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Exam 8: Performance Evaluation for Decentralized Operations

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Question 1

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Which of the following would be most effective in a small owner/manager-operated business?

A) profit centers
B) centralization
C) investment centers
D) cost centers

E) A) and D)
F) C) and D)

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Question 2

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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?

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Question 3

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The residual income for Mason is

Determining the transfer price as the price at which the product or service transferred could be sold to outside buyers is known as the

The profit center income statement should include only revenues and expenses that are controlled by the manager.

Assume that Division Blue has achieved a yearly income from operations of $110,000 using $900,000 of invested assets.If management has set a minimum acceptable rate of return of 11%, the residual income is

The rates at which centralized services are charged to each division are called service department charge rates.

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 ratio of income from operations to sales is termed the profit margin component of the rate of return on investment.

The excess of divisional income from operations over a minimum acceptable amount of divisional income from operations is

What is Clydesdale Company's rate of return on investment?

The profit margin for Division C is 6% and the investment turnover is 1.2.What is the rate of return on investment for Division B?

The DuPont formula uses financial information to measure the performance of a business.

Using the data from the Terrace Industries, determine the divisional income from operations for Districts 1 & 2. Allocate service department expenses proportional to the sales of each district.

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.

What will the income of the Micro Division be after all service department allocations?

Sales commission expense for a department store is an example of a direct expense.

The income from operations for the Rails Division is

How much will Jefferson's total income from operations increase?

Which is the best example of a decentralized operation?