Exam 11: Reporting for Control

Effective decentralization is essential for which of the following management accounting practices in organizations?

The return on investment can ordinarily be improved by either increasing sales,reducing expenses,or reducing operating assets.

External failure costs result when a defective product is shipped to a customer.

Which of the following would be classified as an appraisal cost on a quality cost report?

Which of the following would be classified as an internal failure cost on a quality cost report?

Quality of conformance is the degree to which an actual product meets its design specifications and is free of defects or other problems that may affect appearance or performance.

(Appendix 11B)Order-getting marketing costs cannot be easily controlled through the use of standard costs and flexible budgets.

The following selected data pertain to Beck Co.'s Beam Division for last year: -What was the return on investment?

Cable Company had the following results for the year just ended: Operating Income \ 2.500 Turnover 4 Return on Investment 20\% What were Cable Company's average operating assets during the year?

The following selected data pertain to the belt division of Allen Corp. for last year: -What was the return on investment?

Thais Company's quality cost report is to be based on the following data: -What will be the total external failure cost appearing on the quality cost report?

Suppose a manager's performance is to be evaluated by residual income.Which of the following will NOT result in an increase in the residual income figure for this manager,assuming other factors remain constant?

Which of the following statements provide(s)an argument in favour of including only a plant's net book value rather than gross book value as part of operating assets in the ROI computation? I.Net book value is consistent with how plant and equipment items are reported on a balance sheet. II)Net book value is consistent with the computation of operating income,which includes amortization as an operating expense. III)Net book value allows ROI to decrease over time as assets get older.

(Appendix 11B)Order-filling marketing costs tend to respond directly to changes in activity while order-getting marketing costs tend to be discretionary and fixed in the short-run.

All other things equal,a company's return on investment is affected by a change in which of the following? Turnover Margi A. Yes Yes B. No Yes C. No No D. Yes No

Estes Company has assembled the following data for its divisions for the past year: -What were Division A's sales?

Assuming that sales and operating income remain the same,which of the following statements about a company's return on investment is correct?

Faust Company's quality cost report is to be based on the following data: -What will be the total external failure cost appearing on the quality cost report?

The Holmes Division recorded operating data as follows for the past year: -For the past year,what was the minimum required rate of return?

(Appendices 11A and 11B)The following is a summarized master budget that Moose Jaw Company prepared for February: Sales Sales revenue Less variable costs: Manufacturing Marketing Contribution margin Less fixed costs: Manufacturing Marketing Operating income 9.000 units* \ 450,000 \ 270,000 18,000 288,000 \ 162,000 \ 72.000 27.000 99.000 \ 63.000 *Based on estimated industry volume (market-size) of 180,000 units Actual results for January were as follows: Industry volume Units produced and sold Selling price per unit Variable costs per unit: Manufacturing Marketing Fixed costs: Manufacturing Marketing 140,000 units 8,400 units \ 55.00 \ 32.00 \ 1.50 \ 72.000 \ 27,000 Required: a) (Appendix 11A) Calculate the flexible budget variance and analyze it into sales price variance and cost/expense variance(s). b) (Appendix 11A) Calculate the sales volume variance and analyze it into market-size (industry volume) variance and market-share variance. c) (Appendix 11A) Assume that the marketing manager has direct influence in setting selling prices. On the basis of your analysis in part (b), would you conclude recommend a bonus be paid to the sales manager? Why or why not? d) How successful was the marketing manager in controlling the cost of the marketing activity? Explain.