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Exam 24: Performance Measurement and Responsibility Accounting

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Question 21

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Kragle Corporation reported the following financial data for one of its divisions for the year;average invested assets of $470,000;sales of $930,000;and income of $105,000.The investment turnover is:

A) 22.3.
B) 50.5.
C) 1.98.
D) 447.6.
E) 11.3.

F) A) and B)
G) A) and C)

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Question 22

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Calculating return on investment for an investment center is defined by the following formula:

A) Contribution margin/Ending assets.
B) Gross profit/Ending assets.
C) Net income/Ending assets.
D) Income/Average invested assets.
E) Contribution margin/Average invested assets.

F) C) and D)
G) A) and B)

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Question 23

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Departmental contribution to overhead is calculated as the amount of sales of the department less:

The Mixed Nuts Division of Yummy Snacks,Inc.had the following operating results last year: Yummy expects identical operating results in the division this year.The Mixed Nuts Division has the ability to produce and sell 200,000 pounds of product annually.Assume that the Trail Mix Division of Yummy wants to purchase an additional 20,000 pounds of nuts from the Mixed Nuts Division.Mixed Nuts will be able to increase its profit by accepting any transfer price above:

Which of the following is not one of the perspectives used to analyze performance using the balanced scorecard?

A company pays $15,000 per period to rent a small building that has 10,000 square feet of space.This cost is allocated to the company's three departments on the basis of the amount of the space occupied by each.Department One occupies 2,000 square feet of floor space,Department Two occupies 3,000 square feet of floor space,and Department Three occupies 5,000 square feet of floor space.If the rent is allocated based on the total square footage of the space,Department One should be charged rent expense for the period of:

With respect to cycle time,companies strive to reduce non-value added time in order to improve ________________________.

Using the information below,compute the manufacturing cycle time:

Fallow Corporation has two separate profit centers.The following information is available for the most recent year: The West Division occupies 5,000 square feet in the plant.The East Division occupies 3,000 square feet.Rent,which was $40,000 for the year,is an indirect expense and is allocated based on square footage.Compute operating income for the West Division.

Responsibility accounting performance reports:

Evaluation of the performance of an investment center involves only financial measures.

Pepper Department store allocates its service department expenses to its various operating (sales) departments.The following data is available for its service departments: The following information is available for its three operating (sales) departments: What is the total expense allocated to Department B?

Costs that the manager has the power to determine or at least significantly affect are called:

Joint costs can be allocated either using a physical basis or a value basis.

Investment center managers are typically evaluated using performance measures that combine income and assets.

A responsibility accounting performance report displays:

An example of a controllable cost is equipment depreciation expense.

A company has two departments,Y and Z that incur wage expenses.An analysis of the total wage expense of $19,000 indicates that Dept.Y had a direct wage expense of $2,000 and Dept.Z had a direct wage expense of $3,500.The remaining expenses are indirect and analysis indicates they should be allocated evenly between the two departments.Departmental wage expenses for Dept.Y and Dept.Z,respectively,are:

Part AR3 costs the Southwestern Division of Luxon Corporation $26 to make-direct materials are $10,direct labor is $4,variable manufacturing overhead is $9,and fixed manufacturing overhead is $3.Southwestern Division sells Part AR3 to other companies for $30.The Northeastern Division of Luxon Corporation can use Part AR3 in one of its products.The Southwestern Division has enough idle capacity to produce all of the units of Part AR3 that the Northeastern Division would require.What is the lowest transfer price at which the Southwestern Division should be willing to sell Part AR3 to the Northeastern Division?

Kragle Corporation reported the following financial data for one of its divisions for the year;average invested assets of $470,000;sales of $930,000;and income of $105,000.The investment center profit margin is: