 
g.Minimization of duplicate functions (C / D / Both) 
 h.Standard operating procedures (C / D / Both) 
 i.Requires trust in employees at all levels (C / D / Both) 
 j.Primarily task control rather than results control (C / D / Both)

Accepted Answer

a.D
b. C
c

Question 10

In a decentralized organization,front-line employees are trained to respond to changes in the business environment.

Accepted Answer

A) True 
 B)False

Question 11

All of the following are true of cost-based transfer prices EXCEPT that they:

Accepted Answer

A) provide no incentive to the supplying division to control costs when actual costs are used. 
B) may use standard costs to help maintain operating efficiency. 
C) promote the optimal level of transactions for the overall organization. 
D) don't give proper guidance when operating capacity is constrained. 
A) provide no incentive to the supplying division to control costs when actual costs are used. 
B) may use standard costs to help maintain operating efficiency. 
C) promote the optimal level of transactions for the overall organization. 
D) don't give proper guidance when operating capacity is constrained.

Question 12

Discuss at least two inefficiencies of financial control.

Accepted Answer

First, financial control focuses on fina

Question 13

If a company subscribes to the controllability principle,then it would be best to evaluate product line management on:

Accepted Answer

A) contribution margin. 
B) corporate profit. 
C) segment income. 
D) segment margin. 
A) contribution margin. 
B) corporate profit. 
C) segment income. 
D) segment margin.

Question 14

Financial control involves the use of financial measures to assess organizational and management performance.

Accepted Answer

A) True 
 B)False

Question 15

Problems of using investment centers include all of the problems associated with profit centers plus all of the following EXCEPT:

Accepted Answer

A) how to identify the assets used by each investment center. 
B) how to assign the responsibility for jointly-used assets such as buildings. 
C) how to determine the value of the assets used by each investment center. 
D) what method to use to depreciate the assets. 
A) how to identify the assets used by each investment center. 
B) how to assign the responsibility for jointly-used assets such as buildings. 
C) how to determine the value of the assets used by each investment center. 
D) what method to use to depreciate the assets.

Question 16

In general,managers are motivated to influence generated revenues when those revenues are included in their performance measures.

Accepted Answer

A) True 
 B)False

Question 17

The performance measures chosen should influence the employees' decision-making behavior.

Accepted Answer

A) True 
 B)False

Question 18

A decentralized organization does all the following EXCEPT it:

Accepted Answer

A) encourages local success rather than organizational success. 
B) trains employees in skills needed for decision making. 
C) assigns responsibility to front-line employees. 
D) adapts to the local business environment. 
A) encourages local success rather than organizational success. 
B) trains employees in skills needed for decision making. 
C) assigns responsibility to front-line employees. 
D) adapts to the local business environment.

Question 19

The amount of decentralization in an organization reflects the organization's trust in its employees and other factors.

Accepted Answer

A) True 
 B)False

Question 20

Negotiated transfer prices,and therefore production decisions,may reflect the negotiating skills of the parties rather than economic considerations.

Accepted Answer

A) True 
 B)False

All of the following are true of market-based transfer prices EXCEPT that they:

Segment margin is calculated as follows:

The management accountant for the Martino Organics has prepared the following segmented income statement for the most current year. -If the Produce department had been eliminated prior to this year,the company would have reported:

If the Assembly Division sells 100,000 pairs of shoes at a price of $120 a pair to customers,what is the operating income of both divisions together?

The primary goal of transfer pricing is to:

The return on investment (ROI)is:

All of the following are true regarding productivity EXCEPT:

In a decentralized organization,front-line employees are trained to respond to changes in the business environment.

All of the following are true of cost-based transfer prices EXCEPT that they:

Discuss at least two inefficiencies of financial control.

If a company subscribes to the controllability principle,then it would be best to evaluate product line management on:

Financial control involves the use of financial measures to assess organizational and management performance.

Problems of using investment centers include all of the problems associated with profit centers plus all of the following EXCEPT:

In general,managers are motivated to influence generated revenues when those revenues are included in their performance measures.

The performance measures chosen should influence the employees' decision-making behavior.

A decentralized organization does all the following EXCEPT it:

The amount of decentralization in an organization reflects the organization's trust in its employees and other factors.

Negotiated transfer prices,and therefore production decisions,may reflect the negotiating skills of the parties rather than economic considerations.

How Management Accounting Information Supports Decision Making

The Balanced Scorecard and Strategy Map

Using Costs in Decision Making

Accumulating and Assigning Costs to Products

Activity-Based Cost Systems

Measuring and Managing Customer Relationships

Measuring and Managing Process Performance

Measuring and Managing Life-Cycle Costs

Behavioral and Organizational Issues in Management Accounting and Control Systems

Using Budgets for Planning and Coordination

Filters

Exam 11: Financial Control

All of the following are true of market-based transfer prices EXCEPT that they:

Segment margin is calculated as follows:

The management accountant for the Martino Organics has prepared the following segmented income statement for the most current year. -If the Produce department had been eliminated prior to this year,the company would have reported:

If the Assembly Division sells 100,000 pairs of shoes at a price of $120 a pair to customers,what is the operating income of both divisions together?

The primary goal of transfer pricing is to:

The return on investment (ROI)is:

All of the following are true regarding productivity EXCEPT:

In a decentralized organization,front-line employees are trained to respond to changes in the business environment.

All of the following are true of cost-based transfer prices EXCEPT that they:

Discuss at least two inefficiencies of financial control.

If a company subscribes to the controllability principle,then it would be best to evaluate product line management on:

Financial control involves the use of financial measures to assess organizational and management performance.

Problems of using investment centers include all of the problems associated with profit centers plus all of the following EXCEPT:

In general,managers are motivated to influence generated revenues when those revenues are included in their performance measures.

The performance measures chosen should influence the employees' decision-making behavior.

A decentralized organization does all the following EXCEPT it:

The amount of decentralization in an organization reflects the organization's trust in its employees and other factors.

Negotiated transfer prices,and therefore production decisions,may reflect the negotiating skills of the parties rather than economic considerations.

How Management Accounting Information Supports Decision Making

The Balanced Scorecard and Strategy Map

Using Costs in Decision Making

Accumulating and Assigning Costs to Products

Activity-Based Cost Systems

Measuring and Managing Customer Relationships

Measuring and Managing Process Performance

Measuring and Managing Life-Cycle Costs

Behavioral and Organizational Issues in Management Accounting and Control Systems

Using Budgets for Planning and Coordination

Filters