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| 1 | |
Which of the following is a broad managerial approach consistent with an emphasis on obtaining goal congruence? |
| | A) | Management by crisis |
| | B) | Management by rule-of-thumb |
| | C) | Management through goal congruence |
| | D) | Just-in-time philosophy |
| | E) | Management by objective |
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| 2 | |
Return on investment (ROI) is defined as which of the following? |
| | A) | Sales revenue/Invested capital |
| | B) | Income/Invested capital |
| | C) | Invested capital/Income |
| | D) | Income/Sales revenue |
| | E) | Sales revenue/Income |
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| 3 | |
Which of the following is a formula for computing residual income for an investment center? |
| | A) | Profit – (Invested capital x Imputed interest rate) |
| | B) | Profit – (Invested capital x Capital turnover) |
| | C) | Profit – Budgeted net income |
| | D) | Profit – (Invested capital x sales margin) |
| | E) | Profit – (Invested capital/Imputed interest rate) |
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| 4 | |
Consider the following: <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/9352606310/856416/ch13_4.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (16.0K)</a>]]>
What is the economic value added (EVA)? |
| | A) | $60,000 |
| | B) | $3,200 |
| | C) | $6,000 |
| | D) | $50,000 |
| | E) | $56,000 |
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| 5 | |
Consider the following: <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/9352606310/856416/ch13_5.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (13.0K)</a>]]>
To the nearest tenth, what is the weighted-average cost of capital (WACC)? |
| | A) | 13.0% |
| | B) | 6.4% |
| | C) | 7.2% |
| | D) | 6.6% |
| | E) | 6.1% |
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| 6 | |
The current income of an investment center is $42,000. Its current invested capital is $280,000. If the sales margin is increased to 8% and the capital turnover remains constant at 3, what will be the investment center's new return on investment (ROI)? |
| | A) | 14% |
| | B) | 15% |
| | C) | 45% |
| | D) | 21% |
| | E) | 24% |
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| 7 | |
The current profit for an investment center is $36,000. Its current invested capital is $200,000. The investment center is considering the purchase of equipment for $20,000. The equipment is expected to increase annual profit by $2,800. The firm's cost of capital is 12%. If the equipment is purchased, what will be the increase in residual income of the investment center? |
| | A) | $2,800 |
| | B) | $16,000 |
| | C) | $400 |
| | D) | 4% |
| | E) | 12% |
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| 8 | |
What are the possibilities of the bases used for determining a division's invested capital? |
| | A) | Total assets |
| | B) | Total productive assets |
| | C) | Total assets less current liabilities |
| | D) | All of the above |
| | E) | None of the above |
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| 9 | |
Which of the following statements is true with respect to opportunity costs? |
| | A) | Opportunity costs will always increase the transfer price calculated using the general rule. |
| | B) | An opportunity cost is by definition a sunk cost and is a critical piece of any well designed incentive package. |
| | C) | The outlay cost and the opportunity cost will be equal if there is no excess capacity. |
| | D) | If a company has excess production capacity, opportunity cost will never increase the transfer price calculated using the general rule. |
| | E) | Both C & D are true. |
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| 10 | |
Division One Outlay Costs: <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/9352606310/856416/ch13_10.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (9.0K)</a>]]>
All of the product of Division One can be sold in the external market at $11.25 per batch. The product can be transferred to Division Two and sold by Division Two for $13.00 per batch. What is the transfer price? (Delivery costs will remain the same for internal transfers). |
| | A) | $ 8.50 |
| | B) | $13.00 |
| | C) | $ 8.00 |
| | D) | $11.25 |
| | E) | $13.45 |
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| 11 | |
Division One Outlay Costs: <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/9352606310/856416/ch13_11.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (9.0K)</a>]]>
Division One has excess capacity. The external market price is $10.00 per batch. The product can be transferred to Division Two and sold by Division Two for $12.00 per batch. What is the transfer price? (Delivery costs will remain the same for internal transfers). |
| | A) | $ 8.50 |
| | B) | $10.00 |
| | C) | $ 8.00 |
| | D) | $12.00 |
| | E) | $18.50 |
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