Question 1

Which of the following is a measure of performance for the manager of an investment center?

Accepted Answer

A)  return on investment (ROI) 
B)  residual income
C)  divisional income statements
D)  all of these choicesE) A) and C)
F) None of the above

Question 2

Which of the following statements best describes a decentralized company?

Accepted Answer

A)  One owner prepares plans and makes decisions for the entire company.
B)  Each of many units is responsible for its own operations and decision making.
C)  For a major company, operating decisions are made by top management.
D)  None of these choices describe a decentralized company.E) A) and B)
F) None of the above

Question 3

Assume that Division Blue has achieved a yearly operating income of $110,000 using $900,000 of invested assets. If management has set a minimum acceptable return on investment of 11%, the residual income is

Accepted Answer

A)  $99,000
B)  $691,000
C)  $209,000
D)  $11,000E) A) and B)
F) A) and C)

Question 4

A decentralized business organization is one in which all major planning and operating decisions are made by top management.

Accepted Answer

A) True 
 B)False

Question 5

If operating income for a division is $6,000, invested assets are $25,000, and sales are $30,000, the investment turnover is 1.2.

Accepted Answer

A) True 
 B)False

Question 6

What additional information is needed to determine the return on investment if operating income is known?

Accepted Answer

A)  invested assets
B)  residual income
C)  direct expenses
D)  salesE) C) and D)
F) A) and B)

Question 7

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 8

A department store allocates payroll costs on the basis of the number of payroll checks issued. Accounting costs are allocated on the basis of the number of reports. The payroll costs for the year were $231,000, and the accounting costs for the year totaled $75,500. The departments and the number of payroll checks and accounting reports for each are as follows:  Determine the amount of (a) payroll costs and (b) accounting costs to be allocated to each department.

Accepted Answer

The answer of A department store allocates payroll costs on...

Question 9

A manager is responsible for costs only in a(n)  _____ center.

Accepted Answer

A)  profit
B)  investment
C)  volume
D)  costE) B) and C)
F) None of the above

Question 10

The entity that grants the right or license to another company to market its goods or services is called the

Accepted Answer

A)  investor
B)  franchise
C)  franchisee
D)  franchisorE) B) and C)
F) A) and D)

Exam 24: Evaluating Decentralized Operations

Which of the following is a measure of performance for the manager of an investment center?

Correct Answer
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Correct Answer
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A manager is responsible for costs only in a(n) _____ center.

Correct Answer
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Which of the following statements best describes a decentralized company?

Correct Answer
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Assume that Division Blue has achieved a yearly operating income of $110,000 using $900,000 of invested assets. If management has set a minimum acceptable return on investment of 11%, the residual income is

Correct Answer
verified

A decentralized business organization is one in which all major planning and operating decisions are made by top management.

Correct Answer
verified

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 Answer
verified

What additional information is needed to determine the return on investment if operating income is known?

Correct Answer
verified

The entity that grants the right or license to another company to market its goods or services is called the

Correct Answer
verified

If operating income for a division is $6,000, invested assets are $25,000, and sales are $30,000, the investment turnover is 1.2.

Correct Answer
verified

Exam 24: Evaluating Decentralized Operations

Which of the following is a measure of performance for the manager of an investment center?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A manager is responsible for costs only in a(n) _____ center.

Correct AnswerverifiedShow Answer

Which of the following statements best describes a decentralized company?

Correct AnswerverifiedShow Answer

Assume that Division Blue has achieved a yearly operating income of $110,000 using $900,000 of invested assets. If management has set a minimum acceptable return on investment of 11%, the residual income is

Correct AnswerverifiedShow Answer

A decentralized business organization is one in which all major planning and operating decisions are made by top management.

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

What additional information is needed to determine the return on investment if operating income is known?

Correct AnswerverifiedShow Answer

The entity that grants the right or license to another company to market its goods or services is called the

Correct AnswerverifiedShow Answer

If operating income for a division is $6,000, invested assets are $25,000, and sales are $30,000, the investment turnover is 1.2.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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