Exam 10: Responsibility Accounting,performance Evaluation,and Transfer Pricing

What is the term for placing an emphasis on short-run results at the expense of the long run?

Beta Division had the following information: Asset base in Beta Division \ 400,000 Net income in Beta Division \ 50,000 Weighted average cost of capital 12\% Target ROI 15\% Margin for Beta Division 20\% -Refer to the figure.What is the turnover ratio for Beta Division?

Parker Corporation had sales of $250,000,income of $10,000,and an asset base of $100,000.What is the turnover?

Correll Company has two divisions,A and B.Information for each division is as follows: Net earnings for division \ 40,000 \ 260,000 Asset base for division \ 100,000 \ 1,200,000 Target rate of return 15\% 18\% Margin 10\% 20\% Weighted average cost of capital 12\% 12\% What is the return on investment for A?

Pautner Company had the following historical accounting data per unit: Direct materials \6 0 Direct labour 30 Variable overhead 15 Fixed overhead 24 Variable selling expenses 45 Fixed selling expenses 9 The units are normally transferred internally from Division A to Division B.The units also may be sold externally for $210 per unit.The minimum profit level accepted by the company is a markup of 30 percent.There was no beginning or ending inventories. If variable manufacturing costs without a fixed fee are used as the transfer price,what will be Division A's transfer price?

Discuss the differences between centralized and decentralized decision making.Why would a firm decentralize its operations?

Beta Division had the following information: Asset base in Beta Division \ 400,000 Net income in Beta Division \ 50,000 Weighted average cost of capital 12\% Target ROI 15\% Margin for Beta Division 20\% What is EVA for Beta Division?

In the Ambros Company,Division A has a product that can be sold either to outside customers or to Division B.Information about these divisions is given below: Division A: Case 1 Case 2 Capacity in units 100,000 100,000 Number of units sold externally 100,000 60,000 Market selling price \ 90 \ 75 Variable costs per unit 73 58 Fixed costs per unit based on capacity 10 10 Division B: Number of units needed for production 40,000 40,000 Purchase price per unit from external supplier \9 1 \7 4 The company uses the opportunity cost approach to transfer pricing.What is the maximum transfer price in Case 1?

Given the following information for the Zenith Division: Asset base \ 500,000 Sales Revenues \ 725,000 Expenses \ 662,500 a.What are the margin,turnover,and ROI for Zenith Division? b.Zenith has an option to make an additional investment that would add $100,000 to the asset base.It would generate an additional $50,000 in sales revenue and no additional expenses.What would be the effect on margin,turnover,and ROI? c.Another alternative (independent of alternative 'b')for Zenith is to run an advertising campaign that would require additional advertising expenses of $37,500,but the best estimate is the campaign would generate an additional $75,000 of revenue.What would be the effect on margin,turnover,and ROI?

What is a manager of a revenue centre responsible for?

Correll Company has two divisions, A and B. Information for each division is as follows: Net earnings for division \ 40,000 \ 260,000 Asset base for division \ 100,000 \ 1,200,000 Target rate of return 15\% 18\% Margin 10\% 20\% Weighted average cost of capital 12\% 12\% -Refer to the figure.What is the operating asset turnover for A?

How does EVA encourage the right kind of behaviour from divisions?

In the Ambros Company, Division A has a product that can be sold either to outside customers or to Division B. Information about these divisions is given below: Division A: Case 1 Case 2 Capacity in units 100,000 100,000 Number of units sold externally 100,000 60,000 Market selling price \ 90 \ 75 Variable costs per unit 73 58 Fixed costs per unit based on capacity 10 10 Division B: Number of units needed for production 40,000 40,000 Purchase price per unit from external supplier \8 6 \7 4 -Refer to the figure.The company uses the opportunity cost approach to transfer pricing.What is the minimum transfer price in Case 1?

What is important to keep separate from the evaluation of the division?

What is a manager of a cost centre responsible for?

What is the term for the delegation of decision-making authority to successively lower management levels in an organization?

The Engine Division provides engines for the Tractor Division of a company. The standard unit costs for Engine Division are as follows: Direct materals \6 00 Direct labour 1,200 Variable overhead 300 Fixed overhead 150 Market price per unit 2,730 -Refer to the figure.What is the transfer price based on full cost plus a markup of 30 percent?

Which department would be classified as a revenue centre?

Patterson Company had sales of $200,000,net income of $10,000,and an asset base of $300,000.What is its margin?

The following information pertains to the three divisions of Marlow Company: Sales ? ? 1,250,000 Net operating income \ 36,000 \ 25,000 \ 75,000 Average operating assets 300,000 ? ? Return on investment ? 20\% 15\% Margin 0.10 0.05 ? Turnover 1.5 ? ? Target ROI 15\% 12\% 10\% -Refer to the figure.What is the turnover for Division Z?