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Exam 23: Decentralized Operations

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Question 21

Multiple Choice

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

A) $37,500
B) $100,000
C) $62,500
D) $150,000

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

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Question 22

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In an investment center, the manager has the responsibility and the authority to make decisions that affect not only costs and revenues, but also the plant assets invested in the center.

A) True
B) False

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Question 23

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Use this information for ABC Corporation to answer the questions that follow. ​ ABC Corporation has three service departments with the following costs and activity base: ​ ABC has three operating divisions, Micro, Macro and Super. Their revenue, cost and activity information is as follows: ​ -What is the service department charge rate for Graphics Production?

Assume that divisional income from operations amounts to $215,000, and top management has established 15% as the minimum return on divisional assets totaling $1,000,000. The residual income for the division is

Which of the following is the best example of a decentralized operation?

Use this information for ABC Corporation to answer the questions that follow. ​ ABC Corporation has three service departments with the following costs and activity base: ​ ABC has three operating divisions, Micro, Macro and Super. Their revenue, cost and activity information is as follows: ​ -What is the service department charge rate for the Personnel Department?

Which of the following is not a disadvantage of a decentralized operation?

The following data are taken from the management accounting reports of Dulcimer Co.:​ If an incentive bonus is paid to the manager who achieved the highest income from operations before service department charges, it follows that

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

If divisional income from operations is $100,000, invested assets are $850,000, and the minimum return on invested assets is 8%, the residual income is $68,000.

Use this information for ABC Corporation to answer the questions that follow. ​ ABC Corporation has three service departments with the following costs and activity base: ​ ABC has three operating divisions, Micro, Macro and Super. Their revenue, cost and activity information is as follows: ​ -The profit margin for Chicks is

The profit margin for the Central Division of a company is 20%, and the investment turnover is 2.8. What is the return on investment for the Central Division?

A responsibility center in which the department manager has responsibility for and authority over costs and revenues is called a (n)

The budget for Department 6 of Cardinal Company for the current month ending March 31 is as follows:​ ​During March, the costs incurred in Department 6 of Cardinal Company were materials, $204,000; factory wages, $285,000; supervisory salaries, $63,600; depreciation of plant and equipment, $35,000; power and light, $21,360; insurance and property taxes, $14,400; maintenance, $9,456. (a)Prepare a budget performance report for the supervisor of Department 6 of Cardinal Company for the month of March. (b)Are there any significant variances (5% or greater) of the budgeted amounts that should be examined by the supervisor?

The balanced scorecard measures four areas of financial and nonfinancial performance of a business. Identify one of the following that is not included as a performance measurement.

How much will Division 6's income from operations increase?

The minimum acceptable divisional income from operations is set by top management by establishing a minimum return considered acceptable for invested assets.

The manager of the Furniture Department of a leading retailer does not control the salaries of departmental personnel.

Use this information for ABC Corporation to answer the questions that follow. ​ ABC Corporation has three service departments with the following costs and activity base: ​ ABC has three operating divisions, Micro, Macro and Super. Their revenue, cost and activity information is as follows: ​ -The investment turnover for Chicks is

Responsibility accounting reports for profit centers will include