Question 1

Trompeter Company reports the following information:   What is the residual income for Trompeter Company?

Accepted Answer

A) $30,000 
B) $50,000 
C) $150,000 
D) $250,000 
A) $30,000 
B) $50,000 
C) $150,000 
D) $250,000

Question 2

The lower in the organization that the freedom to make decisions exists,the greater the centralization.

Accepted Answer

A) True 
 B)False

Question 3

Some level of decentralization in an organizational structure creates benefits for most organizations.

Accepted Answer

A) True 
 B)False

Question 4

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 control system 
D) management by objectives 
A) capital budgeting 
B) managerial effort 
C) management control system 
D) management by objectives

Question 5

Identify the disadvantages of decentralization.

Accepted Answer

The disadv

Question 6

Managers tend to focus their efforts in areas where performance is measured and where their performance affects rewards.

Accepted Answer

A) True 
 B)False

Question 7

The following information is available for the Peter Company:   What is the return on sales?

Accepted Answer

A) 10.00% 
B) 10.42% 
C) 62.50% 
D) 100.00% 
A) 10.00% 
B) 10.42% 
C) 62.50% 
D) 100.00%

Question 8

Invested capital can mean any of the following EXCEPT ________.

Accepted Answer

A) total assets 
B) total assets less current liabilities 
C) total assets less long-term liabilities 
D) total assets less total liabilities 
A) total assets 
B) total assets less current liabilities 
C) total assets less long-term liabilities 
D) total assets less total liabilities

Question 9

Martin Company's records reveal the following:     Variable costs:
  The variable costs of Division Y will be incurred whether it buys from Division X or from an outside supplier.Assume Division X is working at full capacity; there is no excess capacity.Division Y can buy the component from an outside supplier for $32 per unit.What is the lowest transfer price per unit Division X should accept from Division Y for the component?

Accepted Answer

A) $8 per unit 
B) $22 per unit 
C) $24 per unit 
D) $32 per unit 
A) $8 per unit 
B) $22 per unit 
C) $24 per unit 
D) $32 per unit

Question 10

Dusty Company's records reveal the following:     Variable costs:
  The variable costs of Division B will be incurred whether it buys from Division A or from an outside supplier.Division A has excess capacity.Division B can buy the parts for $75 per unit from an outside supplier.What is the lowest transfer price per unit Division A will accept from Division B?

Accepted Answer

A) $24 
B) $51 
C) $66 
D) $75 
A) $24 
B) $51 
C) $66 
D) $75

Question 11

Pearson Company reports the following information:   What is the residual income for Pearson Company?

Accepted Answer

A) $30,000 
B) $50,000 
C) $250,000 
D) $450,000 
A) $30,000 
B) $50,000 
C) $250,000 
D) $450,000

Question 12

EVA uses after-tax numbers for operating income.

Accepted Answer

A) True 
 B)False

Question 13

The following information pertains to the Voyager Company:   Return on sales equals ________.

Accepted Answer

A) 12.5% 
B) 50.0% 
C) 75.0% 
D) 133.0% 
A) 12.5% 
B) 50.0% 
C) 75.0% 
D) 133.0%

Question 14

The West and East Divisions are part of the same company.Currently the East Division buys a part from West Division for $384 per unit.The West Division wants to increase the price of the part it sells to East Division by $96 to $480.The manager of the East Division has stated that he cannot pay that much insofar as the division's profit goes below zero.The manager of the East Division can buy the part from an outside supplier for $448 per unit.The cost data pertaining to the part is supplied by the West Division:   If West Division does not produce the parts for the East Division,it will be able to avoid one-third of the fixed manufacturing overhead costs.The West Division has excess capacity but no alternative uses for the facilities.What is the maximum transfer price per unit that East Division should pay for the part?

Accepted Answer

A) $388.80 
B) $414.40 
C) $448.00 
D) $480.00 
A) $388.80 
B) $414.40 
C) $448.00 
D) $480.00

Question 15

Cost-based transfer prices are easy to implement but can lead to ________ decisions.

Accepted Answer

A) questionable 
B) negotiated 
C) dysfunctional 
D) autonomous 
A) questionable 
B) negotiated 
C) dysfunctional 
D) autonomous

Question 16

According to agency theory,employment contracts will balance three factors that include risk,incentive and the cost of measuring performance.

Accepted Answer

A) True 
 B)False

Question 17

Anne Company's records reveal the following:     Variable costs:
  The variable costs of Division B will be incurred whether it buys from Division A or from an outside supplier.Division B can buy the parts from an outside supplier at $75 per unit.Division A has no excess capacity.What is the highest price that Division B should pay to Division A for the parts per unit?

Accepted Answer

A) $24 
B) $51 
C) $66 
D) $75 
A) $24 
B) $51 
C) $66 
D) $75

Question 18

When determining a transfer price,outlay cost is often the variable cost for producing the item transferred.

Accepted Answer

A) True 
 B)False

Question 19

Transfer prices are ________.

Accepted Answer

A) revenues of the segment producing the transferred product 
B) costs of the segment acquiring the transferred product 
C) costs of the segment producing the transferred product 
D) revenues of the segment producing the transferred product and costs of the segment acquiring the transferred product 
A) revenues of the segment producing the transferred product 
B) costs of the segment acquiring the transferred product 
C) costs of the segment producing the transferred product 
D) revenues of the segment producing the transferred product and costs of the segment acquiring the transferred product

Question 20

When a division has idle production capacity,the transfer price that leads to optimal decision making is variable cost.

Accepted Answer

A) True 
 B)False

Trompeter Company reports the following information: What is the residual income for Trompeter Company?

The lower in the organization that the freedom to make decisions exists,the greater the centralization.

Some level of decentralization in an organizational structure creates benefits for most organizations.

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 ________.

Identify the disadvantages of decentralization.

Managers tend to focus their efforts in areas where performance is measured and where their performance affects rewards.

The following information is available for the Peter Company: What is the return on sales?

Invested capital can mean any of the following EXCEPT ________.

Pearson Company reports the following information: What is the residual income for Pearson Company?

EVA uses after-tax numbers for operating income.

The following information pertains to the Voyager Company: Return on sales equals ________.

Cost-based transfer prices are easy to implement but can lead to ________ decisions.

According to agency theory,employment contracts will balance three factors that include risk,incentive and the cost of measuring performance.

When determining a transfer price,outlay cost is often the variable cost for producing the item transferred.

Transfer prices are ________.

When a division has idle production capacity,the transfer price that leads to optimal decision making is variable cost.

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

Trompeter Company reports the following information: What is the residual income for Trompeter Company?

The lower in the organization that the freedom to make decisions exists,the greater the centralization.

Some level of decentralization in an organizational structure creates benefits for most organizations.

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 ________.

Identify the disadvantages of decentralization.

Managers tend to focus their efforts in areas where performance is measured and where their performance affects rewards.

The following information is available for the Peter Company: What is the return on sales?

Invested capital can mean any of the following EXCEPT ________.

Pearson Company reports the following information: What is the residual income for Pearson Company?

EVA uses after-tax numbers for operating income.

The following information pertains to the Voyager Company: Return on sales equals ________.

Cost-based transfer prices are easy to implement but can lead to ________ decisions.

According to agency theory,employment contracts will balance three factors that include risk,incentive and the cost of measuring performance.

When determining a transfer price,outlay cost is often the variable cost for producing the item transferred.

Transfer prices are ________.

When a division has idle production capacity,the transfer price that leads to optimal decision making is variable cost.

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