Question 1

The responsibility center in which the manager has responsibility and authority over revenues and costs,but not assets,is the:

Accepted Answer

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

Question 2

Pine Corp.has revenues of $500,000 resulting in an operating income of $54,000.Invested assets total $600,000.Residual income is $18,000.Calculate the new residual income if sales increase by 10% and the profit margin and invested assets remain the same.

Accepted Answer

A)  $23,400
B)  $0
C)  $3,240
D)  $36,000E) C) and D)
F) A) and B)

Question 3

Sugar Company has two divisions,Lenox and Berkshire.Lenox produces an item that Berkshire could use in its production.Berkshire currently is purchasing 100,000 units from an outside supplier for $43 per unit.Lenox is currently operating at full capacity of 750,000 units and has variable costs of $28 per unit.The full cost to manufacture the unit is $35.Lenox currently sells 750,000 units at a selling price of $44 per unit.
a.What will be the effect on Sugar Company's operating profit if the transfer is made internally?
b.What will be the change in profits for Lenox if the transfer price is $40 per unit?
c.What will be the change in profits for Berkshire if the transfer price is $40 per unit?

Accepted Answer

a.$100,000 less profits = 100,000 × ($43...

Question 4

Indigo Corp.has an ROI of 15% and a residual income of $10,000.If operating income equals $30,000,what is the hurdle rate?

Accepted Answer

A)  15%
B)  10%
C)  33.3%
D)  18.3%E) A) and B)
F) A) and C)

Question 5

Tropic Corp.has sales revenue of $500,000 resulting in operating income of $54,000.Average invested assets total $600,000,and the cost of capital is 6%.Calculate the return on investment if sales increase by 10% and the profit margin and invested assets remain the same.

Accepted Answer

A)  9.0%
B)  9.9%
C)  10.8%
D)  6.0%E) B) and D)
F) All of the above

Question 6

The balanced scorecard includes both leading and lagging indicators.Which of the following correctly places each indicator on the spectrum of most leading to most lagging?

Accepted Answer

A)  Financial → Customer → Internal business process → Learning and growth
B)  Financial → Learning and growth → Internal business process → Customer
C)  Customer → Learning and growth → Internal business process → Financial
D)  Learning and growth → Internal business process → Customer → FinancialE) A) and B)
F) A) and C)

Exam 10: Decentralized Performance Evaluation

Correct Answer
verified
a.$100,000 less profits = 100,000 × ($43...
View Answer

Indigo Corp.has an ROI of 15% and a residual income of $10,000.If operating income equals $30,000,what is the hurdle rate?

Correct Answer
verified

Pine Corp.has revenues of $500,000 resulting in an operating income of $54,000.Invested assets total $600,000.Residual income is $18,000.Calculate the new residual income if sales increase by 10% and the profit margin and invested assets remain the same.

Correct Answer
verified

The balanced scorecard includes both leading and lagging indicators.Which of the following correctly places each indicator on the spectrum of most leading to most lagging?

Correct Answer
verified

Tropic Corp.has sales revenue of $500,000 resulting in operating income of $54,000.Average invested assets total $600,000,and the cost of capital is 6%.Calculate the return on investment if sales increase by 10% and the profit margin and invested assets remain the same.

Correct Answer
verified

The responsibility center in which the manager has responsibility and authority over revenues and costs,but not assets,is the:

Correct Answer
verified

Exam 10: Decentralized Performance Evaluation

Correct Answerverifieda.$100,000 less profits = 100,000 × ($43...View AnswerShow Answer

Indigo Corp.has an ROI of 15% and a residual income of $10,000.If operating income equals $30,000,what is the hurdle rate?

Correct AnswerverifiedShow Answer

Pine Corp.has revenues of $500,000 resulting in an operating income of $54,000.Invested assets total $600,000.Residual income is $18,000.Calculate the new residual income if sales increase by 10% and the profit margin and invested assets remain the same.

Correct AnswerverifiedShow Answer

The balanced scorecard includes both leading and lagging indicators.Which of the following correctly places each indicator on the spectrum of most leading to most lagging?

Correct AnswerverifiedShow Answer

Tropic Corp.has sales revenue of $500,000 resulting in operating income of $54,000.Average invested assets total $600,000,and the cost of capital is 6%.Calculate the return on investment if sales increase by 10% and the profit margin and invested assets remain the same.

Correct AnswerverifiedShow Answer

The responsibility center in which the manager has responsibility and authority over revenues and costs,but not assets,is the:

Correct AnswerverifiedShow Answer

Correct Answer
verified
a.$100,000 less profits = 100,000 × ($43...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified