Question 1

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 2

The income from operations for the Southern Division is:

Accepted Answer

A) $150,000. 
B) $120,000. 
C) $295,000. 
D) $154,400. 
A) $150,000. 
B) $120,000. 
C) $295,000. 
D) $154,400.

Question 3

A responsibility center in which the department manager has responsibility for and authority over costs and revenues is called 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 4

Division M for Movism Company has a rate of return on investment of 20% and an investment turnover of 1.5.What is the profit margin?

Accepted Answer

A) 20% 
B) 13% 
C) 15% 
D) 30% 
A) 20% 
B) 13% 
C) 15% 
D) 30%

Question 5

Identify the formula for the rate of return on investment.

Accepted Answer

A) Invested Assets/Income From Operations 
B) Sales/Invested Assets 
C) Income From Operations/Sales 
D) Income From Operations/Invested Assets 
A) Invested Assets/Income From Operations 
B) Sales/Invested Assets 
C) Income From Operations/Sales 
D) Income From Operations/Invested Assets

Question 6

Assume that Division A has generated sales revenue of $4,550,000 and achieved income from operations of $530,000 using $2,800,000 of invested assets.If management desires a minimum rate of return of 15%,the residual income would be:

Accepted Answer

A) $110,000. 
B) $152,500. 
C) $79,500. 
D) $530,000. 
A) $110,000. 
B) $152,500. 
C) $79,500. 
D) $530,000.

Question 7

The balanced scorecard measures:

Accepted Answer

A) only financial information. 
B) only nonfinancial information. 
C) both financial and nonfinancial information. 
D) both external and internal information. 
A) only financial information. 
B) only nonfinancial information. 
C) both financial and nonfinancial information. 
D) both external and internal information.

Question 8

The following data are taken from the management accounting reports of Dancer Co.:

Accepted Answer

A) division A's manager is given the bonus. 
B) division B's manager is given the bonus. 
C) division C's manager is given the bonus. 
D) the managers of Divisions B and C divide the bonus. 
A) division A's manager is given the bonus. 
B) division B's manager is given the bonus. 
C) division C's manager is given the bonus. 
D) the managers of Divisions B and C divide the bonus.

Question 9

Which of the following is used to measure a manager's performance working in a profit center?

Accepted Answer

A) Balance sheet 
B) Rate of return and residual income 
C) Budget performance report 
D) Divisional income statements 
A) Balance sheet 
B) Rate of return and residual income 
C) Budget performance report 
D) Divisional income statements

Question 10

The sales,income from operations,and invested assets for each division of Garner Company are as follows:

Accepted Answer

(a) Rate of Return on Investment: ROI =

Question 11

Which component of the balanced scorecard evaluates the economic performance of the responsibility centers?

Accepted Answer

A) Internal process 
B) Financial 
C) Innovation and learning 
D) Customer 
A) Internal process 
B) Financial 
C) Innovation and learning 
D) Customer

Question 12

Personnel administration expense for a department in a store is an indirect expense.

Accepted Answer

A) True 
 B)False

Question 13

Some organizations use internal service departments to provide 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 14

If the profit margin for a division is 8% and the investment turnover is 1.20,the rate of return on investment computed would be 6.7%.

Accepted Answer

A) True 
 B)False

Question 15

The best measure of managerial efficiency in the use of investments in assets is:

Accepted Answer

A) rate of return on stockholders' equity. 
B) rate of return on investment. 
C) income from operations. 
D) inventory turnover. 
A) rate of return on stockholders' equity. 
B) rate of return on investment. 
C) income from operations. 
D) inventory turnover.

Question 16

The profit center income statement should include only those revenues and expenses that can be controlled by the manager.

Accepted Answer

A) True 
 B)False

Question 17

The three common types of responsibility centers are referred to as asset centers,liabilities centers,and equity centers.

Accepted Answer

A) True 
 B)False

Question 18

How much would Division B's income from operations increase?

Accepted Answer

A) $75,000 
B) $175,000 
C) $105,000 
D) $70,000 
A) $75,000 
B) $175,000 
C) $105,000 
D) $70,000

Question 19

Since transfer prices will affect a division's financial performance,it is used by decentralized segments of a business.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following expenses incurred by the sporting goods department of a department store is a direct expense?

Accepted Answer

A) Depreciation expense--office equipment 
B) Insurance on inventory of sporting goods 
C) Uncollectible accounts expense 
D) Office salaries 
A) Depreciation expense--office equipment 
B) Insurance on inventory of sporting goods 
C) Uncollectible accounts expense 
D) Office salaries

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

The income from operations for the Southern Division is:

A responsibility center in which the department manager has responsibility for and authority over costs and revenues is called a(n):

Division M for Movism Company has a rate of return on investment of 20% and an investment turnover of 1.5.What is the profit margin?

Identify the formula for the rate of return on investment.

Assume that Division A has generated sales revenue of $4,550,000 and achieved income from operations of $530,000 using $2,800,000 of invested assets.If management desires a minimum rate of return of 15%,the residual income would be:

The balanced scorecard measures:

The following data are taken from the management accounting reports of Dancer Co.:

Which of the following is used to measure a manager's performance working in a profit center?

The sales,income from operations,and invested assets for each division of Garner Company are as follows:

Which component of the balanced scorecard evaluates the economic performance of the responsibility centers?

Personnel administration expense for a department in a store is an indirect expense.

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

If the profit margin for a division is 8% and the investment turnover is 1.20,the rate of return on investment computed would be 6.7%.

The best measure of managerial efficiency in the use of investments in assets is:

The profit center income statement should include only those revenues and expenses that can be controlled by the manager.

The three common types of responsibility centers are referred to as asset centers,liabilities centers,and equity centers.

How much would Division B's income from operations increase?

Since transfer prices will affect a division's financial performance,it is used by decentralized segments of a business.

Which of the following expenses incurred by the sporting goods department of a department store is a direct expense?

The Role of Accounting in Business

Basic Accounting Concepts

Accrual Accounting Concepts

Accounting for Merchandising Businesses

Sarbanes-Oxley, internal Control, and Cash

Receivables and Inventories

Fixed Assets and Intangible Assets

Liabilities and Stockholders Equity

Financial Statement Analysis

Accounting Systems for Manufacturing Businesses

Cost Behavior and Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Cost Systems

Capital Investment Analysis

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Exam 14: Performance Evaluation for Decentralized Operations

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

The income from operations for the Southern Division is:

A responsibility center in which the department manager has responsibility for and authority over costs and revenues is called a(n):

Division M for Movism Company has a rate of return on investment of 20% and an investment turnover of 1.5.What is the profit margin?

Identify the formula for the rate of return on investment.

Assume that Division A has generated sales revenue of $4,550,000 and achieved income from operations of $530,000 using $2,800,000 of invested assets.If management desires a minimum rate of return of 15%,the residual income would be:

The balanced scorecard measures:

The following data are taken from the management accounting reports of Dancer Co.:

Which of the following is used to measure a manager's performance working in a profit center?

The sales,income from operations,and invested assets for each division of Garner Company are as follows:

Which component of the balanced scorecard evaluates the economic performance of the responsibility centers?

Personnel administration expense for a department in a store is an indirect expense.

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

If the profit margin for a division is 8% and the investment turnover is 1.20,the rate of return on investment computed would be 6.7%.

The best measure of managerial efficiency in the use of investments in assets is:

The profit center income statement should include only those revenues and expenses that can be controlled by the manager.

The three common types of responsibility centers are referred to as asset centers,liabilities centers,and equity centers.

How much would Division B's income from operations increase?

Since transfer prices will affect a division's financial performance,it is used by decentralized segments of a business.

Which of the following expenses incurred by the sporting goods department of a department store is a direct expense?

The Role of Accounting in Business

Basic Accounting Concepts

Accrual Accounting Concepts

Accounting for Merchandising Businesses

Sarbanes-Oxley, internal Control, and Cash

Receivables and Inventories

Fixed Assets and Intangible Assets

Liabilities and Stockholders Equity

Financial Statement Analysis

Accounting Systems for Manufacturing Businesses

Cost Behavior and Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Cost Systems

Capital Investment Analysis

Filters