Filters
Question type

A profit center manager should be evaluated by


A) Examination of actual costs against budgeted costs.
B) A review of both revenues and expenses,with a focus on operating income.
C) How well assets have been used to generate income.
D) None of these answer choices are correct.

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

Correct Answer

verifed

verified

If a company desires to increase ROI,it should consider methods that will decrease


A) Sales revenue.
B) Segment margin.
C) Asset turnover.
D) Average operating assets.

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

Correct Answer

verifed

verified

At Devoe Manufacturing,the vice-president of the Southern Division is responsible for the production and selling of products in fifteen states as well as securing the productive assets needed to create the product.This division is an example of which of the following responsibility centers?


A) Cost center
B) Revenue center
C) Profit center
D) Investment center

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

Correct Answer

verifed

verified

The income that is earned above the specified minimum level of return is referred to as


A) EVA.
B) Residual income.
C) Segment income.
D) Operating income.

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

Correct Answer

verifed

verified

An organization may be structured as a centralized or decentralized decision-making environment.Classify each of the following as a characteristic of a centralized or decentralized decision-making environment by placing an "X" in the appropriate column. An organization may be structured as a centralized or decentralized decision-making environment.Classify each of the following as a characteristic of a centralized or decentralized decision-making environment by placing an  X  in the appropriate column.

Correct Answer

verifed

verified

The return on investment measures


A) Actual costs against budgeted costs.
B) The rate of return generated by an investment in assets.
C) The dollar amount of segment margin over operating income.
D) None of these answer choices are correct.

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

Correct Answer

verifed

verified

  -Nobles Corporation provided the following income statement for two of its divisions: East and West.    Required: The home office allocated common fixed costs of $80,000 to East and $60,000 to West.Prepare a segment margin income statement. -Nobles Corporation provided the following income statement for two of its divisions: East and West.   -Nobles Corporation provided the following income statement for two of its divisions: East and West.    Required: The home office allocated common fixed costs of $80,000 to East and $60,000 to West.Prepare a segment margin income statement. Required: The home office allocated common fixed costs of $80,000 to East and $60,000 to West.Prepare a segment margin income statement.

Correct Answer

verifed

verified

ABC Corporation's North Division generates operating income of $100,000 on $900,000 in sales.The company had $400,000 in assets at the beginning of the year and $450,000 at the end of the year.What is the company's return on investment for the year?


A) 11.1%
B) 23.5%
C) 42.5%
D) 100%

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

Correct Answer

verifed

verified

In calculating EVA,invested capital is determined by


A) Subtracting current liabilities from total assets.
B) Subtracting total liabilities from total assets.
C) Subtracting total liabilities from long-term assets.
D) None of these answer choices are correct.

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

Correct Answer

verifed

verified

Return on investment is based on the fair market value of operating assets.

A) True
B) False

Correct Answer

verifed

verified

If managers want to increase ROI,an increase in sales revenue will increase


A) Margin.
B) Asset turnover.
C) Both margin and asset turnover.
D) Neither margin nor asset turnover.

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

Correct Answer

verifed

verified

Nobles Corporation provided the following income statement for two of its divisions: East and West. Nobles Corporation provided the following income statement for two of its divisions: East and West.    Nobles' actual weighted-average cost of capital is 10% and its tax rate is 30%.The East division balance sheet showed $300,000 of assets $60,000 current and $240,000 long-term and $320,000 of liabilities $120,000 current and $200,000 long-term.The West division reported $360,000 of assets $80,000 current and $280,000 long-term and $260,000 of liabilities $60,000 current and $200,000 long-term. Required:  a.Calculate the economic value added for each division. b.Which of the two managers will be rated higher on performance? Why? Nobles' actual weighted-average cost of capital is 10% and its tax rate is 30%.The East division balance sheet showed $300,000 of assets $60,000 current and $240,000 long-term and $320,000 of liabilities $120,000 current and $200,000 long-term.The West division reported $360,000 of assets $80,000 current and $280,000 long-term and $260,000 of liabilities $60,000 current and $200,000 long-term. Required: a.Calculate the economic value added for each division. b.Which of the two managers will be rated higher on performance? Why?

Correct Answer

verifed

verified

a.EVA calculations for East and West: Ea...

View Answer

Bill Jones,Flooring's accountant,has prepared the following income statement for the month of May. Residential Commercial Total Sales revenue $2,760,000 $3,125,000 $5,885,000 Variable expenses 1,305,000 2,520,000 3,825,000 Contribution margin 1,455,000 605,000 2,060,000 Fixed expenses 645,000 615,000 1,260,000 Operating income $ 810,000 $ 10,000 $ 800,000 In preparing the income statement,Bill was unsure what to do with $240,000 in corporate fixed expenses that cannot be traced to a particular division.Since these costs were incurred to run the business as a whole,and he believed that each division benefited equally,he just allocated half to each division. Required a.How do you think Bill should have handled the $240,000 in corporate fixed expenses? b.Prepare a segment margin income statement that highlights each division's contribution to corporate profits.

Correct Answer

verifed

verified

a.Consistent with the principles of resp...

View Answer

In a responsibility accounting environment,which of the following is not a classification of organizational


A) Cost centers
B) Revenue centers
C) Profit centers
D) Investment centers

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

Correct Answer

verifed

verified

If a cost is incurred to support the company as a whole,it is referred to as a


A) Common cost.
B) Traceable cost.
C) Direct cost.
D) None of these answer choices are correct.

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

Correct Answer

verifed

verified

In a responsibility accounting environment,which of the following managers is considered to have the broadest responsibility?


A) Cost center manager
B) Profit center manager
C) Investment center manager
D) Revenue center manager

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

Correct Answer

verifed

verified

  -Mounce Corporation produces and sells two products,Basic and Super.Data for activity during March are as follows:    Required: Prepare a Segment Margin income statement.Common fixed costs of $25,000 are allocated Basic and $30,000 to Super. -Mounce Corporation produces and sells two products,Basic and Super.Data for activity during March are as follows:   -Mounce Corporation produces and sells two products,Basic and Super.Data for activity during March are as follows:    Required: Prepare a Segment Margin income statement.Common fixed costs of $25,000 are allocated Basic and $30,000 to Super. Required: Prepare a Segment Margin income statement.Common fixed costs of $25,000 are allocated Basic and $30,000 to Super.

Correct Answer

verifed

verified

Brooke Bundi,president of the Seco Corporation,has mandated a minimum 10% return on investment for any project undertaken by the company.Given the company's decentralization,Brooke leaves all investment decisions to the divisional managers as long as they anticipate a minimum rate of return of at least 12%.The Flavored Water division,under the direction of manager Karl Martin,has achieved a 14% return on investment for the past three years.This year in not expected to be different from the past three.Martin has just received a proposal to invest $1,700,000 in a new line of flavored water that is expected to generate $221,000 in operating income. Required a.Calculate the residual income for the proposed new line of flavored water. b.If Karl Martin is evaluated based on residual income,will he choose to invest in the new line of flavored water? Why or why not?

Correct Answer

verifed

verified

a. Minimum required return = $1,700,000 ...

View Answer

A segment of an organization is any part of the organization that management wishes to evaluate.

A) True
B) False

Correct Answer

verifed

verified

ROI is a relative measure of return,in other words,the result is a dollar amount of return.

A) True
B) False

Correct Answer

verifed

verified

Showing 21 - 40 of 194

Related Exams

Show Answer