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Exam 23: Decentralized Operations

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Question 111

True/False

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

A) True
B) False

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Question 112

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

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

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

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Question 113

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

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.

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.

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

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.

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

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

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.

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

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

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

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

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

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

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

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.