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The manager of the furniture department of a leading retailer does not control the salaries of departmental personnel.

A) True
B) False

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Some items are omitted from each of the following condensed divisional income statements of Demi Inc. Some items are omitted from each of the following condensed divisional income statements of Demi Inc. a Determine the amount of the missing items, identifying them by letter a-f. b Based on income from operations, which division is the most profitable? a Determine the amount of the missing items, identifying them by letter a-f. b Based on income from operations, which division is the most profitable?

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The Central Division of the Nebraska Company has a rate of return on investment of 28% and a profit margin of 14%.What is the investment turnover?


A) 0.2
B) 2.0
C) 5.0
D) 0.5

E) A) and C)
F) B) and C)

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What is the rate of return on investment for Division D?


A) 153.3%
B) 114.7%
C) 87.2%
D) 233%

E) A) and B)
F) All of the above

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Operating expenses incurred for the entire business as a unit that are not subject to the control of individual department managers are called indirect expenses.

A) True
B) False

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Match each definition that follows with the term a-e it defines. -Ratio of income from operations to sales


A) Controllable revenues
B) Profit margin
C) Investment turnover
D) Rate of return on investments
E) Residual income

F) A) and E)
G) A) and D)

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The gross profit for the Locomotive Division is


A) $57,960
B) $14,790
C) $27,240
D) $47,280

E) B) and C)
F) A) and B)

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How much will Division 3's income from operations increase?


A) $150,000
B) $50,000
C) $32,000
D) $72,000

E) C) and D)
F) All of the above

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It is beneficial for divisions in a company to negotiate a transfer price when the supplying division has unused capacity in its plant.

A) True
B) False

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A responsibility center in which the authority over and responsibility for costs and revenues is vested in the department manager is termed a profit center.

A) True
B) False

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

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All of the following are advantages of decentralization except


A) Managers make better decisions when closer to the operations of the company.
B) Expertise in all areas of the business is difficult; decentralization makes it better to delegate certain responsibilities.
C) Each decentralized operation purchases its own assets and pays for operating costs.
D) Decentralized managers can respond quickly to customer needs.

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

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The income from operations for the Locomotive Division is


A) $57,960
B) $14,790
C) $27,240
D) $47,280

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

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The DuPont formula uses financial and nonfinancial information to measure the performance of a business.

A) True
B) False

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A manager in a cost center also has responsibility and authority over the revenues.

A) True
B) False

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The residual income for Chicks is


A) $165,000
B) $302,500
C) $137,500
D) $191,500

E) A) and D)
F) C) and D)

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The materials used by the Hibiscus Company's Division A are currently purchased from an outside supplier at $55 per unit.Division B is able to supply Division A with 20,000 units at a variable cost of $42 per unit.The two divisions have recently negotiated a transfer price of $48 per unit for the 20,000 units.a By how much will each division's income increase as a result of this transfer? b What is the total increase in income for Hibiscus Company?

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Which of the following is a measure of a cost center manager's performance?


A) budget performance report
B) rate of return and residual income measures
C) divisional income statements
D) balance sheet

E) A) and D)
F) C) and D)

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The costs of services charged to a profit center on the basis of its use of those services are


A) operating expenses
B) noncontrollable charges
C) service department charges
D) activity charges

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

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What is Clydesdale Company's investment turnover?


A) 1.80
B) 2.25
C) 1.25
D) 1.4

E) None of the above
F) All of the above

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Showing 61 - 80 of 218

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