Question 1

Blancher Corporation had $495,000 in invested assets,sales of $660,000,income from operations amounting to $99,000,and a desired minimum rate of return of 15%.The investment turnover for Blancher is:
A)1.20.
B)1.00.
C)1.10.
D)1.33.

Accepted Answer

The investment turnover is calculated as Sales / Average Invested Assets.
Average Invested Assets = (Beginning Invested Assets + Ending Invested Assets) / 2 = $495,000 (given)
Sales = $660,000 (given)
Investment Turnover = $660,000 / $495,000 = 1.33

Since Blancher's desired minimum rate of return is 15%, it is important to consider whether this investment turnover is generating enough income. However, the question does not provide any information about Blancher's profitability relative to the desired rate of return.

Question 2

The income from operations for the Southern Division is:
A)$150,000.
B)$120,000.
C)$295,000.
D)$154,400.

Accepted Answer

The answer of The income from operations for the Southern...

Question 3

Income from operations for Division X is $280,000,total service department charges are $570,000,and operating expenses are $2,530,000.What are the revenues for Division X?
A)$2,810,000
B)$2,240,000
C)$2,530,000
D)$3,380,000

Accepted Answer

Revenues for Division X can be calculated by adding income from operations, service department charges, and operating expenses: $280,000 + $570,000 + $2,530,000 = $3,380,000.

Question 4

Which of the following would not be considered as an internal centralized service department?
A)Payroll accounting department
B)Manufacturing department
C)Information systems department
D)Purchasing department

Accepted Answer

The manufacturing department is not considered as an internal centralized service department as it is responsible for the actual production of goods or services and is typically a revenue-generating department, unlike the other options which are support or administrative functions.

Question 5

Plamba Corporation had $250,000 in invested assets,sales of $490,000,income from operations amounting to $70,000,and a desired minimum rate of return of 15%.The residual income for Plamba is:
A)$32,500.
B)$10,500.
C)$59,500.
D)$37,500.

Accepted Answer

Residual income = Income from operations - (Desired rate of return * Invested assets)= $70,000 - (15% * $250,000)= $70,000 - $37,500= $32,500

Question 6

Income from operations for Division M is $150,000,and income from operations before service department charges is $975,000.Therefore,:
A)total operating expenses are $825,000.
B)total manufacturing expenses are $825,000.
C)direct materials,direct labor,and factory overhead total $825,000.
D)total service department charges are $825,000.

Accepted Answer

The income from operations before service department charges is $975,000, and the income from operations for Division M is $150,000. The difference of $825,000 represents the total service department charges.

Question 7

Some organizations use internal service departments to provide services to several divisions or departments within an organization.Which of the following would probably not lend itself as a service department?
A)Inventory Control
B)Payroll Accounting
C)Information Systems
D)Human Resources

Accepted Answer

Inventory Control is not typically a service department as it involves physical management of goods and materials rather than internal administrative or support services. Service departments typically provide support in areas such as finance, accounting, IT, and HR.

Question 8

The gross profit for the Southern Division is:
A)$150,000.
B)$295,000.
C)$235,000.
D)$120,000.

Accepted Answer

The gross profit is calculated as sales minus the cost of goods sold. Without specific sales and cost figures provided, the correct answer is assumed to be based on given options or context.

Question 9

Which of the following is used to measure a manager's performance working in a profit center?
A)Balance sheet
B)Rate of return and residual income
C)Budget performance report
D)Divisional income statements

Accepted Answer

The answer of Which of the following is used to...

Question 10

Responsibility accounting reports for profit centers will include:
A)only costs.
B)only revenues.
C)both expenses and fixed assets.
D)revenues,expenses,and net income or loss from operations.

Accepted Answer

Responsibility accounting reports for profit centers will include revenues, expenses, and net income or loss from operations. This is because profit centers are responsible for generating both revenue and controlling expenses, and the net income or loss from operations reflects the overall performance of the profit center in achieving its objectives. Including fixed assets in the report would be more relevant to investment centers, which are responsible for managing and investing in fixed assets to generate returns.

Question 11

Espinosa Corporation had $220,000 invested in assets,sales of $242,000,income from operations amounting to $48,400,and a desired minimum rate of return of 3%.The rate of return on investment for Espinosa is:
A)20%.
B)22%.
C)3%.
D)6.4%.

Accepted Answer

The rate of return on investment (ROI) is calculated by dividing the income from operations by the invested assets. So, ROI = $48,400 / $220,000 = 0.22 or 22%.

Question 12

Blancher Corporation had $495,000 in invested assets,sales of $660,000,income from operations amounting to $99,000,and a desired minimum rate of return of 15%.The profit margin for Blancher is:
A)16%.
B)20%.
C)18%.
D)15%.

Accepted Answer

The answer of Blancher Corporation had $495,000 in invested assets,sales...

Question 13

The following data are taken from the management accounting reports of Dancer Co.:
A)division A's manager is given the bonus.
B)division B's manager is given the bonus.
C)division C's manager is given the bonus.
D)the managers of Divisions B and C divide the bonus.

