Question 1

The "floor" in transfer pricing is

Accepted Answer

A)  the transfer price that would leave the buying division no worse off if an input is purchased from an internal division. 
B)  the transfer price that would leave the selling division no worse off if the good is sold to an internal division. 
C)  the transfer price that would leave the buying division worse off if an input is purchased from an internal division. 
D)  none of these. 
A)  the transfer price that would leave the buying division no worse off if an input is purchased from an internal division. 
B)  the transfer price that would leave the selling division no worse off if the good is sold to an internal division. 
C)  the transfer price that would leave the buying division worse off if an input is purchased from an internal division. 
D)  none of these.

Question 2

EVA encourages the right kind of behavior from divisions because of its emphasis on

Accepted Answer

A)  after-tax net income. 
B)  total capital employed. 
C)  true cost of capital. 
D)  before-tax operating income. 
A)  after-tax net income. 
B)  total capital employed. 
C)  true cost of capital. 
D)  before-tax operating income.

Question 3

The transfer price is revenue to the selling division and cost to the buying division.

Accepted Answer

A) True 
 B)False

Question 4

__________ are a noncash benefit received over and above salary.

Accepted Answer

The answer of __________ are a noncash benefit received over...

Question 5

The manager of a profit center is responsible for

Accepted Answer

A)  delivering a quality product or service at reasonable but minimal cost. 
B)  decisions to invest in capital equipment. 
C)  decisions regarding revenue generation. 
D)  both a and c. 
A)  delivering a quality product or service at reasonable but minimal cost. 
B)  decisions to invest in capital equipment. 
C)  decisions regarding revenue generation. 
D)  both a and c.

Question 6

Which of the following would NOT be a reason for decentralization?

Accepted Answer

A)  Managers will make decisions for their own benefit, rather than the organization's benefit. 
B)  Lower level managers have better access to information. 
C)  Upper management can spend more time focusing on strategic planning and decision making. 
D)  Lower level managers with decision-making ability are more motivated. 
A)  Managers will make decisions for their own benefit, rather than the organization's benefit. 
B)  Lower level managers have better access to information. 
C)  Upper management can spend more time focusing on strategic planning and decision making. 
D)  Lower level managers with decision-making ability are more motivated.

Question 7

Goal congruence means that the goals of managers are aligned with the goals of the company.

Accepted Answer

A) True 
 B)False

Question 8

Responsibility accounting is a system that does NOT consider

Accepted Answer

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

Question 9

Olden Company has a tax rate of 40 percent. Information for the company is as follows:   What is the EVA if the before-tax operating income is $1,500,000?

Accepted Answer

A)  $(198,000) 
B)  $402,000 
C)  $534,000 
D)  $1,134,000 
A)  $(198,000) 
B)  $402,000 
C)  $534,000 
D)  $1,134,000

Question 10

Which of the following is NOT a disadvantage of the ROI performance measure?

Accepted Answer

A)  It encourages managers to focus on the long run rather than the short run. 
B)  It discourages managers from investing in projects that would decrease divisional ROI but increase the profitability of the company as a whole. 
C)  It encourages myopic behavior. 
D)  All are disadvantages of the ROI measure. 
A)  It encourages managers to focus on the long run rather than the short run. 
B)  It discourages managers from investing in projects that would decrease divisional ROI but increase the profitability of the company as a whole. 
C)  It encourages myopic behavior. 
D)  All are disadvantages of the ROI measure.

Question 11

__________ managers can make better decisions using __________ information.

Accepted Answer

The answer of __________ managers can make better decisions using...

Question 12

Benjamin Manufacturing Company has two divisions, X and Y. Division X prepares the steel for processing. Division Y processes the steel into the final product. No inventories exist in either division at the beginning or end of 2014. During the year, Division X prepared 80,000 lbs. of steel at a cost of $800,000. All the steel was transferred to Division Y where additional operating costs of $5 per lb. were incurred. The final product was sold for $3,000,000.
Required:

Accepted Answer

The answer of Benjamin Manufacturing Company has two divisions, X...

Question 13

Both revenue center and profit center managers are responsible for achieving

Accepted Answer

A)  budgeted revenues. 
B)  budgeted net income. 
C)  budgeted costs. 
D)  budgeted contribution margin. 
A)  budgeted revenues. 
B)  budgeted net income. 
C)  budgeted costs. 
D)  budgeted contribution margin.

Question 14

Lambda Division had the following information:   What is the residual income for Lambda Division?

Accepted Answer

A)  $(10,000) 
B)  $48,000 
C)  $7,500 
D)  $60,000 
A)  $(10,000) 
B)  $48,000 
C)  $7,500 
D)  $60,000

Question 15

Provide the missing data in the following situations:

Accepted Answer

The answer of Provide the missing data in the following...

Question 16

Nantucket Company has two divisions that report on a decentralized basis. Their results for 2014 were as follows:
   Required:
Compute the following amounts for each division:

Accepted Answer

The answer of Nantucket Company has two divisions that report...

Question 17

Provide the missing data for the following divisions.

Accepted Answer

The answer of Provide the missing data for the following...

Question 18

The emphasis on short-run results at the expense of the long run is

Accepted Answer

A)  efficient behavior. 
B)  effective behavior. 
C)  optimal behavior. 
D)  myopic behavior. 
A)  efficient behavior. 
B)  effective behavior. 
C)  optimal behavior. 
D)  myopic behavior.

Question 19

The delegation of decision-making authority to successively lower management levels in an organization is called:

Accepted Answer

A)  Centralization 
B)  Decentralization 
C)  Optimization 
D)  An unfavorable overhead variance 
A)  Centralization 
B)  Decentralization 
C)  Optimization 
D)  An unfavorable overhead variance

Question 20

Which of the following departments is likely to be an investment center?

Accepted Answer

A)  machining department 
B)  food products division 
C)  personnel department 
D)  accounting department 
A)  machining department 
B)  food products division 
C)  personnel department 
D)  accounting department

The "floor" in transfer pricing is

EVA encourages the right kind of behavior from divisions because of its emphasis on

The transfer price is revenue to the selling division and cost to the buying division.

__________ are a noncash benefit received over and above salary.

The manager of a profit center is responsible for

Which of the following would NOT be a reason for decentralization?

Goal congruence means that the goals of managers are aligned with the goals of the company.

Responsibility accounting is a system that does NOT consider

Olden Company has a tax rate of 40 percent. Information for the company is as follows: What is the EVA if the before-tax operating income is $1,500,000?

Which of the following is NOT a disadvantage of the ROI performance measure?

managers can make better decisions using information.

Both revenue center and profit center managers are responsible for achieving

Lambda Division had the following information: What is the residual income for Lambda Division?

Provide the missing data in the following situations:

Nantucket Company has two divisions that report on a decentralized basis. Their results for 2014 were as follows: Required: Compute the following amounts for each division:

Provide the missing data for the following divisions.

The emphasis on short-run results at the expense of the long run is

The delegation of decision-making authority to successively lower management levels in an organization is called:

Which of the following departments is likely to be an investment center?

Introduction to Cost Management

Basic Cost Management Concepts

Cost Behavior

Activity-Based Costing

Product and Service Costing: Job-Order System

Process Costing

Allocating Costs of Support Departments and Joint Products

Budgeting for Planning and Control Key

Standard Costing: a Functional-Based Control Approach

Strategic Cost Management

Activity-Based Management

The Balanced Scorecard: Strategic-Based Control

Quality and Environmental Cost Management

Lean Accounting and Productivity Measurement

Cost-Volume-Profit Analysis

Activity Resource Usage Model and Tactical Decision Making

Pricing and Profitability Analysis

Capital Investment

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

Filters

Exam 10: Decentralization: Responsibility Accounting, Performance Evaluation, and Transfer Pricing

The "floor" in transfer pricing is

EVA encourages the right kind of behavior from divisions because of its emphasis on

The transfer price is revenue to the selling division and cost to the buying division.

__________ are a noncash benefit received over and above salary.

The manager of a profit center is responsible for

Which of the following would NOT be a reason for decentralization?

Goal congruence means that the goals of managers are aligned with the goals of the company.

Responsibility accounting is a system that does NOT consider

Olden Company has a tax rate of 40 percent. Information for the company is as follows: What is the EVA if the before-tax operating income is $1,500,000?

Which of the following is NOT a disadvantage of the ROI performance measure?

__________ managers can make better decisions using __________ information.

Both revenue center and profit center managers are responsible for achieving

Lambda Division had the following information: What is the residual income for Lambda Division?

Provide the missing data in the following situations:

Nantucket Company has two divisions that report on a decentralized basis. Their results for 2014 were as follows: Required: Compute the following amounts for each division:

Provide the missing data for the following divisions.

The emphasis on short-run results at the expense of the long run is

The delegation of decision-making authority to successively lower management levels in an organization is called:

Which of the following departments is likely to be an investment center?

Introduction to Cost Management

Basic Cost Management Concepts

Cost Behavior

Activity-Based Costing

Product and Service Costing: Job-Order System

Process Costing

Allocating Costs of Support Departments and Joint Products

Budgeting for Planning and Control Key

Standard Costing: a Functional-Based Control Approach

Strategic Cost Management

Activity-Based Management

The Balanced Scorecard: Strategic-Based Control

Quality and Environmental Cost Management

Lean Accounting and Productivity Measurement

Cost-Volume-Profit Analysis

Activity Resource Usage Model and Tactical Decision Making

Pricing and Profitability Analysis

Capital Investment

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

Filters

managers can make better decisions using information.