 |
| 1 | |
Which of the following is not an advantage of decentralization? |
| | A) | Upper-level management is encouraged to concentrate on strategic decisions. |
| | B) | Managers are motivated to improve productivity. |
| | C) | Lower-level managers are trained to accept less responsibility. |
| | D) | Improves performance evaluation. |
|
|
|
| 2 | |
A difference between a cost center and a profit center is that a: |
| | A) | Cost center is responsible for revenues and expenses. |
| | B) | Cost center and a profit center are both responsible for only expenses. |
| | C) | Cost center is not responsible for expenses. |
| | D) | Cost center is not responsible for revenues. |
|
|
|
| 3 | |
ROI is impacted by all of the following factors except: |
| | A) | Net income |
| | B) | Contribution margin |
| | C) | Sales |
| | D) | Investment |
|
|
|
| 4 | |
Prices at which products or services are sold between corporate divisions is referred to by the purchasing division as: |
| | A) | Sales price |
| | B) | Sales cost |
| | C) | Transfer price |
| | D) | Transfer expense |
|
|
|
| 5 | |
Qualitative features of a responsibility report include all of the following except: |
| | A) | Accuracy |
| | B) | Variances |
| | C) | Relevant Information |
| | D) | Timely |
|
|
|
| 6 | |
Many organizations use ROI to evaluate management performance. A consideration in motivating managers when developing the proper formula is: |
| | A) | Net income. |
| | B) | Controllability of the assets. |
| | C) | Total assets listed on the general ledger. |
| | D) | There are no qualitative considerations associated with using ROI. |
|
|
|
| 7 | |
Which concept is crucial to an effective responsibility accounting system? |
| | A) | Net income |
| | B) | Divisional income |
| | C) | ROI |
| | D) | Controllability |
|
|
|
| 8 | |
Margin: |
| | A) | expresses the amount of assets used to produce earnings. |
| | B) | expresses qualitative aspects of a manager's performance. |
| | C) | expresses the manager's ability at controlling expenses relative to sales. |
| | D) | expresses the manager's performance relative to turnover. |
|
|
|
| 9 | |
Monster Mash produces computer games. Mash's balance sheet indicates $450,000 in operating assets. The company's operating income was $121,500 from sales of $810,000.
Compute Monster Mash's turnover. |
| | A) | 1.7% |
| | B) | 2.7% |
| | C) | 1.8% |
| | D) | .27% |
|
|
|
| 10 | |
Monster Mash produces computer games. Mash's balance sheet indicates $450,000 in operating assets. The company's operating income was $121,500 from sales of $810,000.
Compute Monster Mash's ROI. |
| | A) | 11 % |
| | B) | 18 % |
| | C) | 23.2 % |
| | D) | 27 % |
|
|
|
| 11 | |
Monster Mash produces computer games. Mash's balance sheet indicates $450,000 in operating assets. Its operating income was $121,500 from sales of $810,000.
Monster Mash's has a desired ROI of 20%. What is Mash's residual income? |
| | A) | $22,500 |
| | B) | $31,500 |
| | C) | $90,000 |
| | D) | $121,500 |
|
|
|
| 12 | |
Monster Mash produces computer games. The Explosion division uses $112,500 in operating assets. Its operating income was $30,375 from sales of $202,500. Mash offered the manager of the Explosion division an opportunity to use new explosive effect software costing $100,000. The ROI of the new software is expected to be 18%. Mash has a desired ROI of 15%.
What will the manager of the Explosion division most likely do? |
| | A) | Reduce the amount of assets used in their division. |
| | B) | Not invest in the software, even though it will increase divisional ROI. |
| | C) | Invest in the new software to increase operating income |
| | D) | Suboptimize, choosing not to use the new software. |
|
|
|
| 13 | |
The Sultans currently earn $100,000 in net income using equipment that cost $500,000. Ticket sales are $800,000. Guitar George wants to invest in new guitars costing $50,000. George figures all the chords he plays will attract a new audience and sales will increase to $1,000,000.
What is the Sultans' current ROI? |
| | A) | 20% |
| | B) | 20.83% |
| | C) | 12.5% |
| | D) | 29.33% |
|
|
|
| 14 | |
The Sultans currently earn $100,000 in net income using equipment that cost $500,000. Ticket sales are $800,000. Guitar George wants to invest in new guitars costing $50,000. George figures all the chords he plays will attract a new audience and sales will increase to $1,000,000.
Assuming income will change in the same proportion as before the investment, what will the Sultans' new ROI be if they invest in new guitars? |
| | A) | 22.73% |
| | B) | 28% |
| | C) | 29.33% |
| | D) | 32% |
|
|
|
| 15 | |
The Sultans currently earn $100,000 in net income using equipment that cost $500,000. Ticket sales are $800,000. Guitar George wants to invest in new guitars and picks costing $50,000. Harry thinks buying a new drum set will increase ticket sales to $1,100,000. The drum set costs $30,000. Assuming income will change in the same proportion as before the investment, should the Sultans invest in drums? |
| | A) | Yes, ROI will increase to 25.9%. |
| | B) | No, profitability will decrease $3,750. |
| | C) | Yes, residual Income will increase 12.5%. |
| | D) | No, ROI will decrease. |
|
|
.