Accepted Answer

The answer of The following data are taken from the...

Question 14

The net income for Globe Corporation is:
A)$59,000.
B)$160,000.
C)$19,400.
D)$47,000.

Accepted Answer

The answer of The net income for Globe Corporation is:
A)$59,000.
B)$160,000.
C)$19,400.
D)$47,000....

Question 15

Division T reported income from operations of $900,000 and total service department charges of $575,000.Therefore:
A)net income was $325,000.
B)the gross profit margin was $325,000.
C)income from operations before service department charges was $1,475,000.
D)consolidated net income was $325,000.

Accepted Answer

Income from operations before service department charges can be calculated by adding service department charges to income from operations. Therefore, income from operations before service department charges was $1,475,000 ($900,000 + $575,000). None of the other answer choices are correct based on the information given.

Question 16

In an investment center,the manager has the responsibility for and the authority to make decisions that affect:
A)the assets invested in the center but not costs and revenues.
B)costs and assets invested in the center but not revenues.
C)both costs and revenues for the department or division.
D)not only costs and revenues but also assets invested in the center.

Accepted Answer

The answer of In an investment center,the manager has the...

Question 17

The profit margin for Division E is 28% and the investment turnover is 3.0.What is the rate of return on investment for Division E?
A)84%
B)28%
C)14%
D)9%

Accepted Answer

The rate of return on investment is calculated by multiplying the profit margin by the investment turnover. In this case, the profit margin is 28% and the investment turnover is 3.0, so the rate of return on investment is 28% x 3.0 = 84%.

Question 18

The following data are taken from the management accounting reports of Dancer Co.:
A)division A's manager is given the bonus.
B)division B's manager is given the bonus.
C)division C's manager is given the bonus.
D)the managers of Divisions B and C divide the bonus.

Accepted Answer

The answer of The following data are taken from the...

Question 19

How do the responsibilities of a manager in an investment center compare to the responsibilities of managers in a cost or profit center?
A)Investment center managers have more authority and responsibility than managers of a cost or profit center.
B)Investment center managers have more authority and responsibility than managers of a cost center but less than managers of a profit center.
C)Investment center managers have about the same authority and responsibility as managers of a cost or profit center.
D)Investment center managers have more authority and responsibility than managers of a profit center but less than managers of a cost center.

Accepted Answer

Managers in an investment center are responsible for making decisions on investing funds and achieving maximum return on investment. They have authority and responsibility to make strategic decisions that can impact the future growth of the company. On the other hand, managers of cost or profit centers are responsible for managing the costs or revenues of their specific department without the authority to make significant changes to the overall business strategy. Therefore, investment center managers have more authority and responsibility than managers of cost or profit centers.

Question 20

Plamba Corporation had $250,000 invested in assets,sales of $490,000,income from operations amounting to $70,000,and a desired minimum rate of return of 15%.The rate of return on investment for Plamba is:
A)14%.
B)28%.
C)20%.
D)15%.

Accepted Answer

The answer of Plamba Corporation had $250,000 invested in assets,sales...

Quiz 14: Performance Evaluation for Decentralized Operations

Blancher Corporation had $495,000 in invested assets,sales of $660,000,income from operations amounting to $99,000,and a desired minimum rate of return of 15%.The investment turnover for Blancher is:

The income from operations for the Southern Division is:

Income from operations for Division X is $280,000,total service department charges are $570,000,and operating expenses are $2,530,000.What are the revenues for Division X?

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

Plamba Corporation had $250,000 in invested assets,sales of $490,000,income from operations amounting to $70,000,and a desired minimum rate of return of 15%.The residual income for Plamba is:

Income from operations for Division M is $150,000,and income from operations before service department charges is $975,000.Therefore,:

Some organizations use internal service departments to provide services to several divisions or departments within an organization.Which of the following would probably not lend itself as a service department?

The gross profit for the Southern Division is:

Which of the following is used to measure a manager's performance working in a profit center?

Responsibility accounting reports for profit centers will include:

Espinosa Corporation had $220,000 invested in assets,sales of $242,000,income from operations amounting to $48,400,and a desired minimum rate of return of 3%.The rate of return on investment for Espinosa is:

Blancher Corporation had $495,000 in invested assets,sales of $660,000,income from operations amounting to $99,000,and a desired minimum rate of return of 15%.The profit margin for Blancher is:

The following data are taken from the management accounting reports of Dancer Co.:

The net income for Globe Corporation is:

Division T reported income from operations of $900,000 and total service department charges of $575,000.Therefore:

In an investment center,the manager has the responsibility for and the authority to make decisions that affect:

The profit margin for Division E is 28% and the investment turnover is 3.0.What is the rate of return on investment for Division E?

The following data are taken from the management accounting reports of Dancer Co.:

How do the responsibilities of a manager in an investment center compare to the responsibilities of managers in a cost or profit center?

Plamba Corporation had $250,000 invested in assets,sales of $490,000,income from operations amounting to $70,000,and a desired minimum rate of return of 15%.The rate of return on investment for Plamba is: