Question 1

Determining the transfer price as the price at which the product or service transferred could be sold to outside buyers is known as the:

Accepted Answer

A)   Cost price approach
B)   Negotiated price approach
C)   Revenue price approach
D)   Market price approachE) A) and D)
F) A) and C)

Question 2

The following financial information was summarized from the accounting records of Train Corporation for the current year ended December 31:  The gross profit for the Rails Division is:

Accepted Answer

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

Question 3

The plant managers in a cost center can be held responsible for major differences between budgeted and actual costs in their plants.

Accepted Answer

A) True 
 B)False

Question 4

The Western Division of Bestboot Company has a rate of return on investment of 15% and an investment turnover of 1.2. What is the profit margin?

Accepted Answer

A)   10%
B)   12.5%
C)   9%
D)   6%E) A) and B)
F) B) and C)

Question 5

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 marginE) B) and D)
F) B) and C)

Question 6

Division A of Mocha Company has sales of $155,000, cost of goods sold of $83,000, operating expenses of $43,000, and invested assets of $150,000. What is the rate of return on investment for Division A?

Accepted Answer

A)   19.3%
B)   48.0%
C)   18.7%
D)   5.47%E) B) and C)
F) C) and D)

Question 7

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)   centralizedE) A) and D)
F) All of the above

Question 8

Piano Company's costs were over budget by $47,000. The Piano Company is divided in two regions. The first region's costs were over budget by $5,000. Determine the amount that the second region's cost was over or under budget.

Accepted Answer

The answer of Piano Company's costs were over budget by...

Question 9

Xang Company's costs were over budget by $46,000. The Xang Company is divided in two regions. The first region's costs were over budget by $7,000.
Required:
Determine the amount that the second region's cost was over or under budget.

Accepted Answer

$46,000 - ...

Question 10

If income from operations for a division is $120,000, sales are $975,000, and invested assets are $750,000, the investment turnover is 1.3.

Accepted Answer

A) True 
 B)False

Question 11

The ratio of sales to investment is termed the rate of return on investment.

Accepted Answer

A) True 
 B)False

Question 12

If income from operations for a division is $30,000, sales are $263,750, and invested assets are $187,500, the investment turnover is 1.3.

Accepted Answer

A) True 
 B)False

Question 13

Mason Corporation had $650,000 in invested assets, sales of $700,000, income from operations amounting to $99,000, and a desired minimum rate of return of 15%. The profit margin for Mason is:

Accepted Answer

A)   7.1%
B)   20%
C)   15.2%
D)   14.1%E) All of the above
F) B) and C)

Question 14

The costs of services charged to a profit center on the basis of its use of those services are called:

Accepted Answer

A)   operating expenses
B)   noncontrollable charges
C)   service department charges
D)   activity chargesE) A) and B)
F) None of the above

Question 15

Some organizations use internal service departments to provide like services to several divisions or departments within an organization. Which of the following would probably not lend itself as a service department?

Accepted Answer

A)   Inventory Control
B)   Payroll Accounting
C)   Information Systems
D)   Human ResourcesE) None of the above
F) All of the above

Question 16

The profit margin is the:

Accepted Answer

A)   ratio of income from operations to sales
B)   ratio of income from operations to invested assets
C)   ratio of assets to liabilities
D)   ratio of sales to invested assetsE) B) and C)
F) A) and B)

Question 17

The balanced scorecard measures

Accepted Answer

A)   only financial information
B)   only nonfinancial information
C)   both financial and nonfinancial information
D)   external and internal informationE) All of the above
F) B) and D)

Question 18

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 19

The following financial information was summarized from the accounting records of Train Corporation for the current year ended December 31:  The net income for Train Corporation is:

Accepted Answer

A)   $83,180
B)   $35,940
C)   $48,390
D)   $60,840E) A) and B)
F) A) and C)

Question 20

Service department charges are similar to the expenses of a profit center that purchased services from a source outside the company.

Accepted Answer

A) True 
 B)False

Exam 23: Performance Evaluation for Decentralized Operations

Xang Company's costs were over budget by $46,000. The Xang Company is divided in two regions. The first region's costs were over budget by $7,000. Required: Determine the amount that the second region's cost was over or under budget.

Correct Answerverified$46,000 - ...View AnswerShow Answer

The balanced scorecard measures

Correct AnswerverifiedShow Answer

Piano Company's costs were over budget by $47,000. The Piano Company is divided in two regions. The first region's costs were over budget by $5,000. Determine the amount that the second region's cost was over or under budget.

Correct AnswerverifiedShow Answer

To calculate income from operations, total service department charges are:

Correct AnswerverifiedShow Answer

The following financial information was summarized from the accounting records of Train Corporation for the current year ended December 31: The gross profit for the Rails Division is:

Correct AnswerverifiedShow Answer

Service department charges are similar to the expenses of a profit center that purchased services from a source outside the company.

Correct AnswerverifiedShow Answer

Some organizations use internal service departments to provide like services to several divisions or departments within an organization. Which of the following would probably not lend itself as a service department?

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

The Western Division of Bestboot Company has a rate of return on investment of 15% and an investment turnover of 1.2. What is the profit margin?

Correct AnswerverifiedShow Answer

The profit margin is the:

Correct AnswerverifiedShow Answer

If income from operations for a division is $30,000, sales are $263,750, and invested assets are $187,500, the investment turnover is 1.3.

Correct AnswerverifiedShow Answer

Division A of Mocha Company has sales of $155,000, cost of goods sold of $83,000, operating expenses of $43,000, and invested assets of $150,000. What is the rate of return on investment for Division A?

Correct AnswerverifiedShow Answer

The plant managers in a cost center can be held responsible for major differences between budgeted and actual costs in their plants.

Correct AnswerverifiedShow Answer

The ratio of sales to investment is termed the rate of return on investment.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The costs of services charged to a profit center on the basis of its use of those services are called:

Correct AnswerverifiedShow Answer

Mason Corporation had $650,000 in invested assets, sales of $700,000, income from operations amounting to $99,000, and a desired minimum rate of return of 15%. The profit margin for Mason is:

Correct AnswerverifiedShow Answer

If income from operations for a division is $120,000, sales are $975,000, and invested assets are $750,000, the investment turnover is 1.3.

Correct AnswerverifiedShow Answer

The following financial information was summarized from the accounting records of Train Corporation for the current year ended December 31: The net income for Train Corporation is:

Correct AnswerverifiedShow Answer

Determining the transfer price as the price at which the product or service transferred could be sold to outside buyers is known as the:

Correct AnswerverifiedShow Answer

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$46,000 - ...
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