Question 1

Which of the following is a disadvantage of both residual income and ROI?

Accepted Answer

A) They are both absolute measures of return. 
B) They are both difficult to calculate. 
C) They both do not discourage myopic behaviour. 
D) They both result in a percentage. 
A) They are both absolute measures of return. 
B) They are both difficult to calculate. 
C) They both do not discourage myopic behaviour. 
D) They both result in a percentage.

Question 2

The following information pertains to the three divisions of Marlow Company: $\begin{array}{lrrr}
& \underline{\text { Division} X} & \underline{\text { Division } Y} & \underline{ \text { Division Z }}\
\text { Sales } & ? & ? & 1,250,000 \
\text { Net operating income } & \$ 36,000 & \$ 25,000 & \$ 75,000 \
\text { Average operating assets } & 300,000 & ? & ? \
\text { Return on investment } & ? & 20 \% & 15 \% \
\text { Margin } & 0.10 & 0.05 & ? \
\text { Turnover } & 1.5 & ? & ? \
\text { Target ROI } & 15 \% & 12 \% & 10 \%
\end{array}$ What is the margin for Division Z?

Accepted Answer

A) 1.5% 
B) 6.0% 
C) 15.0% 
D) 100.0% 
A) 1.5% 
B) 6.0% 
C) 15.0% 
D) 100.0%

Question 3

One of the reasons for decentralization is more timely response.What does this mean?

Accepted Answer

A) Lower-level managers are more in contact with immediate operating conditions. 
B) Central management can be free to focus on strategic planning. 
C) The organization determines each division's contribution to profit and exposes each division to market forces. 
D) Local management both makes and implements decisions. 
A) Lower-level managers are more in contact with immediate operating conditions. 
B) Central management can be free to focus on strategic planning. 
C) The organization determines each division's contribution to profit and exposes each division to market forces. 
D) Local management both makes and implements decisions.

Question 4

Young Company has a tax rate of 40 percent. Information for the company is as follows:
$$\begin{array} { l r r } 
& \text { Amount } & \text { After-Tax Cost } \
\text { Mortgage bonds } & \$ 1,000,000 & 0.048 \
\text { Unsecured bonds } & 3,000,000 & 0.050 \
\text { Comman stock } & 6,000,000 & 0.150
\end{array}$$
-Refer to the figure.What is the weighted cost of capital?

Accepted Answer

A) 0.0366 
B) 0.0827 
C) 0.1098 
D) 0.2480 
A) 0.0366 
B) 0.0827 
C) 0.1098 
D) 0.2480

Question 5

The following information pertains to the three divisions of Marlow Company:
$\begin{array}{lrrr}
& \underline{\text { Division} X} & \underline{\text { Division } Y} & \underline{ \text { Division Z }}\
\text { Sales } & ? & ? & 1,250,000 \
\text { Net operating income } & \$ 36,000 & \$ 25,000 & \$ 75,000 \
\text { Average operating assets } & 300,000 & ? & ? \
\text { Return on investment } & ? & 20 \% & 15 \% \
\text { Margin } & 0.10 & 0.05 & ? \
\text { Turnover } & 1.5 & ? & ? \
\text { Target ROI } & 15 \% & 12 \% & 10 \%
\end{array}$
-Refer to the figure.What are the average operating assets for Division Z?

Accepted Answer

A) $75,000 
B) $187,500 
C) $500,000 
D) $1,250,000 
A) $75,000 
B) $187,500 
C) $500,000 
D) $1,250,000

Question 6

The Engine Division provides engines for the Tractor Division of a company. The standard unit costs for Engine Division are as follows:
$$\begin{array} { l r } 
\text { Direct materals }&\$600 \
\text { Direct labour } & 1,200 \
\text { Variable overhead } & 300 \
\text { Fixed overhead } & 150 \
\text { Market price per unit } & 2,730
\end{array}$$
-Refer to the figure.What is the transfer price based on variable product costs plus 20 percent?

Accepted Answer

A) $720 
B) $2,100 
C) $2,160 
D) $2,520 
A) $720 
B) $2,100 
C) $2,160 
D) $2,520

Question 7

What does responsibility accounting fail to consider?

Accepted Answer

A) responsibility 
B) accountability 
C) performance evaluation 
D) static budgeting 
A) responsibility 
B) accountability 
C) performance evaluation 
D) static budgeting

Question 8

Hasslehoff Inc.is a multinational company with divisions around the world.Division A in the United States purchases a part from Division G in Canada.The part can be purchased externally for $7 each.Transportation costs amount to $1,and the commission of $.50 will not need to be paid. What is the transfer price using the comparable uncontrolled price method?

Accepted Answer

A) $7.00 
B) $7.50 
C) $8.00 
D) $8.50 
A) $7.00 
B) $7.50 
C) $8.00 
D) $8.50

Question 9

Which responsibility centre would have a manager responsible for revenues,costs,and investments?

Accepted Answer

A) cost centre 
B) investment centre 
C) profit centre 
D) expense centre 
A) cost centre 
B) investment centre 
C) profit centre 
D) expense centre

Question 10

Money Corporation has two divisions,X and Y.Division X sells its product to Division Y.Standard costs for Division X are as follows: $\begin{array}{llcc}
  \text {Direct materials  } &  \text {$ \$ 4 $ per unit  } \
  \text {  Direct labour} &  \text {2 per unit  } \
  \text { Variable overhead } &  \text { 5 per unit } \
  \text { Fixed overhead } &  \text { 3 per unit } \
  \text {Total  } &  \text { \$14  per unit} \
\end{array}$
 What is the transfer price for Division X based on standard variable cost plus a markup of 25 percent?

Accepted Answer

A) $7.50 
B) $11.00 
C) $13.75 
D) $17.50 
A) $7.50 
B) $11.00 
C) $13.75 
D) $17.50

Which of the following is a disadvantage of both residual income and ROI?

One of the reasons for decentralization is more timely response.What does this mean?

Young Company has a tax rate of 40 percent. Information for the company is as follows: Amount After-Tax Cost Mortgage bonds \ 1,000,000 0.048 Unsecured bonds 3,000,000 0.050 Comman stock 6,000,000 0.150 -Refer to the figure.What is the weighted cost of capital?

What does responsibility accounting fail to consider?

Which responsibility centre would have a manager responsible for revenues,costs,and investments?

A: Basic Cost Management Concepts

B: Basic Cost Management Concepts

Cost Behaviour

Cost-Volume-Profit Analysis

Job-Order Costing Systems

Process Costing

Activity-Based Costing

Allocating Costs of Support Departments and Joint Products

Budgeting for Planning and Control

Standard Costing: a Functional-Based Control Approach

Tactical Decision Making

Pricing and Profitability Analysis

Strategic Cost Management

Activity-Based Management

The Balanced Scorecard: Strategic-Based Control

Quality and Environmental Cost Management

Lean Accounting and Productivity Measurement

Inventory Management: Economic Order Quantity,jit,and the Theory of Constraints

Filters

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

Which of the following is a disadvantage of both residual income and ROI?

One of the reasons for decentralization is more timely response.What does this mean?

Young Company has a tax rate of 40 percent. Information for the company is as follows: Amount After-Tax Cost Mortgage bonds \ 1,000,000 0.048 Unsecured bonds 3,000,000 0.050 Comman stock 6,000,000 0.150 -Refer to the figure.What is the weighted cost of capital?

What does responsibility accounting fail to consider?

Which responsibility centre would have a manager responsible for revenues,costs,and investments?

A: Basic Cost Management Concepts

B: Basic Cost Management Concepts

Cost Behaviour

Cost-Volume-Profit Analysis

Job-Order Costing Systems

Process Costing

Activity-Based Costing

Allocating Costs of Support Departments and Joint Products

Budgeting for Planning and Control

Standard Costing: a Functional-Based Control Approach

Tactical Decision Making

Pricing and Profitability Analysis

Strategic Cost Management

Activity-Based Management

The Balanced Scorecard: Strategic-Based Control

Quality and Environmental Cost Management

Lean Accounting and Productivity Measurement

Inventory Management: Economic Order Quantity,jit,and the Theory of Constraints

Filters