Question 1

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

If an incentive bonus is paid to the manager who achieved the highest income from operations before service department charges,it follows that
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 2

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 Stevenson is
A)1.20.
B)1.00.
C)1.10.
D)1.33.

Accepted Answer

The investment turnover is calculated by dividing sales by invested assets.

Investment Turnover = Sales / Invested Assets
Investment Turnover = $660,000 / $495,000
Investment Turnover = 1.33

Since the desired minimum rate of return is 15%, we also need to calculate the ROI (return on investment) to see if it meets or exceeds the desired rate.

ROI = Income from Operations / Invested Assets
ROI = $99,000 / $495,000
ROI = 0.20 or 20%

Since the ROI is higher than the desired minimum rate of return, the investment is considered successful. Therefore, the best choice is D (1.33).

Question 3

Income from operations for Division B is $150,000,total service department charges are $400,000,and operating expenses are $2,266,000.What are the revenues for Division B?
A)$2,416,000
B)$3,216,000
C)$2,666,000
D)$2,816,000

Accepted Answer

The answer of Income from operations for Division B is...

Question 4

Espinosa Corporation had $220,000 in invested 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 answer of Espinosa Corporation had $220,000 in invested assets,sales...

Question 5

The following financial information was summarized from the accounting records of Block Corporation for the current year ended December 31:
 
-The gross profit for the Hardware Division is
A)$103,000.
B)$229,800.
C)$176,400.
D)$76,200.

Accepted Answer

The gross profit for the Hardware Division can be calculated as follows:
Net Sales - Cost of Goods Sold = Gross Profit
$880,000 - $703,600 = $176,400
Therefore, the correct answer is C) $176,400.

Question 6

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

In an investment center, the manager has responsibility and authority for making decisions that affect not only costs and revenues but also the assets invested in the center. This means that the manager is accountable for both the financial performance and the investment decisions of the center, making it more autonomous than other types of centers.

Question 7

Some organizations use internal service departments to provide like 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 a service that would typically be provided by an internal service department as it is more directly related to the specific operations of each division or department. The other options (payroll accounting, information systems, and human resources) are all services that can be provided centrally and shared among different areas of the organization.

Question 8

The following financial information was summarized from the accounting records of Block Corporation for the current year ended December 31:
 
-The income from operations for the Hardware Division is
A)$103,000.
B)$76,200.
C)$166,400.
D)$66,200.

Accepted Answer

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

Question 9

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

Accepted Answer

Manufacturing department is not a centralized service department as it is likely responsible for producing the company's products/ services, which is a core business function. The other choices listed are all examples of internal centralized service departments that provide support services to other areas of the company.

Question 10

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 rate of return on investment for Stevenson is
A)16%.
B)20%.
C)18%.
D)15%.

Accepted Answer

To find the rate of return on investment, we need to divide the income from operations by the invested assets.

Rate of return = (Income from operations / Invested assets) x 100

Plugging in the values, we get

Rate of return = (99,000 / 495,000) x 100 
Rate of return = 20%

Since the desired rate of return is 15% and the actual rate of return is 20%, the investment is performing better than expected. Therefore, the best choice is B.

Question 11

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 residual income for Stevenson is
A)$24,750.
B)$17,820.
C)$14,850.
D)$16,500.

Accepted Answer

Residual income is calculated as the income from operations minus the product of the invested assets and the desired minimum rate of return. Here, it is $99,000 - ($495,000 * 0.15) = $99,000 - $74,250 = $24,750.

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 Stevenson 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 financial information was summarized from the accounting records of Block Corporation for the current year ended December 31:
 
-The net income for Block Corporation is
A)$68,200.
B)$44,700.
C)$54,700.
D)$54,900.

Accepted Answer

Net income is calculated by subtracting total expenses from total revenues. In this case, total revenues are $239,800 and total expenses are $185,100, resulting in a net income of $54,700 (Option C).

Question 14

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

Accepted Answer

Responsibility accounting reports for profit centers typically focus on the financial performance of the center, including revenues, expenses, and ultimately net income or loss from operations. While costs and fixed assets may also be important considerations, they are not necessarily included in a standard profit center report.

Question 15

How do the responsibilities of a manager in an investment center compare to the responsibilities of 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 than 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 of an investment center have the most authority and responsibility compared to managers of cost or profit centers. Investment center managers are responsible for not only generating profits but also for managing assets and making investment decisions, which require a higher level of authority and responsibility. In contrast, cost and profit center managers are responsible for managing costs and generating profits within their respective areas, but they do not have the same level of decision-making power as investment center managers.

Question 16

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 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 answer of The profit margin for Division E is...

Question 18

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 answer of Income from operations for Division M is...

Question 19

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

If an incentive bonus is paid to the manager who achieved the highest income from operations before service department charges,it follows that
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

Based on the data provided, Division A has the highest income from operations before service department charges, so its manager would receive the incentive bonus.

Question 20

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

Accepted Answer

The answer of Which of the following is a measure...

Quiz 14: Performance Evaluation for Decentralized Operations

The following data are taken from the management accounting reports of Dancer Co.: If an incentive bonus is paid to the manager who achieved the highest income from operations before service department charges,it follows that

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 Stevenson is

Income from operations for Division B is $150,000,total service department charges are $400,000,and operating expenses are $2,266,000.What are the revenues for Division B?

Espinosa Corporation had $220,000 in invested 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

The following financial information was summarized from the accounting records of Block Corporation for the current year ended December 31: -The gross profit for the Hardware Division is

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

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

The following financial information was summarized from the accounting records of Block Corporation for the current year ended December 31: -The income from operations for the Hardware Division is

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

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 rate of return on investment for Stevenson 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 residual income for Stevenson 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 Stevenson is

The following financial information was summarized from the accounting records of Block Corporation for the current year ended December 31: -The net income for Block Corporation is

Responsibility accounting reports for profit centers will include

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

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

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?

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

The following data are taken from the management accounting reports of Dancer Co.: If an incentive bonus is paid to the manager who achieved the highest income from operations before service department charges,it follows that

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