Question 1

A decentralized company should try to minimize autonomy among the managers of its divisions and departments.

Accepted Answer

A) True 
 B)False

Question 2

The Electronics Division of Anton Company reports the following results for the current year: $\begin{array}{|l|lr|}
\hline \text { Revenues } & \$ & 800,000 \
\hline \text { Operating expenses } & \$ & 720,000 \
\hline \text { Operating income } & \$ & 144,000 \
\hline \text { Operating assets } & \$ & 1,200,000 \
\hline
\end{array}$ Anton Company has set a target return on investment (ROI)of 11% for the Electronics Division.The Electronic Division's margin is:

Accepted Answer

A)  11.25%. 
B)  12%. 
C)  66.7%. 
D)  18%. 
A)  11.25%. 
B)  12%. 
C)  66.7%. 
D)  18%.

Question 3

Howard Company provided the following selected information about its consumer products division for the current year: $\begin{array}{|l|lr|}
\hline \text { Desired ROI } & & 12 \% \
\hline \text { Net Income } & \$ & 150,000 \
\hline \text { Residual Income } & \$ & 30,000 \
\hline
\end{array}$ Based on this information,the division's investment amount was:

Accepted Answer

A)  $250,000. 
B)  $1,000,000. 
C)  $1,500,000. 
D)  $1,250,000. 
A)  $250,000. 
B)  $1,000,000. 
C)  $1,500,000. 
D)  $1,250,000.

Question 4

Car City is divided into three divisions: new car sales (NCS),used car sales (UCS),and parts and service (PAS).Each division is supervised by a division manager.The three division managers report to the general manager.Each division is subdivided into different departments managed by a department manager.For example,the PAS division has a parts department manager and a service department manager and NCS has a department manager for auto sales and a department manager for

Accepted Answer

The answer of Car City is divided into three divisions:...

Question 5

A major benefit of a decentralized organization is that:

Accepted Answer

A)  Managers are more motivated to improve productivity. 
B)  Upper level managers are more involved in routine decisions. 
C)  It avoids the necessity for a managerial accounting system. 
D)  It avoids decision making by less experienced lower level managers. 
A)  Managers are more motivated to improve productivity. 
B)  Upper level managers are more involved in routine decisions. 
C)  It avoids the necessity for a managerial accounting system. 
D)  It avoids decision making by less experienced lower level managers.

Question 6

The Perez Company had a 12.5% return on a $100,000 investment in new equipment.The investment resulted in increased sales,and the resultant increase in income amounted to 5% of sales.The turnover (asset utilization)was:

Accepted Answer

A)  1. 
B)  17.5. 
C)  2.5. 
D)  7.5. 
A)  1. 
B)  17.5. 
C)  2.5. 
D)  7.5.

Question 7

Which of the following statements is incorrect?

Accepted Answer

A)  Turnover is calculated by dividing sales by average operating assets. 
B)  Margin is a measure of the profits generated from sales. 
C)  Return on investment can be improved by increasing sales,decreasing expenses,or increasing the asset base. 
D)  If return on investment increases when sales increase,that change usually is due at least in part to the effect of fixed costs (operating leverage). 
A)  Turnover is calculated by dividing sales by average operating assets. 
B)  Margin is a measure of the profits generated from sales. 
C)  Return on investment can be improved by increasing sales,decreasing expenses,or increasing the asset base. 
D)  If return on investment increases when sales increase,that change usually is due at least in part to the effect of fixed costs (operating leverage).

Question 8

Sanford Company reported the following information for the current year: $\begin{array}{|l|lr|}
\hline \text { Sales } & \$ & 880,000 \
\hline \text { Average operating assets } & \$ & 475,000 \
\hline \text { Desired ROI } & & 10 \% \
\hline \text { Net income } & \$ & 90,000 \
\hline
\end{array}$ Required:
Based on this information,calculate the company's residual income.

