Question<\/p>\n
1. ROI is most appropriately used to evaluate the performance of:<\/p>\n
cost center managers.<\/p>\n
revenue center managers.<\/p>\n
profit center managers.<\/p>\n
investment center managers.<\/p>\n
both profit center managers and investment center managers.<\/p>\n
2. A manufacturer’s raw-material purchasing department would likely be classified as a:<\/p>\n
cost center.<\/p>\n
revenue center.<\/p>\n
profit center.<\/p>\n
investment center.<\/p>\n
contribution center.<\/p>\n
3. Controllable costs, as used in a responsibility accounting system, consist of:<\/p>\n
only fixed costs.<\/p>\n
only direct materials and direct labor.<\/p>\n
those costs that a manager can influence in the time period under review.<\/p>\n
those costs about which a manager has some knowledge.<\/p>\n
those costs that are influenced by parties external to the organization.<\/p>\n
4. The amounts charged for goods and services exchanged between two divisions are known as:<\/p>\n
opportunity costs.<\/p>\n
transfer prices.<\/p>\n
standard variable costs.<\/p>\n
residual prices.<\/p>\n
target prices.<\/p>\n
5. Which of the following is an appropriate base to distribute the cost of building depreciation to responsibility centers?<\/p>\n
Number of employees in the responsibility centers.<\/p>\n
Budgeted sales dollars of the responsibility centers.<\/p>\n
Square feet occupied by the responsibility centers.<\/p>\n
Budgeted net income of the responsibility centers.<\/p>\n
Total budgeted direct operating costs of the responsibility centers.<\/p>\n
6. A responsibility center in which the manager is held accountable for the profitable use of assets and capital is commonly known as a(n):<\/p>\n
cost center.<\/p>\n
revenue center.<\/p>\n
profit center.<\/p>\n
investment center.<\/p>\n
contribution center.<\/p>\n
7. Which of the following bodies oversees audits and auditors, and sanctions firms and individuals for violations of laws and regulations?<\/p>\n
American Institute of Certified Public Accountants (AICPA).<\/p>\n
American Accounting Association (AAA).<\/p>\n
Public Company Accounting Oversight Board (PCAOB).<\/p>\n
Financial Accounting Standards Board (FASB).<\/p>\n
Accounting Principles Board (APB).<\/p>\n
8. Under section 404 of the Sarbanes-Oxley Act, auditors are required to:<\/p>\n
Attest to and report on management’s assessment of internal controls.<\/p>\n
Establish and maintain internal controls for audited companies.<\/p>\n
Advise management on its preparation of the Report on Internal Controls.<\/p>\n
Evaluate the company’s internal control system periodically throughout the year.<\/p>\n
All of these.<\/p>\n
9. Which of the following costs would be classified as a prevention cost on a quality report?<\/p>\n
Reliability engineering.<\/p>\n
Materials inspection.<\/p>\n
Rework.<\/p>\n
Warranty repairs.<\/p>\n
Out-of-court liability settlements.<\/p>\n
10. The Little Rock Division of Classics Companies currently reports a profit of $3.6 million. Divisional invested capital totals $9.5 million; the imputed interest rate is 12%. On the basis of this information, Little Rock’s residual income is:<\/p>\n
$432,000.<\/p>\n
$708,000.<\/p>\n
$1,140,000.<\/p>\n
$2,460,000.<\/p>\n
some other amount.<\/p>\n
11. The difference between the profit margin controllable by a segment manager and the segment profit margin is caused by:<\/p>\n
variable operating expenses.<\/p>\n
allocated common expenses.<\/p>\n
fixed expenses controllable by the segment manager.<\/p>\n
fixed expenses traceable to the segment but controllable by others.<\/p>\n
sales revenue.<\/p>\n
12. The basic idea behind residual income is to have a division maximize its:<\/p>\n
earnings per share.<\/p>\n
income in excess of a corporate imputed interest charge.<\/p>\n
cost of capital.<\/p>\n
cash flows.<\/p>\n
invested capital.<\/p>\n
13. Sand Fly Corporation operates two stores: J and K. The following information relates to J:<\/p>\n
Sales revenue $1,300,000<\/p>\n
Variable operating expenses 600,000<\/p>\n
Fixed expenses:<\/p>\n
Traceable to J and controllable by J 275,000<\/p>\n
Traceable to J and controllable by others 80,000<\/p>\n
J’s segment contribution margin is:<\/p>\n
$345,000.<\/p>\n
$425,000.<\/p>\n
$620,000.<\/p>\n
$700,000.<\/p>\n
$745,000.<\/p>\n
14. Which of the following is the correct mathematical expression to derive a company’s capital turnover?<\/p>\n
Sales revenue \/ invested capital.<\/p>\n
Contribution margin \/ invested capital.<\/p>\n
Income \/ invested capital.<\/p>\n
Invested capital \/ sales revenue.<\/p>\n
Invested capital \/ income.<\/p>\n
15. Weston Company had sales revenue and operating expenses of $5,000,000 and $4,200,000, respectively, for the year just ended. If invested capital amounted to $6,000,000, the firm’s ROI was:<\/p>\n
13.33%.<\/p>\n
83.33%.<\/p>\n
120.00%.<\/p>\n
750.00%.<\/p>\n
some other figure<\/p>\n
16. Sunrise Corporation has a return on investment of 15%. A Sunrise division, which currently has a 13% ROI and $750,000 of residual income, is contemplating a massive new investment that will (1) reduce divisional ROI and (2) produce $120,000 of residual income. If Sunrise strives for goal congruence, the investment:<\/p>\n
should not be acquired because it reduces divisional ROI.<\/p>\n
should not be acquired because it produces $120,000 of residual income.<\/p>\n
should not be acquired because the division’s ROI is less than the corporate ROI before the investment is considered.<\/p>\n
should be acquired because it produces $120,000 of residual income for the division.<\/p>\n
should be acquired because after the acquisition, the division’s ROI and residual income are both positive numbers.<\/p>\n
17. A general calculation method for transfer prices that achieves goal congruence begins with the additional outlay cost per unit incurred because goods are transformed and then<\/p>\n
adds the opportunity cost per unit to the organization because of the transfer.<\/p>\n
subtracts the opportunity cost per unit to the organization because of the transfer.<\/p>\n
adds the sunk cost per unit to the organization because of the transfer.<\/p>\n
subtracts the sunk cost per unit to the organization because of the transfer.<\/p>\n
adds the sales revenue per unit to the organization because of the transfer.<\/p>\n
18. When managers of subunits throughout an organization strive to achieve the goals set by top management, the result is:<\/p>\n
goal congruence.<\/p>\n
planning and control.<\/p>\n
responsibility accounting.<\/p>\n
delegation of decision making.<\/p>\n
strategic control.<\/p>\n
19. Which of the following describes the goal that should be pursued when setting transfer prices?<\/p>\n
Maximize profits of the buying division.<\/p>\n
Maximize profits of the selling division.<\/p>\n
Allow top management to become actively involved when calculating the proper dollar amounts.<\/p>\n
Establish incentives for autonomous division managers to make decisions that are in the overall organization’s best interests (i.e., goal congruence).<\/p>\n
Minimize opportunity costs.<\/p>\n
20. The provisions of section 302 of the Sarbanes-Oxley Act (as originally enacted) require the signing officers of a company to do all of the following except:<\/p>\n
Audit the internal controls over financial reporting.<\/p>\n
Establish the internal controls over financial reporting.<\/p>\n
Maintain the internal controls over financial reporting.<\/p>\n
Evaluate the internal controls over financial reporting.<\/p>\n
Disclose material weaknesses in the internal controls over financial reporting.<\/p>\n","protected":false},"excerpt":{"rendered":"
Question 1. ROI is most appropriately used to evaluate the performance of: cost center managers. revenue center managers. profit center managers. investment center managers. both profit center managers and investment center managers. 2. A manufacturer’s raw-material purchasing department would likely Read More …<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-51134","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/51134","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/comments?post=51134"}],"version-history":[{"count":0,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/51134\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/media?parent=51134"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/categories?post=51134"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/tags?post=51134"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}