ACCT 2002 Chapter 10

In? a(n) ________? center, managers are accountable to both revenues and costs. A) equity B) investment C) profit D) cost

All of the following are responsibility centers except A) profit center B) equity center C) investment center D) cost center

A manager is only accountable for expenses in? a(n) ________ center. A) revenue B) profit C) investment D) cost

To evaluate the performance of? a(an) ________, a top manager is responsible for? revenues, costs, and the efficient use of the assets invested in the division. A) investment center B) cost center C) revenue center D) profit center

Management by? ________ is the practice that directs executive attention to large budget variances. A) control B) exception C) objective D) analysis

Which term below best fits? "a part,? segment, or subunit of a company whose manager is accountable for specified? activities"? A) Sensitivity analysis B) Master budget C) Operating budget D) Responsibility center

The human resources department for? Kohl's Department Stores may be classified as? a(n) A) cost center. B) profit center. C) revenue center. D) investment center.

The reservations department that has self-contained sales operations at a car rental chain may be classified as? a(n) A) cost center. B) investment center. C) profit center. D) revenue center.

The convenience store that is responsible for its own? revenues, costs, and is owned by a national convenience store chain may be classified as? a(n) A) profit center. B) revenue center. C) cost center. D) investment center.

A potential disadvantage of decentralization is which of the? following? A) Duplication of costs B) Provides feedback C) Benchmarking D) Provides training

The Frito-Lay, a stand-alone division of PepsiCo may be classified as? a(n) A) revenue center. B) investment center. C) cost center. D) profit center.

Which type of variance causes operating income to be lower than the budgeted operating? income? A) Favorable variance B) Neutral variance C) Reverse variance D) Unfavorable variance

Which type of variance causes operating income to be greater than the budgeted operating? income? A) Neutral variance B) Unfavorable variance C) Favorable variance D) Reverse variance

An unfavorable variance causes operating income to be? _______________ the budgeted operating? income? A) equal to B) half as much as C) lower than D) greater than

A performance report compares actual revenue and expenses with? _____________ revenues and expenses. A) another? company's B) last? year's C) next? year's D) budgeted

A performance report of a? ________ will only include revenues generated by the center. A) revenue center B) cost center C) investment center D) All of the above

With? ________, managers look at the size of the variances between actual results and budgeted amounts to determine which variances a manager should investigate. A) management by budget B) management by variance C) management by decision D) management by exception

Which of the following is the operating income an investment center generates before subtracting common fixed costs that are allocated to the? center? A) Return on investment? (ROI) B) Return on assets? (ROA) C) Sales volume variance D) Segment margin

The duties of an investment center manager are similar to those of a CFO of an entire company. T/F

The duties of an investment center manager are similar to those of a CEO. T/F

Companies evaluate investment center performance the way they evaluate profit center performance. T/F

Return on Investment? (ROI) is defined as operating income divided by current assets. T/F

Return on Investment? (ROI) is defined as operating income divided by total assets. T/F

The capital turnover is operating income divided by sales. T/F

Residual Income? (RI) equals operating income less minimum acceptable income. T/F

Sales margin is a component of the Return on Investment? (ROI) calculation. T/F

Total assets is the denominator in the formula managers use to compute ROI. T/F

Sales margin is defined as operating income divided by sales. T/F

Capital turnover is defined as operating income divided by total assets. T/F

The use of return on investment? (ROI) as a short-term performance measure may lead managers to reject projects that may be profitable for the company as a whole. T/F

Residual income is defined as the difference between revenues and expenses. T/F

Using? ________ may cause a manager to reject a project that may be profitable to the company as a whole. A) operating income B) EVA C) residual income D) ROI

If selling and administrative expenses decrease while other expenses remain? constant, what will happen to return on investment? (ROI)? A) ROI will increase. B) ROI will not be affected. C) ROI will decrease. D) We cannot determine the direction of the effect from the information provided.

?Large, diversified companies often will sell? products/components from one division to another division rather than purchase from an outside supplier. T/F

The practice of purchasing other companies within? one's supply chain which is predicated on the notion that a? company's profits can be maximized by owning? one's supplier is known as? _______________. A) profit integration. B) vertical integration. C) supply chain management. D) transfer purchasing.

Which of the strategies listed are used to determine a transfer? price? A) Cost B) Market price C) Negotiated price D) All of the above

Which of the following strategies listed is NOT used to determine a transfer? price? A) Market price B) Cost C) Selling price D) Negotiated price

A flexible budget is a budget prepared for a different level of volume than that which was originally anticipated. T/F

The volume variance is the difference between actual results and the flexible budget. T/F

The flexible budget variance is the difference between actual results and the flexible budget. T/F

Which of the following causes the master budget variance between the amounts in the master budget and the flexible budget of a revenue? center? A) The selling price per unit B) The number of units sold differs from planned sales levels C) The cost of sales D) Both the selling price and the number of units sold

Which of the following statements is NOT? true? A) The flexible budget variance is the comparison of actual results to the flexible budget. B) The volume variance for fixed cost will always be zero. C) When a flexible budget is used in a performance? report, it is prepared for the actual level of units sold. D) The flexible budget variance for fixed costs will always be zero.

