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Exam 14: Performance Evaluation for Decentralized Operations

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Question 71

True/False

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Budget performance reports prepared for the vice-president of production would generally contain less detail than the reports prepared for the various plant managers.

A) True
B) False

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Question 72

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The underlying principle of allocating operating expenses to departments is to assign each department an amount of expense proportional to the revenues of that department.

A) True
B) False

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Question 73

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

The sales,income from operations,and invested assets for each division of Salem Company are as follows:

The gross profit for the Southern Division is:

Under the negotiated price approach,the transfer price is the price at which the product or service transferred could be sold to outside buyers.

The budget for Department 5 of Plant M for the current month ending March 31 is as follows:

Responsibility accounting reports for profit centers are normally in the form of balance sheets.

If divisional income from operations is $100,000,invested assets are $850,000,and the minimum rate of return on invested assets is 8%,the residual income would be $32,000.

How much would Division C's income from operations increase?

The profit margin for Division J is 12% and the investment turnover is 1.40.What is the rate of return on investment for Division J?

Businesses that are separated into two or more manageable units and in which managers have authority and responsibility for operations are said to be:

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

Separation of businesses into more manageable operating units is termed centralization.

The costs of services charged to a profit center based on the usage of the service are called:

A responsibility center in which the department manager has responsibility for and authority over costs in the department is termed a cost center.

How much would Boone's total income from operations increase?