Question 1

Match each of the following phrases as describing a) an advantage, b) a disadvantage, or c) neither of decentralization.
-Responsibilities delegated to unit managers
A)Advantage of decentralization
B)Disadvantage of decentralization
C)Neither an advantage or disadvantage

Accepted Answer

Delegating responsibilities to unit managers is an advantage of decentralization because it allows for decision-making to occur at a lower level in the organization, resulting in quicker responses to issues and more efficient use of resources.

Question 2

Using the data below for the Coffee & Cocoa Company,
a) determine the divisional income from operations for the three regions by allocating the service department expenses proportional to the sales of the regions.
b) determine the increase or decrease in net income if C Region did not operate.

Accepted Answer

The answer of Using the data below for the Coffee...

Question 3

The Creative Division of the Barry Company reported the following results for December:
Invested assets
$1,200,000
Profit margin
25%
Return on investment
30%
Based on this information, what were sales?

Accepted Answer

The answer of The Creative Division of the Barry Company...

Question 4

The sales, income from operations, and invested assets for each division of Grosbeak Company are as follows:  a) Using the DuPont formula, determine the profit margin, investment turnover, and rate of return on investment for each division. Round profit margin percentage to two decimal places, investment turnover to four decimal places, and rate of return on investment to one decimal place.
b) Which division is the most profitable per dollar invested?

Accepted Answer

The answer of The sales, income from operations, and invested...

Question 5

The sales, income from operations, invested assets, and residual income for each division of Marcus Company are as follows:  Determine the minimum rate of return for invested assets.

Accepted Answer

The answer of The sales, income from operations, invested assets,...

Question 6

Ralston Company has income from operations of $75,000, invested assets of $360,000, and sales of $790,000.
Use the DuPont formula to calculate the rate of return on investment, and show a) the profit margin, b) the investment turnover, and c) rate of return on investment. Round the profit margin percentage to two decimal places and the investment turnover to three decimal places.

Accepted Answer

The answer of Ralston Company has income from operations of...

Question 7

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?

Accepted Answer

The answer of The materials used by the Hibiscus Company's...

Question 8

Paduka Industries has several divisions. The Eastern Division has $350,000 of invested assets, income from operations of $200,000, and residual income of $151,000. Determine the minimum acceptable rate of return on divisional assets.

Accepted Answer

The answer of Paduka Industries has several divisions. The Eastern...

Question 9

The Bottlebrush Company has income from operations of $60,000, invested assets of $345,000, and sales of $786,000. Use the DuPont formula to calculate the rate of return on investment, and show a) the profit margin, b) the investment turnover, and c) rate of return on investment. Round the profit margin percentage to two decimal places and the investment turnover to three decimal places.

Accepted Answer

The answer of The Bottlebrush Company has income from operations...

Question 10

The materials used by the Holly Company's Division A are currently purchased from an outside supplier. Division B is able to supply Division A with 20,000 units at a variable cost of $42 per unit. The normal price that Division B normally sells its units is $53 per unit. What is the range of transfer prices within which the two division managers should negotiate?

Accepted Answer

The answer of The materials used by the Holly Company's...

Question 11

The Magnolia Company's Division A has income from operations of $80,000 and assets of $400,000. The minimum acceptable rate of return on assets is 12%. What is the residual income for the division?

Accepted Answer

The answer of The Magnolia Company's Division A has income...

Question 12

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?

Accepted Answer

The answer of Some items are omitted from each of...

Question 13

Miller's Quarter Horse Company has sales of $4,500,000. It also has invested assets of $2,500,000 and operating expenses of $3,800,000. The company has established a minimum rate of return of 7%.
a) What is Miller's profit margin?
b) What is the investment turnover?
c) What is the rate of return on investment?
d) What is Miller's residual income?

Accepted Answer

The answer of Miller's Quarter Horse Company has sales of...

