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Exam 14: Performance Evaluation for Decentralized Operations

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Question 71

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

A) True
B) False

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Question 72

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How much would Division A's income from operations increase?

A) $0
B) $180,000
C) $60,000
D) $120,000

E) B) and D)
F) All of the above

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Question 73

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The objective of transfer pricing is to encourage each division manager to transfer goods and services between divisions if overall company income can be increased by doing so.

A department store apportions payroll costs on the basis of the number of payroll checks issued.Accounting costs are apportioned on the basis of the number of reports.The payroll costs for the year were $100,000,and the accounting costs for the year totaled $50,000.The departments and the average cost of store equipment and average cost of inventory for each are as follows: Determine the amount of (a)payroll cost and (b)accounting cost to be apportioned to each department.

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

The financial performance of responsibility centers is evaluated in the balanced scorecard under the financial section of the scorecard.

The investment turnover is the ratio of

Which one of the following is NOT a measure that management can use in evaluating and controlling investment center performance?

Division A of Purvis Company has a rate of return on investment of 15% and an investment turnover of 1.6.What is the profit margin?

Budget performance reports prepared for the vice-president of production would generally contain less detail than reports prepared for the various plant managers.

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

Which of the following would be MOST effective in a small owner/manager-operated business?

How much would Beta-Products total income from operations increase?

It is beneficial for related companies to negotiate a transfer price when the supplying company has unused capacity in its plant.

Income from operations for Division M is $150,000,and income from operations before service department charges is $975,000.Therefore,

Income from operations of the Commercial Aviation Division is $2,500,000.If income from operations before service department charges is $3,250,000,

Which transfer price approach is used when the transfer price is set at the amount sold to outside buyers?