Question 1

Any action taken in conflict with organizational goals is called

Accepted Answer

A)  congruent behaviour. 
B)  managerial effort. 
C)  dysfunctional behaviour. 
D)  negotiating. 
A)  congruent behaviour. 
B)  managerial effort. 
C)  dysfunctional behaviour. 
D)  negotiating.

Question 2

Good, Inc.'s records reveal the following:
     The variable cost of Division B will be incurred whether it buys from Division A or from an outside supplier.
-If Division A wants to transfer the components to Division B for $30 each, the manager of Division B would

Accepted Answer

A)  not want to buy from Division A, as the same component could be purchased at the market price of $24. 
B)  buy from Division A, as this would be in the best interest of the company as a whole. 
C)  buy from Division A as long as Division A could supply a large enough quantity to make it profitable to Division B. 
D)  probably ask Division A's manager to split the difference between the $30 and the market price of $24 to arrive at a transfer price of $27. 
A)  not want to buy from Division A, as the same component could be purchased at the market price of $24. 
B)  buy from Division A, as this would be in the best interest of the company as a whole. 
C)  buy from Division A as long as Division A could supply a large enough quantity to make it profitable to Division B. 
D)  probably ask Division A's manager to split the difference between the $30 and the market price of $24 to arrive at a transfer price of $27.

Question 3

The following information pertains to Wolfe Company
  
-If invested capital is defined as total assets, the return on investment is

Accepted Answer

A)  160 percent. 
B)  25 percent. 
C)  57 percent. 
D)  40 percent. 
A)  160 percent. 
B)  25 percent. 
C)  57 percent. 
D)  40 percent.

Question 4

What a firm must pay to acquire more capital, whether or not it actually has to acquire more capital to take on a project.

Accepted Answer

The answer of What a firm must pay to acquire...

Question 5

Decentralization is the delegation of freedom to make decisions.

Accepted Answer

A) True 
 B)False

Question 6

The asset section of the January 1, 20X7 balance sheet of Murphy Company includes a machine, which was acquired on January 1, 20X1. The machine's original cost was $1,000,000, and the estimated life was determined to be 10 years. The estimated residual value was zero, and the straight-line method of depreciation was chosen.
-The book value of the machine as of January 1, 20X7 is

Accepted Answer

A)  $1,000,000. 
B)  $900,000. 
C)  $500,000. 
D)  $400,000. 
A)  $1,000,000. 
B)  $900,000. 
C)  $500,000. 
D)  $400,000.

Question 7

The use of which cost is recommended for transfer-pricing purposes?

Accepted Answer

A)  Standard cost 
B)  Actual cost 
C)  Fixed cost 
D)  Sunk cost 
A)  Standard cost 
B)  Actual cost 
C)  Fixed cost 
D)  Sunk cost

Question 8

The following information pertains to Wolfe Company
  
-The income percentage of revenue is

Accepted Answer

A)  75 percent. 
B)  25 percent. 
C)  200 percent. 
D)  40 percent. 
A)  75 percent. 
B)  25 percent. 
C)  200 percent. 
D)  40 percent.

Question 9

The following information pertains to Wolfe Company
  
-Which of the following definitions of invested capital is NOT recommended for measuring the performance of division managers?

Accepted Answer

A)  Total assets 
B)  Total assets less total liabilities 
C)  Total assets employed 
D)  Total assets less current liabilities 
A)  Total assets 
B)  Total assets less total liabilities 
C)  Total assets employed 
D)  Total assets less current liabilities

Question 10

Raymer Incorporated has just formed a new division and the following four investment opportunities are available to the division. The firm requires a minimum return of 20 percent.   a. If you were the division manager and your evaluation was based on ROI, which investment opportunities would you accept?
b. If your evaluation was based on RI, which investment opportunities would you accept?
c. If you were president, which projects would you want the division to accept and which performance measure would you use to encourage this action?

Accepted Answer

a. @#IMG-DLM& If the division manager accepts only

Question 11

Buchmiller Company's records reveal the following:
     The variable costs of Division Y will be incurred whether it buys from Division X or from an outside supplier.
-If Division X is NOT at full capacity, the lowest price at which it would be willing to sell to Division Y would be

Accepted Answer

A)  $50. 
B)  $34. 
C)  $16. 
D)  $44. 
A)  $50. 
B)  $34. 
C)  $16. 
D)  $44.

Question 12

The following information pertains to Jordan Company:
  
-The income percentage of revenue is

Accepted Answer

A)  100 percent. 
B)  10 percent. 
C)  500 percent. 
D)  20 percent. 
A)  100 percent. 
B)  10 percent. 
C)  500 percent. 
D)  20 percent.

Question 13

Which of the following is NOT a benefit of decentralization?

Accepted Answer

A)  Lower-level managers have the best information concerning local conditions and therefore may be able to make better decisions than their superiors. 
B)  Managers acquire decision-making ability and other management skills that help them move upward in the organization, assuring continuity of leadership. 
C)  Managers enjoy higher status from being independent and thus are better motivated. 
D)  Managers save time dealing with managers from other segments regarding transfer prices. 
A)  Lower-level managers have the best information concerning local conditions and therefore may be able to make better decisions than their superiors. 
B)  Managers acquire decision-making ability and other management skills that help them move upward in the organization, assuring continuity of leadership. 
C)  Managers enjoy higher status from being independent and thus are better motivated. 
D)  Managers save time dealing with managers from other segments regarding transfer prices.

Question 14

Buchmiller Company's records reveal the following:
     The variable costs of Division Y will be incurred whether it buys from Division X or from an outside supplier.
-If Division X is working at full capacity, the lowest price it would be willing to accept from Division Y would be

Accepted Answer

A)  $34. 
B)  $50. 
C)  $16. 
D)  $44. 
A)  $34. 
B)  $50. 
C)  $16. 
D)  $44.

Question 15

The following information pertains to Wolfe Company
  
-The joint formulation by a manager and his or her superior of a set of goals and plans for achieving the goals for a forthcoming period is known as

Accepted Answer

A)  capital budgeting. 
B)  managerial effort. 
C)  management by opinion. 
D)  management by objectives. 
A)  capital budgeting. 
B)  managerial effort. 
C)  management by opinion. 
D)  management by objectives.

Question 16

Use the following information of the Toro division of Hondo Corporation to answer the next question(s):
   Total divisional assets are $800,000. The firm's minimum required rate of return is 10%.
-Residual income for the Toro division is

Accepted Answer

A)  $50,000. 
B)  $70,000. 
C)  $150,000. 
D)  $170,000. 
A)  $50,000. 
B)  $70,000. 
C)  $150,000. 
D)  $170,000.

Question 17

The following information is available for the Berger Company:
  
-What is the Net income?

Accepted Answer

A)  $2,750,000 
B)  $1,250,000 
C)  $125,000 
D)  $400,000 
A)  $2,750,000 
B)  $1,250,000 
C)  $125,000 
D)  $400,000

Question 18

The following information is available for the Peppercorn Company:
  
-Residual income is defined as

Accepted Answer

A)  net income less "imputed" interest. 
B)  sales less expenses. 
C)  income divided by revenue. 
D)  being the same as ROI. 
A)  net income less "imputed" interest. 
B)  sales less expenses. 
C)  income divided by revenue. 
D)  being the same as ROI.

Question 19

The Pen and Pencil Divisions are part of the same company. Currently the Pencil Division buys a part ingredient from Pen for $96. The Pen Division wants to increase the price of the part it sells to Pencil by $24 to $120. The manager of Pencil has stated that it cannot afford to go that high, as it will decrease the division's profit to near zero. Pencil can buy the part from an outside supplier for $112. The cost data for the Pen Division is as follows:
   If Pen ceases to produce the parts for Pencil, it will be able to avoid one-third of the fixed manufacturing overhead. The Pen Division has excess capacity but no alternative uses for its facilities.
-From the standpoint of the company as a whole, should Pencil continue to buy from Pen or start to buy from the outside supplier?

Accepted Answer

A)  Buy from Pen Division, because the company's profit would be $14.80 per unit larger. 
B)  Buy from Pen Division, because the company's profit would be $8.00 per unit larger. 
C)  Buy from an outside supplier. 
D)  None of the above. 
A)  Buy from Pen Division, because the company's profit would be $14.80 per unit larger. 
B)  Buy from Pen Division, because the company's profit would be $8.00 per unit larger. 
C)  Buy from an outside supplier. 
D)  None of the above.

Question 20

The Pen and Pencil Divisions are part of the same company. Currently the Pencil Division buys a part ingredient from Pen for $96. The Pen Division wants to increase the price of the part it sells to Pencil by $24 to $120. The manager of Pencil has stated that it cannot afford to go that high, as it will decrease the division's profit to near zero. Pencil can buy the part from an outside supplier for $112. The cost data for the Pen Division is as follows:
   If Pen ceases to produce the parts for Pencil, it will be able to avoid one-third of the fixed manufacturing overhead. The Pen Division has excess capacity but no alternative uses for its facilities.
-What is the maximum transfer price that should be charged?

Accepted Answer

A)  $120.00 
B)  $112.00 
C)  $97.20 
D)  $103.60 
A)  $120.00 
B)  $112.00 
C)  $97.20 
D)  $103.60

Any action taken in conflict with organizational goals is called

Good, Inc.'s records reveal the following: The variable cost of Division B will be incurred whether it buys from Division A or from an outside supplier. -If Division A wants to transfer the components to Division B for $30 each, the manager of Division B would

The following information pertains to Wolfe Company -If invested capital is defined as total assets, the return on investment is

What a firm must pay to acquire more capital, whether or not it actually has to acquire more capital to take on a project.

Decentralization is the delegation of freedom to make decisions.

The use of which cost is recommended for transfer-pricing purposes?

The following information pertains to Wolfe Company -The income percentage of revenue is

The following information pertains to Wolfe Company -Which of the following definitions of invested capital is NOT recommended for measuring the performance of division managers?

Buchmiller Company's records reveal the following: The variable costs of Division Y will be incurred whether it buys from Division X or from an outside supplier. -If Division X is NOT at full capacity, the lowest price at which it would be willing to sell to Division Y would be

The following information pertains to Jordan Company: -The income percentage of revenue is

Which of the following is NOT a benefit of decentralization?

Buchmiller Company's records reveal the following: The variable costs of Division Y will be incurred whether it buys from Division X or from an outside supplier. -If Division X is working at full capacity, the lowest price it would be willing to accept from Division Y would be

The following information pertains to Wolfe Company -The joint formulation by a manager and his or her superior of a set of goals and plans for achieving the goals for a forthcoming period is known as

Use the following information of the Toro division of Hondo Corporation to answer the next question(s): Total divisional assets are $800,000. The firm's minimum required rate of return is 10%. -Residual income for the Toro division is

The following information is available for the Berger Company: -What is the Net income?

The following information is available for the Peppercorn Company: -Residual income is defined as

Management Accounting and Management Decisions

Cost Behaviour and Cost-Volume Relationships

Measurement of Cost Behaviour

Cost Management Systems

Cost Allocation and Activity-Based Costing Systems

Job-Costing Systems

Process-Costing Systems

Relevant Information and Decision Making: Marketing Decisions

Relevant Information and Decision Making: Production Decisions

Capital Budgeting Decisions

The Master Budget

Flexible Budgets and Variance Analysis

Management Control Systems, the Balanced Scorecard, and Responsibility Accounting

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Exam 14: Management Control in Decentralized Organizations

Any action taken in conflict with organizational goals is called

Good, Inc.'s records reveal the following: The variable cost of Division B will be incurred whether it buys from Division A or from an outside supplier. -If Division A wants to transfer the components to Division B for $30 each, the manager of Division B would

The following information pertains to Wolfe Company -If invested capital is defined as total assets, the return on investment is

What a firm must pay to acquire more capital, whether or not it actually has to acquire more capital to take on a project.

Decentralization is the delegation of freedom to make decisions.

The use of which cost is recommended for transfer-pricing purposes?

The following information pertains to Wolfe Company -The income percentage of revenue is

The following information pertains to Wolfe Company -Which of the following definitions of invested capital is NOT recommended for measuring the performance of division managers?

Buchmiller Company's records reveal the following: The variable costs of Division Y will be incurred whether it buys from Division X or from an outside supplier. -If Division X is NOT at full capacity, the lowest price at which it would be willing to sell to Division Y would be

The following information pertains to Jordan Company: -The income percentage of revenue is

Which of the following is NOT a benefit of decentralization?

Buchmiller Company's records reveal the following: The variable costs of Division Y will be incurred whether it buys from Division X or from an outside supplier. -If Division X is working at full capacity, the lowest price it would be willing to accept from Division Y would be

The following information pertains to Wolfe Company -The joint formulation by a manager and his or her superior of a set of goals and plans for achieving the goals for a forthcoming period is known as

Use the following information of the Toro division of Hondo Corporation to answer the next question(s): Total divisional assets are $800,000. The firm's minimum required rate of return is 10%. -Residual income for the Toro division is

The following information is available for the Berger Company: -What is the Net income?

The following information is available for the Peppercorn Company: -Residual income is defined as

Management Accounting and Management Decisions

Cost Behaviour and Cost-Volume Relationships

Measurement of Cost Behaviour

Cost Management Systems

Cost Allocation and Activity-Based Costing Systems

Job-Costing Systems

Process-Costing Systems

Relevant Information and Decision Making: Marketing Decisions

Relevant Information and Decision Making: Production Decisions

Capital Budgeting Decisions

The Master Budget

Flexible Budgets and Variance Analysis

Management Control Systems, the Balanced Scorecard, and Responsibility Accounting

Filters