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Exam 15: Performance Evaluation

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Question 31

True/False

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If the master budget prepared at a volume level of 20,000 units includes factory rent of $40,000, a flexible budget based on a volume of 21,000 units would include factory rent of $40,000.

A) True
B) False

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Question 32

Multiple Choice

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Timberlake Company planned for a production and sales volume of 12,000 units. However, the company actually made and sold 13,000 units. What was the total variable cost volume variance?

A) $29,800 unfavorable
B) $29,800 favorable
C) $35,200 unfavorable
D) $35,200 favorable

E) None of the above
F) A) and C)

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Question 33

Multiple Choice

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Which of the following is a difference between a static and a flexible budget?

Flexible budget amounts for variable costs and revenues come from multiplying standard per unit amounts by the planned volume of production.

In responsibility accounting systems, managers never are held responsible for items over which they have less than absolute control.

The Electronics Division of Anton Company reports the following results for the current year: Anton Company has set a target return on investment (ROI) of 11% for the Electronics Division. The Electronic Division's turnover (asset utilization) is:

The concept that says managers should be evaluated on the basis of revenues and/or expenses they can control is known as the:

Delegating authority and responsibility throughout an organization is known as:

Suboptimization refers to actions taken by a manager that are in the best interest of the firm as a whole but not in his/her own best interest.

Jacob is a department manager who recently instituted a new recognition program for his employees. He budgeted the cost of the new program at $10 per employee, but actual costs were $15 per employee. The cost associated with the recognition program would be considered which of the following kinds of cost?

The sales volume variance was:

Which manager is generally held responsible for the sales volume variance?

The kind of responsibility center that would be evaluated by comparing income on assets to the amount of assets invested is:

Joseph Company has an investment in assets of $450,000, operating income that is 10% of sales, and an ROI of 18%. From this information the amount of operating income would be:

The New Products Division of Testar Company, had operating income of $8,000,000 and operating assets of $44,800,000 during the current year. The New Products Division has developed a potential new product that would require $8,500,000 in operating assets and would be expected to provide $1,400,000 in operating income each year. Testar has set a target return on investment (ROI) of 16% for each of its divisions. Assuming that the new product is put into production, calculate the division's ROI.

Which of the following statements is incorrect?

Liam manages a division that is part of a large, decentralized business. He has a substantial degree of control over the division's costs, revenues, and investment in assets. Based on this information, the division would be classified as a profit center.

Under all circumstances, unfavorable variances are bad; favorable variances are good.

Jones Company developed the following static budget at the beginning of the company's accounting period: If actual production totals 8,200 units, the flexible budget would show total costs of:

The sales volume variance is the difference between the: