Question 1

An increase in either capital turnover or return on sales,without changing the other,will also ________ the ________.

Accepted Answer

A) increase; gross book value of long-term assets 
B) increase; return on investment 
C) increase; cost of capital 
D) increase: net book value of long-term assets 
A) increase; gross book value of long-term assets 
B) increase; return on investment 
C) increase; cost of capital 
D) increase: net book value of long-term assets

Question 2

Jewel Company's revenues are $300 and invested capital is $240.Expenses are currently 60% of sales.Jewel Company's current return on investment is ________.

Accepted Answer

A) 50% 
B) 60% 
C) 80% 
D) 100% 
A) 50% 
B) 60% 
C) 80% 
D) 100%

Question 3

Which of the following adjustments to after-tax operating income is used to approximate cash income for EVA?

Accepted Answer

A) expensing research and development costs 
B) using LIFO inventory method 
C) deducting interest payable 
D) using taxes paid rather than tax expense 
A) expensing research and development costs 
B) using LIFO inventory method 
C) deducting interest payable 
D) using taxes paid rather than tax expense

Question 4

________ is any decision in conflict with organizational goals.

Accepted Answer

A) Congruent behavior 
B) Managerial effort 
C) Dysfunctional decision 
D) Negotiating 
A) Congruent behavior 
B) Managerial effort 
C) Dysfunctional decision 
D) Negotiating

Question 5

Segment autonomy means that the activities of segment managers are directed by top managers.

Accepted Answer

A) True 
 B)False

Question 6

Return on sales equals revenue divided by income.

Accepted Answer

A) True 
 B)False

Question 7

________ is a measure of income divided by the investment required to obtain that income.

Accepted Answer

A) Return on sales 
B) Capital turnover 
C) Return on investment 
D) Residual income 
A) Return on sales 
B) Capital turnover 
C) Return on investment 
D) Residual income

Question 8

To calculate economic value added,several adjustments are made to after tax operating profit that include ________ and ________.

Accepted Answer

A) the use of LIFO inventory valuation; capitalization of research and development costs 
B) taxes paid rather than tax expense; capitalization of research and development costs 
C) the use of average cost inventory valuation; current costs of fixed assets 
D) the use of LIFO inventory valuation; current costs of fixed assets 
A) the use of LIFO inventory valuation; capitalization of research and development costs 
B) taxes paid rather than tax expense; capitalization of research and development costs 
C) the use of average cost inventory valuation; current costs of fixed assets 
D) the use of LIFO inventory valuation; current costs of fixed assets

Question 9

________ is an approach for establishing a market-based transfer price.

Accepted Answer

A) Full cost plus a normal profit markup 
B) External market price less selling and delivery costs 
C) External market price plus a profit markup 
D) Variable cost plus unavoidable fixed cost 
A) Full cost plus a normal profit markup 
B) External market price less selling and delivery costs 
C) External market price plus a profit markup 
D) Variable cost plus unavoidable fixed cost

Question 10

Incentives do not increase managerial effort toward goal congruence.

Accepted Answer

A) True 
 B)False

Question 11

For multinational companies,worldwide income taxes do not influence the setting of transfer prices.

Accepted Answer

A) True 
 B)False

Question 12

Dysfunctional decisions are decisions that conflict with organizational goals and objectives.

Accepted Answer

A) True 
 B)False

Question 13

The variable cost of Part X is $50 per unit and the full cost of the part is $80 per unit.The part is produced in Country Z and transferred to a plant in Country B.Country Z has a 30% income tax rate.Country B has a 50% income tax rate and an import duty equal to 10% of the price of the item.Part X can be transferred at full cost or variable cost.Assume Part X is transferred at full cost.By using full cost instead of variable cost for the transfer price,the net savings is ________.

Accepted Answer

A) $3 per unit 
B) $6 per unit 
C) $9 per unit 
D) $15 per unit 
A) $3 per unit 
B) $6 per unit 
C) $9 per unit 
D) $15 per unit

Question 14

The following data are available for three divisions of Beck Company:
   Required:
Compute the missing data.

Accepted Answer

A)$22,500 B)$281,250 C)1.875 D

Question 15

A full-cost or full-cost plus profit transfer price can potentially create dysfunctional decisions.

Accepted Answer

A) True 
 B)False

Question 16

The costs of accumulating and processing information frequently decline under decentralization.

Accepted Answer

A) True 
 B)False

Question 17

The following information pertains to Alan Company:   Invested capital is defined as total assets.What is the return on investment?

Accepted Answer

A) 20% 
B) 60% 
C) 70% 
D) 160% 
A) 20% 
B) 60% 
C) 70% 
D) 160%

Question 18

The Nicholson and Cage Divisions are in the same company.Currently the Cage Division buys a part from the Nicholson Division for $82 per unit.The Nicholson Division wants to increase the price of the part to $100 per unit.Cage Division can buy the part for $94 from an outside supplier.The cost data for the part obtained from the Nicholson Division is below:
   If Nicholson does not provide the parts to Cage,it will save one-fourth of the fixed indirect production costs.The Nicholson Division has excess capacity but no alternative uses of the facilities.
Required: 
A)From the standpoint of the company as a whole,should Cage Division continue to buy the part from Nicholson Division?
B)From the standpoint of Cage Division only,should Cage Division continue to buy the part from Nicholson Division?