Accepted Answer

Residual Income = Net Income -

Question 9

Indicate whether each of the following statements is

Accepted Answer

A responsibility accounting system is us

Question 10

The Electronics Division of Anton Company reports the following results for the current year: $\begin{array}{|l|lr|}
\hline \text { Revenues } & \$ & 800,000 \
\hline \text { Operating expenses } & \$ & 720,000 \
\hline \text { Operating income } & \$ & 144,000 \
\hline \text { Operating assets } & \$ & 1,200,000 \
\hline
\end{array}$ Anton Company has set a target return on investment (ROI)of 11% for the Electronics Division.The Electronic Division's return on investment is:

Accepted Answer

A)  11.25%. 
B)  12%. 
C)  66.7%. 
D)  18%. 
A)  11.25%. 
B)  12%. 
C)  66.7%. 
D)  18%.

Question 11

Delegating authority and responsibility throughout an organization is known as:

Accepted Answer

A)  centralization. 
B)  decentralization. 
C)  management by exception. 
D)  suboptimization. 
A)  centralization. 
B)  decentralization. 
C)  management by exception. 
D)  suboptimization.

Question 12

Hinton Corporation includes two divisions,Filter Division and Motor Division.The Filter Division makes specialized filters,including one that could be used by the Motor Division.Costs for the filter are: variable costs,$16;fixed costs,$20.Filter Division has capacity to make 20,000 of the filters,and it is operating at capacity.It sells the filters to other companies for $52 each.The Motor Division needs 8,000 filters per year,and it has been purchasing them from another company for $45 each.
Required:
1)Businesses traditionally have used different bases for establishing transfer prices.What basis should be used in this case?
2)If a transfer were to occur between Filter Division and Motor Division,what is the maximum that Motor Division should be willing to pay for the filters?
3)If a transfer were to occur between Filter Division and Motor Division,what is the minimum price that Filter Division should be willing to accept?
4)Do you recommend that a transfer occur between Filter Division and Motor Division? If the transfer did occur,what would be the effect on the overall profits of Hinton Corporation?

Accepted Answer

1)One of the bases used to set transfer

Question 13

Indicate whether each of the following statements is

Accepted Answer

Responsibility reports prepared for high

Question 14

The manager of the production department for Romulus Manufacturing has responsibility for all stages of the production process and does not have time to review all the operational details of his department.He has found it to be more productive to focus on the significant deviations from budget.This kind of management is called:

Accepted Answer

A)  Management by exception. 
B)  Crisis management. 
C)  Controllable management. 
D)  Decentralized management. 
A)  Management by exception. 
B)  Crisis management. 
C)  Controllable management. 
D)  Decentralized management.

Question 15

The Cineplex Movie Theater has invested in a snack bar for its store,where individual pizzas would be prepared and sold.The investment cost the company $45,000.The company expects a sales volume for the new product to be 12,000 pizzas a year.Variable materials,preparation,and marketing costs are expected to be $1.50 per unit and fixed costs are estimated at $15,000 a year.Based on a desired 12% ROI,what should Cineplex charge as the selling price per pizza?

Accepted Answer

A)  $3.00 
B)  $2.75 
C)  $5.20 
D)  $3.20 
A)  $3.00 
B)  $2.75 
C)  $5.20 
D)  $3.20

Question 16

Which of the following statements regarding a balanced scorecard is correct?

Accepted Answer

A)  A balanced scorecard includes several different performance measures that can be used to assess how well a business is accomplishing their mission. 
B)  A balanced scorecard includes financial performance measures such as ROI. 
C)  A balanced scorecard includes non-financial measures such as defect rates or on-time deliveries. 
D)  All of these are correct answers. 
A)  A balanced scorecard includes several different performance measures that can be used to assess how well a business is accomplishing their mission. 
B)  A balanced scorecard includes financial performance measures such as ROI. 
C)  A balanced scorecard includes non-financial measures such as defect rates or on-time deliveries. 
D)  All of these are correct answers.

Question 17

An organizational unit of a business that incurs costs and generates revenues is known as a(n):

Accepted Answer

A)  Cost center. 
B)  Sales center. 
C)  Profit center. 
D)  Investment center. 
A)  Cost center. 
B)  Sales center. 
C)  Profit center. 
D)  Investment center.

Question 18

Perfect Products provided the following selected information about its consumer products division for the current year: $\begin{array}{|l|lr|}
\hline \text { Desired ROI } & & 14 \% \
\hline \text { Net income } & \$ & 220,000 \
\hline \text { Residual income } & \$ & 15,000 \
\hline
\end{array}$ Required:
Based on this information,calculate the company's investment amount.Round your answer to the nearest dollar.

