Question 1

The investment turnover for Mason is

Accepted Answer

A)  1.08 
B)  0.93 
C)  6.57 
D)  7.07 
A)  1.08 
B)  0.93 
C)  6.57 
D)  7.07

Question 2

The income from operations for the Locomotive Division is

Accepted Answer

A)  $57,960 
B)  $14,790 
C)  $27,240 
D)  $47,280 
A)  $57,960 
B)  $14,790 
C)  $27,240 
D)  $47,280

Question 3

The income from operations for the Rails Division is

Accepted Answer

A)  $60,800 
B)  $33,600 
C)  $8,700 
D)  $21,150 
A)  $60,800 
B)  $33,600 
C)  $8,700 
D)  $21,150

Question 4

Most manufacturing plants are considered cost centers because they have control over

Accepted Answer

A)  sales and costs 
B)  fixed assets and costs 
C)  costs only 
D)  fixed assets and sales 
A)  sales and costs 
B)  fixed assets and costs 
C)  costs only 
D)  fixed assets and sales

Question 5

Marshall Corporation had $220,000 in invested assets,sales of $242,000,income from operations of $66,000,and a desired minimum rate of return of 3%.The rate of return on investment for Marshall is

Accepted Answer

A)  9.1% 
B)  30% 
C)  3.0% 
D)  27.3% 
A)  9.1% 
B)  30% 
C)  3.0% 
D)  27.3%

Question 6

A responsibility center in which the department manager is responsible for costs,revenues,and assets for a department is called:

Accepted Answer

A)  a cost center 
B)  a profit center 
C)  an operating center 
D)  an investment center 
A)  a cost center 
B)  a profit center 
C)  an operating center 
D)  an investment center

Question 7

One of the advantages of decentralization is that delegating authority to managers closest to the operation always​ results in better decisions.

Accepted Answer

A) True 
 B)False

Question 8

The primary disadvantage of decentralized operations is that decisions made by one manager may affect other managers in such a way that the profitability of the entire company may suffer.

Accepted Answer

A) True 
 B)False

Question 9

​The Nelson Company's radio division currently is purchasing transistors from the Charlotte Co.for $3.50 each.The total number of transistors needed is 8,000 per month.Nelson Company's electronics division can produce the transistors for a cost of $4.00 each and they have plenty of capacity to manufacture the units.The $4 is made up of $3.25 in variable costs,and $0.75 in allocated fixed costs.What should be the range of a possible transfer price?

Accepted Answer

A)  ​$3.26 to $3.49 
B)  ​$3.51 to $3.99 
C)  ​$3.26 to $3.99 
D)  ​$3.25 to $3.50 
A)  ​$3.26 to $3.49 
B)  ​$3.51 to $3.99 
C)  ​$3.26 to $3.99 
D)  ​$3.25 to $3.50

Question 10

Which of the following would be most effective in a small owner / manager-operated business?

Accepted Answer

A)  profit centers 
B)  centralization 
C)  investment centers 
D)  cost centers 
A)  profit centers 
B)  centralization 
C)  investment centers 
D)  cost centers

Question 11

A responsibility center in which the department manager has responsibility for and authority over costs,revenues,and assets invested in the department is termed a cost center.

Accepted Answer

A) True 
 B)False

Question 12

The profit margin component of rate of return on investment analysis focuses on profitability by indicating the rate of profit earned on each sales dollar.

Accepted Answer

A) True 
 B)False

Question 13

The major advantage of the rate of return on investment over income from operations as a divisional performance measure is that divisional investment is directly considered and thus comparability of divisions is facilitated.

Accepted Answer

A) True 
 B)False

Question 14

In evaluating the profit center manager,the income from operations should be compared

Accepted Answer

A)  across profit centers 
B)  to historical performance or budget 
C)  to the competitor's net income 
D)  to the total company earnings per share 
A)  across profit centers 
B)  to historical performance or budget 
C)  to the competitor's net income 
D)  to the total company earnings per share

Question 15

The minimum accepted divisional income from operations is set by top management by establishing a maximum rate of return considered acceptable for invested assets.