Accepted Answer

A)It costs $82.90 per unit to make the p

Question 19

When evaluating the performance of division managers,which definition of invested capital should be used?

Accepted Answer

A) total assets 
B) total assets less current liabilities 
C) total assets less total liabilities 
D) total assets or total assets less current liabilities 
A) total assets 
B) total assets less current liabilities 
C) total assets less total liabilities 
D) total assets or total assets less current liabilities

Question 20

Companies must pay managers more if the managers bear more risk,assuming the managers are risk averse.

Accepted Answer

A) True 
 B)False

An increase in either capital turnover or return on sales,without changing the other,will also the .

Jewel Company's revenues are $300 and invested capital is $240.Expenses are currently 60% of sales.Jewel Company's current return on investment is ________.

Which of the following adjustments to after-tax operating income is used to approximate cash income for EVA?

________ is any decision in conflict with organizational goals.

Segment autonomy means that the activities of segment managers are directed by top managers.

Return on sales equals revenue divided by income.

________ is a measure of income divided by the investment required to obtain that income.

To calculate economic value added,several adjustments are made to after tax operating profit that include and .

________ is an approach for establishing a market-based transfer price.

Incentives do not increase managerial effort toward goal congruence.

For multinational companies,worldwide income taxes do not influence the setting of transfer prices.

Dysfunctional decisions are decisions that conflict with organizational goals and objectives.

The following data are available for three divisions of Beck Company: Required: Compute the missing data.

A full-cost or full-cost plus profit transfer price can potentially create dysfunctional decisions.

The costs of accumulating and processing information frequently decline under decentralization.

The following information pertains to Alan Company: Invested capital is defined as total assets.What is the return on investment?

When evaluating the performance of division managers,which definition of invested capital should be used?

Companies must pay managers more if the managers bear more risk,assuming the managers are risk averse.

Managerial Accounting, the Business Organization

Introduction to Cost Behavior and Cost-Volume Relationships

Measurement of Cost Behavior

Cost Management Systems and Activity-Based Costing

Relevant Information for Decision Making With a Focus

Relevant Information for Decision Making With a Focus

Introduction to Budgets and Preparing the Master Budget

Flexible Budgets and Variance Analysis

Management Control Systems and Responsibility Accounting

Capital Budgeting

Cost Allocation

Accounting for Overhead Costs

Job-Order Costing and Process-Costing Systems

Basic Accounting: Concepts, techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

Understanding and Analyzing Consolidated Financial Statements

Filters

Exam 10: Management Control in Decentralized Organizations

An increase in either capital turnover or return on sales,without changing the other,will also ________ the ________.

Jewel Company's revenues are $300 and invested capital is $240.Expenses are currently 60% of sales.Jewel Company's current return on investment is ________.

Which of the following adjustments to after-tax operating income is used to approximate cash income for EVA?

________ is any decision in conflict with organizational goals.

Segment autonomy means that the activities of segment managers are directed by top managers.

Return on sales equals revenue divided by income.

________ is a measure of income divided by the investment required to obtain that income.

To calculate economic value added,several adjustments are made to after tax operating profit that include ________ and ________.

________ is an approach for establishing a market-based transfer price.

Incentives do not increase managerial effort toward goal congruence.

For multinational companies,worldwide income taxes do not influence the setting of transfer prices.

Dysfunctional decisions are decisions that conflict with organizational goals and objectives.

The following data are available for three divisions of Beck Company: Required: Compute the missing data.

A full-cost or full-cost plus profit transfer price can potentially create dysfunctional decisions.

The costs of accumulating and processing information frequently decline under decentralization.

The following information pertains to Alan Company: Invested capital is defined as total assets.What is the return on investment?

When evaluating the performance of division managers,which definition of invested capital should be used?

Companies must pay managers more if the managers bear more risk,assuming the managers are risk averse.

Managerial Accounting, the Business Organization

Introduction to Cost Behavior and Cost-Volume Relationships

Measurement of Cost Behavior

Cost Management Systems and Activity-Based Costing

Relevant Information for Decision Making With a Focus

Relevant Information for Decision Making With a Focus

Introduction to Budgets and Preparing the Master Budget

Flexible Budgets and Variance Analysis

Management Control Systems and Responsibility Accounting

Capital Budgeting

Cost Allocation

Accounting for Overhead Costs

Job-Order Costing and Process-Costing Systems

Basic Accounting: Concepts, techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

Understanding and Analyzing Consolidated Financial Statements

Filters

An increase in either capital turnover or return on sales,without changing the other,will also the .

To calculate economic value added,several adjustments are made to after tax operating profit that include and .