Chapter 23 - Performance Evaluation For Decentralized Operations

15 Questions | Total Attempts: 372

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Evaluation Quizzes & Trivia

This is a quiz that covers the topics presented in Chapter 23.


Questions and Answers
  • 1. 
    Which of the following is considered an advantage of decentralization?
    • A. 

      Decentralized decision making provides excellent training for managers.

    • B. 

      Decisions made by different managers all positively affect the overall profitability of the company.

    • C. 

      Assets and costs are duplicated across operating divisions.

    • D. 

      All of the above.

  • 2. 
    The manager of which of the following centers has the most authority and responsibility?
    • A. 

      Cost center

    • B. 

      Profit center

    • C. 

      Data center

    • D. 

      Investment center

  • 3. 
    Division F has sales of $750,000, cost of goods sold of $450,000, operating expenses of $228,000, and invested assets of $300,000. What is the rate of return on investment of Division F?
    • A. 

      9.6%

    • B. 

      20%

    • C. 

      24%

    • D. 

      10%

  • 4. 
    The profit margin for Division Q is 15% and the investment turnover is 1.2. What is the rate of return on investment for Division Q?
    • A. 

      12.5%

    • B. 

      18%

    • C. 

      15%

    • D. 

      10%

  • 5. 
    Income from operations for Division B is $150,000, total service department charges are $400,000, and cost of goods sold of $2,266,000. What are the revenues for Division B?
    • A. 

      $550,000

    • B. 

      $3,216,000

    • C. 

      $2,816,000

    • D. 

      2,666,000

  • 6. 
    Stevenson Corporation had $550,000 in invested assets, sales of $660,000, income from operation amounting to $99,000, and the minimum rate of return of 15%. The residual income for Stevenson is:
    • A. 

      $0

    • B. 

      $17,820

    • C. 

      $82,500

    • D. 

      $16,500

  • 7. 
    Espinsoa Corporation had $1,100,000 in invested assets, sales of $1,210,000, income from operations amounting to $242,000, and a desired minimum rate of return of 15%. Determine the profit margin for Espinosa:
    • A. 

      20%

    • B. 

      22%

    • C. 

      15%

    • D. 

      32%

  • 8. 
    Espinosa Corporation had $1,100,000 in invested assets, sales of $1,210,000, income from operations amounting to $242,000, and a desired minimum rate of return of 15%. Determine the investment turnover for Espinosa.
    • A. 

      1.3

    • B. 

      1.1

    • C. 

      1.0

    • D. 

      1.2

  • 9. 
    The Hua Company's radio division currently purchases transistors from Xiang Co. for $3.50 each. The total number of transistors is 8,000 per month. Hua Company's electronics division can produce the transistors for a cost of $4.00 each. The $4.00 is made up of $3.00 in variable costs and $1.00 in allocated fixed costs. What should be the range of possible transfer prices?
    • A. 

      No transfer should take place.

    • B. 

      $3.51 to $3.99

    • C. 

      $3.01 to $3.99

    • D. 

      $3.01 to $3.49

  • 10. 
    A good example of a non-finacial performance measure is:
    • A. 

      Residual income

    • B. 

      Income from operations

    • C. 

      Customer retention rate

    • D. 

      Investment turnover

  • 11. 
    The primary responsibility accounting report for a cost center is the income statement.
    • A. 

      True

    • B. 

      False

  • 12. 
    The profit center income statement should include only controllable revenues and expenses.
    • A. 

      True

    • B. 

      False

  • 13. 
    A decentralized business organization is one in which all major planning and operating decisions are made by top management.
    • A. 

      True

    • B. 

      False

  • 14. 
    Three measures of investment center performance are rate of return on investment, residual income, and income from operations.
    • A. 

      True

    • B. 

      False

  • 15. 
    The DuPont formula uses non-financial information to measure the performance of a business.
    • A. 

      True

    • B. 

      False