Accepted Answer

A) True 
 B)False

Question 16

Purchase requisitions for Purchasing and the number of payroll checks for Payroll Accounting are examples of activity bases.

Accepted Answer

A) True 
 B)False

Question 17

Under the cost price approach,the transfer price is the price at which the product or service transferred could be sold to outside buyers.

Accepted Answer

A) True 
 B)False

Question 18

Businesses that are separated into two or more manageable units in which managers have authority and responsibility for operations are said to be

Accepted Answer

A)  decentralized 
B)  consolidated 
C)  diversified 
D)  centralized 
A)  decentralized 
B)  consolidated 
C)  diversified 
D)  centralized

Question 19

To calculate income from operations,total service department charges are

Accepted Answer

A)  added to income from operations before service department charges 
B)  subtracted from operating expenses 
C)  subtracted from income from operations before service department charges 
D)  subtracted from gross profit margin 
A)  added to income from operations before service department charges 
B)  subtracted from operating expenses 
C)  subtracted from income from operations before service department charges 
D)  subtracted from gross profit margin

Question 20

The ratio of income from operations to sales,which is also a factor in the DuPont formula for determining the rate of return on investment,is called

Accepted Answer

A)  profit margin 
B)  indirect expenses 
C)  investment turnover 
D)  cost 
A)  profit margin 
B)  indirect expenses 
C)  investment turnover 
D)  cost

Exam 23: Evaluating Decentralized Operations

The investment turnover for Mason is

The income from operations for the Locomotive Division is

The income from operations for the Rails Division is

Most manufacturing plants are considered cost centers because they have control over

Marshall Corporation had $220,000 in invested assets,sales of $242,000,income from operations of $66,000,and a desired minimum rate of return of 3%.The rate of return on investment for Marshall is

A responsibility center in which the department manager is responsible for costs,revenues,and assets for a department is called:

One of the advantages of decentralization is that delegating authority to managers closest to the operation always​ results in better decisions.

The primary disadvantage of decentralized operations is that decisions made by one manager may affect other managers in such a way that the profitability of the entire company may suffer.

Which of the following would be most effective in a small owner / manager-operated business?

A responsibility center in which the department manager has responsibility for and authority over costs,revenues,and assets invested in the department is termed a cost center.

The profit margin component of rate of return on investment analysis focuses on profitability by indicating the rate of profit earned on each sales dollar.

The major advantage of the rate of return on investment over income from operations as a divisional performance measure is that divisional investment is directly considered and thus comparability of divisions is facilitated.

In evaluating the profit center manager,the income from operations should be compared

The minimum accepted divisional income from operations is set by top management by establishing a maximum rate of return considered acceptable for invested assets.

Purchase requisitions for Purchasing and the number of payroll checks for Payroll Accounting are examples of activity bases.

Under the cost price approach,the transfer price is the price at which the product or service transferred could be sold to outside buyers.

Businesses that are separated into two or more manageable units in which managers have authority and responsibility for operations are said to be

To calculate income from operations,total service department charges are

The ratio of income from operations to sales,which is also a factor in the DuPont formula for determining the rate of return on investment,is called

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Inventories

Internal Control and Cash

Receivables

Long-Term Assets: Fixed and Intangible

Liabilities: Current,installment Notes,and Contingencies

Liabilities: Bonds Payable

Corporations: Organization, stock Transactions, and Dividends

Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Cost Systems

Activity-Based Costing

Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Evaluating Variances From Standard Costs

Differential Analysis and Product Pricing

Capital Investment Analysis

Lean Manufacturing and Activity Analysis

Filters

One of the advantages of decentralization is that delegating authority to managers closest to the operation always results in better decisions.