Accepted Answer

Investment = (Net In

Question 19

Huang Company reported the following information for the current year: $\begin{array}{|l|lr|}
\hline \text { Sales } & \$ & 400,000 \
\hline \text { Average Operating Assets } & \$ & 250,000 \
\hline \text { Margin } & & 10 \% \
\hline
\end{array}$ The company's return on investment was:

Accepted Answer

A)  10%. 
B)  6.25%. 
C)  16%. 
D)  Cannot be ascertained from the information provided. 
A)  10%. 
B)  6.25%. 
C)  16%. 
D)  Cannot be ascertained from the information provided.

Question 20

What are the advantages of using a market-based transfer price? Why is it not always used?

Accepted Answer

Answers will vary
One advantage is that

A decentralized company should try to minimize autonomy among the managers of its divisions and departments.

Howard Company provided the following selected information about its consumer products division for the current year: Desired ROI 12\% Net Income \ 150,000 Residual Income \ 30,000 Based on this information,the division's investment amount was:

A major benefit of a decentralized organization is that:

The Perez Company had a 12.5% return on a $100,000 investment in new equipment.The investment resulted in increased sales,and the resultant increase in income amounted to 5% of sales.The turnover (asset utilization)was:

Which of the following statements is incorrect?

Sanford Company reported the following information for the current year: Sales \ 880,000 Average operating assets \ 475,000 Desired ROI 10\% Net income \ 90,000 Required: Based on this information,calculate the company's residual income.

Indicate whether each of the following statements is

Delegating authority and responsibility throughout an organization is known as:

Indicate whether each of the following statements is

Which of the following statements regarding a balanced scorecard is correct?

An organizational unit of a business that incurs costs and generates revenues is known as a(n):

Huang Company reported the following information for the current year: Sales \ 400,000 Average Operating Assets \ 250,000 Margin 10\% The company's return on investment was:

What are the advantages of using a market-based transfer price? Why is it not always used?

Management Accounting and Corporate Governance

Cost Behavior, Operating Leverage, and Profitability Analysis

Analysis of Cost,Volume,and Pricing to Increase Profitability

Cost Accumulation,Tracing,and Allocation

Cost Management in an Automated Business Environment: ABC, ABM, and TQM

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Performance Evaluation

Planning for Capital Investments

Product Costing in Service and Manufacturing Entities

Job-Order, Process, and Hybrid Costing Systems

Financial Statement Analysis

Statement of Cash Flows

Filters

Exam 9: Responsibility Accounting

A decentralized company should try to minimize autonomy among the managers of its divisions and departments.

Howard Company provided the following selected information about its consumer products division for the current year: Desired ROI 12\% Net Income \ 150,000 Residual Income \ 30,000 Based on this information,the division's investment amount was:

A major benefit of a decentralized organization is that:

The Perez Company had a 12.5% return on a $100,000 investment in new equipment.The investment resulted in increased sales,and the resultant increase in income amounted to 5% of sales.The turnover (asset utilization)was:

Which of the following statements is incorrect?

Sanford Company reported the following information for the current year: Sales \ 880,000 Average operating assets \ 475,000 Desired ROI 10\% Net income \ 90,000 Required: Based on this information,calculate the company's residual income.

Indicate whether each of the following statements is

Delegating authority and responsibility throughout an organization is known as:

Indicate whether each of the following statements is

Which of the following statements regarding a balanced scorecard is correct?

An organizational unit of a business that incurs costs and generates revenues is known as a(n):

Huang Company reported the following information for the current year: Sales \ 400,000 Average Operating Assets \ 250,000 Margin 10\% The company's return on investment was:

What are the advantages of using a market-based transfer price? Why is it not always used?

Management Accounting and Corporate Governance

Cost Behavior, Operating Leverage, and Profitability Analysis

Analysis of Cost,Volume,and Pricing to Increase Profitability

Cost Accumulation,Tracing,and Allocation

Cost Management in an Automated Business Environment: ABC, ABM, and TQM

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Performance Evaluation

Planning for Capital Investments

Product Costing in Service and Manufacturing Entities

Job-Order, Process, and Hybrid Costing Systems

Financial Statement Analysis

Statement of Cash Flows

Filters