Question 1

Negotiated prices are transfer prices

Accepted Answer

A)  determined between a division and corporate headquarters. 
B)  negotiated with external customers. 
C)  used when supplying and buying divisions independently agree on a price. 
D)  agreed to by division management and employees. 
A)  determined between a division and corporate headquarters. 
B)  negotiated with external customers. 
C)  used when supplying and buying divisions independently agree on a price. 
D)  agreed to by division management and employees. C

Question 2

Patterson Company had sales of $200,000, net income of $10,000, and an asset base of $300,000.Its margin is

Accepted Answer

A)  66.7%. 
B)  150.0%. 
C)  3.3%. 
D)  5.0%. 
A)  66.7%. 
B)  150.0%. 
C)  3.3%. 
D)  5.0%. D

Question 3

Chemical Company has two divisions, the Mixing Division and Bottling Division.The Mixing Division sells chemicals to the Bottling Division. Standard costs for the Mixing Division are as follows:
  The Bottling Division uses the following predetermined overhead rate:
  What is the transfer price for the chemicals per gallon based on standard variable cost?

Accepted Answer

A)  $3.00 
B)  $5.40 
C)  $9.00 
D)  $11.40 
A)  $3.00 
B)  $5.40 
C)  $9.00 
D)  $11.40 C

Question 4

The following information pertains to the three divisions of Marlow Company:   What is the residual income for Division X?

Accepted Answer

A)  $36,000 
B)  $45,000 
C)  $(9,000) 
D)  $(36,000) 
A)  $36,000 
B)  $45,000 
C)  $(9,000) 
D)  $(36,000)

Question 5

The manager of an investment center is responsible for

Accepted Answer

A)  decisions regarding costs. 
B)  decisions regarding revenues. 
C)  decisions to invest in assets. 
D)  all of these. 
A)  decisions regarding costs. 
B)  decisions regarding revenues. 
C)  decisions to invest in assets. 
D)  all of these.

Question 6

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 7

The Auto Division of Big Department Store had a net income of $560,000, a net asset base of $4,000,000, and a required rate of return of 12 percent.Sales for the period totaled $3,000,000.The residual income for the period is

Accepted Answer

A)  $480,000. 
B)  $360,000. 
C)  $120,000. 
D)  $80,000. 
A)  $480,000. 
B)  $360,000. 
C)  $120,000. 
D)  $80,000.

Question 8

Bernie 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 2011.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 Bernie Manufacturing Company has two divisions, X...

Question 9

A manufacturing division of a company would most likely be evaluated as a(n)

Accepted Answer

A)  cost center. 
B)  investment center. 
C)  revenue center. 
D)  asset center. 
A)  cost center. 
B)  investment center. 
C)  revenue center. 
D)  asset center.

Question 10

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 11

Given the following information for the Zenith Division:
   Required:

Accepted Answer

The answer of Given the following information for the Zenith...

Question 12

_______________ is after-tax operating profit minus the total annual cost of capital.

Accepted Answer

A)  ROI 
B)  Residual income 
C)  EVA 
D)  Net income 
A)  ROI 
B)  Residual income 
C)  EVA 
D)  Net income

Question 13

O'Neil Company requires a return on capital of 15 percent.The following information is available for 2011:
   Required:

Accepted Answer

@#IMG-DLM&_TB2043_00

Question 14

Which of the following departments would NOT be classified as a profit center?

Accepted Answer

A)  hardware department 
B)  men's shoes department 
C)  accounting department 
D)  automotive department 
A)  hardware department 
B)  men's shoes department 
C)  accounting department 
D)  automotive department

Question 15

Correll Company has two divisions, A and B.Information for each division is as follows:   
-What is the total sales amount for B?

Accepted Answer

A)  $666,667 
B)  $800,000 
C)  $1,200,000 
D)  $1,300,000 
A)  $666,667 
B)  $800,000 
C)  $1,200,000 
D)  $1,300,000

Question 16

Stevens Company has two divisions that report on a decentralized basis.Their results for 2011 were as follows:
   Required:
Compute the following amounts for each division:

Accepted Answer

@#IMG-DLM&_TB2043_00

Question 17

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 18

The Bat Division of Baseball Company has just revised its actual cost data for 2011.Bat Division transfers goods to the Sport Division.Sport Division can buy the same goods in the open market for $122 each.Bat's new cost data are as follows:
   Current production is 200,000 units, and the Bat Division has a capacity of 300,000 units.
Required:

Accepted Answer

The answer of The Bat Division of Baseball Company has...

Question 19

The following information pertains to the three divisions of Marlow Company:   
-What is the turnover for Division Z?

Accepted Answer

A)  2.500 
B)  0.150 
C)  6.670 
D)  1.500 
A)  2.500 
B)  0.150 
C)  6.670 
D)  1.500

Question 20

The return on investment is computed as

Accepted Answer

A)  operating income divided by sales. 
B)  operating income divided by average operating assets. 
C)  sales divided by average operating assets. 
D)  operating asset turnover divided by the operating income margin. 
A)  operating income divided by sales. 
B)  operating income divided by average operating assets. 
C)  sales divided by average operating assets. 
D)  operating asset turnover divided by the operating income margin.

Negotiated prices are transfer prices

Patterson Company had sales of $200,000, net income of $10,000, and an asset base of $300,000.Its margin is

The following information pertains to the three divisions of Marlow Company: What is the residual income for Division X?

The manager of an investment center is responsible for

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

The Auto Division of Big Department Store had a net income of $560,000, a net asset base of $4,000,000, and a required rate of return of 12 percent.Sales for the period totaled $3,000,000.The residual income for the period is

A manufacturing division of a company would most likely be evaluated as a(n)

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

Given the following information for the Zenith Division: Required:

_______________ is after-tax operating profit minus the total annual cost of capital.

O'Neil Company requires a return on capital of 15 percent.The following information is available for 2011: Required:

Which of the following departments would NOT be classified as a profit center?

Correll Company has two divisions, A and B.Information for each division is as follows: -What is the total sales amount for B?

Stevens Company has two divisions that report on a decentralized basis.Their results for 2011 were as follows: Required: Compute the following amounts for each division:

The "floor" in transfer pricing is

The following information pertains to the three divisions of Marlow Company: -What is the turnover for Division Z?

The return on investment is computed as

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

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

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

Negotiated prices are transfer prices

Patterson Company had sales of $200,000, net income of $10,000, and an asset base of $300,000.Its margin is

The following information pertains to the three divisions of Marlow Company: What is the residual income for Division X?

The manager of an investment center is responsible for

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

The Auto Division of Big Department Store had a net income of $560,000, a net asset base of $4,000,000, and a required rate of return of 12 percent.Sales for the period totaled $3,000,000.The residual income for the period is

A manufacturing division of a company would most likely be evaluated as a(n)

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

Given the following information for the Zenith Division: Required:

_______________ is after-tax operating profit minus the total annual cost of capital.

O'Neil Company requires a return on capital of 15 percent.The following information is available for 2011: Required:

Which of the following departments would NOT be classified as a profit center?

Correll Company has two divisions, A and B.Information for each division is as follows: -What is the total sales amount for B?

Stevens Company has two divisions that report on a decentralized basis.Their results for 2011 were as follows: Required: Compute the following amounts for each division:

The "floor" in transfer pricing is

The following information pertains to the three divisions of Marlow Company: -What is the turnover for Division Z?

The return on investment is computed as

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

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