Question 14

The sales, income from operations, and invested assets for each division of Wren Company are as follows:  Management has established a minimum rate of return for invested assets of 8%.
a) Determine the residual income for each division.
b) Based on residual income, which of the divisions is the most profitable?

Accepted Answer

The answer of The sales, income from operations, and invested...

Question 15

Materials used by the Layton Company's Division 1 are currently purchased from outside supplier at $58 per unit. Division 2 is able to supply Division 1 with 22,000 units at a variable cost of $46 per unit. The two divisions have recently negotiated a transfer price of $50 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 Layton?

Accepted Answer

The answer of Materials used by the Layton Company's Division...

Question 16

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 rate of return on investment for Division G.
b) The profit margin for Division G.
c) The investment turnover for Division G.

Accepted Answer

The answer of Division G of Elephant Preservation Inc. has...

Question 17

Materials used by Best Bread Company in producing Division A's product are currently purchased from outside suppliers at a cost of $30 per unit. However, the same materials are available from Division B. Division B has unused capacity and can produce the materials needed by Division A at a variable cost of $20 per unit.
a) If a transfer price of $25 per unit is established and 60,000 units of material are transferred, with no reductions in Division B's current sales, how much would Best Bread Company's total income from operations increase?
b) Assuming transfer price of $25 per unit is established and 60,000 units of material are transferred, with no reductions in Division B's current sales, how much would the income from operations of Division A increase?
c) Assuming transfer price of $25 per unit is established and 60,000 units of material are transferred, with no reductions in Division B's current sales, how much would the income from operations of Division B increase?
d) If the negotiated price approach is used, what would be the range of acceptable transfer prices?

Accepted Answer

The answer of Materials used by Best Bread Company in...

Question 18

The following financial information was summarized from the accounting records of Buddy Corporation for the current year ended December 31:
​
Calculate:
a) The gross profit for the Dalmatian Division.
b) The income from operations from the Dalmatian Division.
c) The gross profit for the Beagle Division.
d) The income from operations from the Beagle Division.
e) The net income for the Buddy Corporation.

Accepted Answer

The answer of The following financial information was summarized from...

Question 19

Bentz Co. has two divisions, A and B. Invested assets and condensed income statement data for each division for the year ended December 31, are as follows:  a) Prepare condensed income statements for the past year for each division.
b) Using the DuPont formula, determine the profit margin, investment turnover, and rate of return on investment for each division. Round the profit margin percentage to two decimal places and investment turnover to four decimal places.

Accepted Answer

The answer of Bentz Co. has two divisions, A and...

Question 20

A department store apportions payroll costs on the basis of the number of payroll checks issued. Accounting costs are apportioned on the basis of the number of reports. The payroll costs for the year were $231,000, and the accounting costs for the year totaled $75,500. The departments and the number of payroll checks and accounting reports for each are as follows:  Determine the amount of a) payroll cost and b) accounting cost to be apportioned to each department.

Accepted Answer

The answer of A department store apportions payroll costs on...

Quiz 23: Performance Evaluation for Decentralized Operations

Match each of the following phrases as describing a) an advantage, b) a disadvantage, or c) neither of decentralization. -Responsibilities delegated to unit managers

Using the data below for the Coffee & Cocoa Company, a) determine the divisional income from operations for the three regions by allocating the service department expenses proportional to the sales of the regions. b) determine the increase or decrease in net income if C Region did not operate.

The Creative Division of the Barry Company reported the following results for December: Invested assets $1,200,000 Profit margin 25% Return on investment 30% Based on this information, what were sales?

The sales, income from operations, invested assets, and residual income for each division of Marcus Company are as follows: Determine the minimum rate of return for invested assets.

Paduka Industries has several divisions. The Eastern Division has $350,000 of invested assets, income from operations of $200,000, and residual income of $151,000. Determine the minimum acceptable rate of return on divisional assets.

The Magnolia Company's Division A has income from operations of $80,000 and assets of $400,000. The minimum acceptable rate of return on assets is 12%. What is the residual income for the division?

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?