Question 1

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) A) and D)
F) B) and D)

Question 2

The profit center income statement should include only revenues and expenses that are controlled by the manager.

Accepted Answer

A) True 
 B)False

Question 3

Office salaries expense for a department store is an indirect expense.

Accepted Answer

A) True 
 B)False

Question 4

In a profit center, the department manager has responsibility for and the authority to make decisions that affect

Accepted Answer

A)   not only costs and revenues, but also assets invested in the center
B)   the assets invested in the center, but not costs and revenues
C)   both costs and revenues for the department or division
D)   costs and assets invested in the center, but not revenuesE) A) and B)
F) A) and C)

Question 5

An activity base is used to charge service department expenses. Match each of the following activity bases with the appropriate department (a-h) .
-Allocated equally among divisions

Accepted Answer

A)  Purchasing
B)  Payroll Accounting
C)  Human Resources
D)  Maintenance
E)  Information SystemsF) MarketingG) President's OfficeH) TransportationI) B) and C)
J) F) and H)

Question 6

The amount of detail presented in a budget performance report for a cost center depends on the level of management to which the report is directed.

Accepted Answer

A) True 
 B)False

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

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Division G of Elephant Preservation Inc. has sales of $895,000, cost of goods sold of $475,000, operating expenses of $79,500, and invested assets of $750,000.?
Calculate:
(a) The return on investment for Division G.
(b) The profit margin for Division G.
(c) The investment turnover for Division G.

Accepted Answer

1. Return on investment: ($895...

Question 11

A disadvantage to using the residual income performance measure is that it encourages managers to spend only the minimum acceptable return on assets set by upper management.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

How much will Division C's income from operations increase?

Accepted Answer

A)   $0
B)   $75,000
C)   $12,500
D)   $50,000E) A) and C)
F) A) and B)

Question 14

Which of the following is not one of the common types of responsibility centers?

Accepted Answer

A)   cost center
B)   profit center
C)   investment center
D)   revenue centerE) C) and D)
F) A) and B)

Question 15

Using the data below for Ace Guitar Company, determine the divisional income from operations for the Regions A and B.​  Allocate service department expenses proportionally to the sales of each region. Round the percentage of sales allocation to one decimal place.

Accepted Answer

The answer of Using the data below for Ace Guitar...

Question 16

Use this information for Train Corporation to answer the questions that follow.
​
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) None of the above
F) B) and D)

Question 17

If divisional income from operations is $75,000, invested assets are $737,500, and the minimum return on invested assets is 6%, the residual income is $36,750.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A)   market price
B)   cost price
C)   negotiated price
D)   variable priceE) A) and B)
F) A) and C)

Exam 23: Decentralized Operations

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

Correct Answer
verified

Division G of Elephant Preservation Inc. has sales of $895,000, cost of goods sold of $475,000, operating expenses of $79,500, and invested assets of $750,000.? Calculate: (a) The return on investment for Division G. (b) The profit margin for Division G. (c) The investment turnover for Division G.

Correct Answer
verified
1. Return on investment: ($895...
View Answer

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

Correct Answer
verified

How much will Division C's income from operations increase?

Correct Answer
verified

The profit center income statement should include only revenues and expenses that are controlled by the manager.

Correct Answer
verified

The amount of detail presented in a budget performance report for a cost center depends on the level of management to which the report is directed.

Correct Answer
verified

In a profit center, the department manager has responsibility for and the authority to make decisions that affect

Correct Answer
verified

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

Correct Answer
verified

Office salaries expense for a department store is an indirect expense.

Correct Answer
verified

An activity base is used to charge service department expenses. Match each of the following activity bases with the appropriate department (a-h) . -Allocated equally among divisions

Correct Answer
verified

Use this information for Train Corporation to answer the questions that follow. 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 Answer
verified

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

Correct Answer
verified

A disadvantage to using the residual income performance measure is that it encourages managers to spend only the minimum acceptable return on assets set by upper management.

Correct Answer
verified

Which of the following is not one of the common types of responsibility centers?

Correct Answer
verified

Using the data below for Ace Guitar Company, determine the divisional income from operations for the Regions A and B. Allocate service department expenses proportionally to the sales of each region. Round the percentage of sales allocation to one decimal place.

Correct Answer
verified

If divisional income from operations is $75,000, invested assets are $737,500, and the minimum return on invested assets is 6%, the residual income is $36,750.

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Exam 23: Decentralized Operations

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

Correct AnswerverifiedShow Answer

Division G of Elephant Preservation Inc. has sales of $895,000, cost of goods sold of $475,000, operating expenses of $79,500, and invested assets of $750,000.? Calculate: (a) The return on investment for Division G. (b) The profit margin for Division G. (c) The investment turnover for Division G.

Correct Answerverified1. Return on investment: ($895...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

How much will Division C's income from operations increase?

Correct AnswerverifiedShow Answer

The profit center income statement should include only revenues and expenses that are controlled by the manager.

Correct AnswerverifiedShow Answer

The amount of detail presented in a budget performance report for a cost center depends on the level of management to which the report is directed.

Correct AnswerverifiedShow Answer

In a profit center, the department manager has responsibility for and the authority to make 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

Office salaries expense for a department store is an indirect expense.

Correct AnswerverifiedShow Answer

An activity base is used to charge service department expenses. Match each of the following activity bases with the appropriate department (a-h) . -Allocated equally among divisions

Correct AnswerverifiedShow Answer

Use this information for Train Corporation to answer the questions that follow. ​ 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

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

Correct AnswerverifiedShow Answer

A disadvantage to using the residual income performance measure is that it encourages managers to spend only the minimum acceptable return on assets set by upper management.

Correct AnswerverifiedShow Answer

Which of the following is not one of the common types of responsibility centers?

Correct AnswerverifiedShow Answer

Using the data below for Ace Guitar Company, determine the divisional income from operations for the Regions A and B.​ Allocate service department expenses proportionally to the sales of each region. Round the percentage of sales allocation to one decimal place.

Correct AnswerverifiedShow Answer

If divisional income from operations is $75,000, invested assets are $737,500, and the minimum return on invested assets is 6%, the residual income is $36,750.

Correct AnswerverifiedShow Answer

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

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

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Correct Answer
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1. Return on investment: ($895...
View Answer

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Use this information for Train Corporation to answer the questions that follow. 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 Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Using the data below for Ace Guitar Company, determine the divisional income from operations for the Regions A and B. Allocate service department expenses proportionally to the sales of each region. Round the percentage of sales allocation to one decimal place.

Correct Answer
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Correct Answer
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