Question 1

Which of the following is a measure of a manager's performance working in a profit center?

Accepted Answer

A)   a balance sheet
B)   the rate of return and residual income measures
C)   a budget performance report
D)   the divisional income statementsE) C) and D)
F) A) and D)

Question 2

Controllable expenses are those that can be influenced by the decisions of the profit center management.

Accepted Answer

A) True 
 B)False

Question 3

The rates at which centralized services are charged to each division are called service department charge rates.

Accepted Answer

A) True 
 B)False

Question 4

What is the service department charge rate for the Accounting Department?

Accepted Answer

A)   $714
B)   $250
C)   $625
D)   $0.004E) A) and B)
F) None of the above

Question 5

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 6

The transfer price approach that uses a variety of cost concepts is the

Accepted Answer

A)   negotiated price approach
B)   standard cost approach
C)   cost price approach
D)   market price approachE) C) and D)
F) A) and D)

Question 7

What is the investment turnover?

Accepted Answer

A)   16.0
B)   3.05
C)   0.33
D)   27.5E) B) and C)
F) B) and D)

Question 8

Which of the following would not be considered an internal centralized service department?

Accepted Answer

A)   Payroll Accounting Department
B)   Manufacturing Department
C)   Information Systems Department
D)   Purchasing DepartmentE) All of the above
F) B) and C)

Question 9

The investment turnover for Chicks is

Accepted Answer

A)   1.3
B)   1.5
C)   1.0
D)   1.1E) A) and B)
F) A) and C)

Question 10

In a profit center,the manager has responsibility and authority for making decisions that affect

Accepted Answer

A)   long-term liabilities
B)   assets
C)   investments
D)   costsE) A) and B)
F) A) and C)

Question 11

Managers of what type of decentralized units have authority and responsibility for revenues,costs,and assets invested in the unit?

Accepted Answer

A)   profit center
B)   investment center
C)   production center
D)   cost centerE) All of the above
F) A) and D)

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

The profit margin for Mason is

Accepted Answer

A)   7.1%
B)   20%
C)   15.2%
D)   14.1%E) A) and C)
F) A) and B)

Question 14

What will the income of the Super Division be after all service department allocations?

Accepted Answer

A)   $300,000
B)   $325,000
C)   $550,000
D)   $200,000E) A) and B)
F) A) and C)

Question 15

Which of the following formulas is the investment turnover factor as used in determining the rate of return on investment?

Accepted Answer

A)   Invested assets / Sales
B)   Income from operations / Invested assets
C)   Income from operations / Sales
D)   Sales / Invested assetsE) B) and C)
F) A) and D)

Question 16

What is Clydesdale Company's profit margin?

Accepted Answer

A)   20%
B)   80%
C)   44.4%
D)   18%E) B) and C)
F) C) and D)

Question 17

Responsibility accounting reports for profit centers are normally in the form of income statements.

Accepted Answer

A) True 
 B)False

Question 18

The ratio of sales to invested assets is termed the investment turnover component of the rate of return on investment.

Accepted Answer

A) True 
 B)False

Question 19

What is the profit margin?

Accepted Answer

A)   33.3%
B)   5.2%
C)   16.0%
D)   19.1%E) A) and B)
F) A) and C)

Question 20

What is the service department charge rate for the Personnel Department?

Accepted Answer

A)   $2,758
B)   $3,200
C)   $3,077
D)   $1,000E) C) and D)
F) A) and C)

Exam 23: Evaluating Decentralized Operations

What is the investment turnover?

Correct AnswerverifiedShow Answer

What is Clydesdale Company's profit margin?

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What is the service department charge rate for the Accounting Department?

Correct AnswerverifiedShow Answer

The transfer price approach that uses a variety of cost concepts is the

Correct AnswerverifiedShow Answer

Controllable expenses are those that can be influenced by the decisions of the profit center management.

Correct AnswerverifiedShow Answer

What will the income of the Super Division be after all service department allocations?

Correct AnswerverifiedShow Answer

Which of the following formulas is the investment turnover factor as used in determining the rate of return on investment?

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

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

Correct AnswerverifiedShow Answer

Which of the following would not be considered an internal centralized service department?

Correct AnswerverifiedShow Answer

In a profit center,the manager has responsibility and authority for making decisions that affect

Correct AnswerverifiedShow Answer

The rates at which centralized services are charged to each division are called service department charge rates.

Correct AnswerverifiedShow Answer

What is the service department charge rate for the Personnel Department?

Correct AnswerverifiedShow Answer

The ratio of sales to invested assets is termed the investment turnover component of the rate of return on investment.

Correct AnswerverifiedShow Answer

The profit margin for Mason is

Correct AnswerverifiedShow Answer

Which of the following is a measure of a manager's performance working in a profit center?

Correct AnswerverifiedShow Answer

Managers of what type of decentralized units have authority and responsibility for revenues,costs,and assets invested in the unit?

Correct AnswerverifiedShow Answer

What is the profit margin?

Correct AnswerverifiedShow Answer

The investment turnover for Chicks is

Correct AnswerverifiedShow Answer

Responsibility accounting reports for profit centers are normally in the form of income statements.

Correct AnswerverifiedShow Answer

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