A favorable volume variance for sales revenue would indicate? that: A) actual sales revenue was higher than the flexible budget sales revenue. B) the expenses of the company were less than what they had planned. C) more units were actually sold than the company had originally budgeted to sell. D) fewer units were actually sold than the company had anticipated.

An unfavorable volume variance for variable expenses would indicate? that: A) fewer units were actually sold than the company had anticipated. B) actual variable expenses were higher than the flexible budget variable expenses. C) more units were actually sold than the company had originally budgeted to sell. D) the expenses of the company were less than what they had planned.

An unfavorable flexible budget variance for variable expenses would indicate? that: A) more units were actually sold than the company had originally budgeted to sell. B) fewer units were actually sold than the company had anticipated. C) actual variable expenses were higher than the flexible budget variable expenses. D) the expenses of the company were less than what they had planned.

A favorable flexible budget variance for variable expenses would indicate? that: A) actual variable expenses were higher than the flexible budget variable expenses. B) more units were actually sold than the company had originally budgeted to sell. C) actual variable expenses of the company were less than the flexible budget variable expenses. D) fewer units were actually sold than the company had anticipated.

Sitz Company makes chairs. The budgeted selling price is $45.00 per? chair, the variable rate is $15.00 per chair and budgeted fixed costs are $50,000 per month. What is the budgeted operating income for 2,600 chairs sold in a? month? A) $28,000 B) $117,000 C) $89,000 D) $78,000

The balanced scorecard considers only financial performance measures. T/F

Financial performance measures are known as lag indicators. A lag indicator is a performance measure that predicts future performance. T/F

Customer? satisfaction, operational? efficiency, employee? excellence, and financial profitability are often measured as critical factors in the balanced scorecard approach. T/F

The ultimate purpose of the balanced scorecard is to give management a? balanced, comprehensive view of the? company's performance. T/F

KPI in the Balanced Scorecard stands for Knowledge Profitability Index. T/F

The four perspectives of the balanced scorecard include all of the following except A) learning and growth B) customer C) financial D) cost

The number of on-time deliveries may be an example of measuring which perspective of the balanced? scorecard? A) Financial B) Customer C) Learning and growth D) Internal business

Employee satisfaction would be an example of measuring which perspective of the balanced? scorecard? A) Learning and growth B) Customer C) Internal business D) Financial

The number of repeat customers may be an example of measuring which perspective of the balanced? scorecard? A) Customer B) Learning and growth C) Financial D) Internal business

The number of rework units may be an example of measuring which perspective of the balanced? scorecard? A) Financial B) Customer C) Internal business D) Learning and growth

The results of a customer survey about customer experiences with the? company's services may be an example of measuring which perspective of the balanced? scorecard? A) Financial B) Customer C) Internal business D) Learning and growth

Total hours of continuing professional education taken by employees may be an example of measuring which perspective of the balanced? scorecard? A) Financial B) Customer C) Internal business D) Learning and growth

The number of new products developed may be an example of measuring which perspective of the balanced? scorecard? A) Learning and growth B) Internal business C) Customer D) Financial

The percentage of market share may be an example of measuring which perspective of the balanced? scorecard? A) Customer B) Internal business C) Learning and growth D) Financial

The percentage of products with schematics and detailed operating instructions available within the? company's information system for use by customer service representatives may be an example of measuring which perspective of the balanced? scorecard? A) Learning and growth B) Financial C) Customer D) Internal business

The number of defects found during the manufacturing process may be an example of measuring which perspective of the balanced? scorecard? A) Internal business B) Customer C) Learning and growth D) Financial

The? ________ approach recognizes that both financial and operational performance measures should be considered when evaluating company performance. A) balanced scorecard B) financial and operational C) total D) complete

The? ________ perspective of the balanced scorecard helps managers answer the? question, "How do we look to? shareholders?" A) customer B) learning and growth C) internal business D) financial

The? ________ of the balanced scorecard focuses on continuing to improve and create value. A) internal business perspective B) learning and growth perspective C) customer perspective D) financial perspective

The? ________ of the balanced scorecard focuses on determining if customers are satisfied. A) internal business perspective B) learning and growth perspective C) customer perspective D) financial perspective

The? ________ of the balanced scorecard focuses on how to determine the? company's "climate for? action." A) internal business perspective B) learning and growth perspective C) customer perspective D) financial perspective

Return on investment and revenue growth may be examples of A) learning and growth perspective. B) customer perspective. C) internal business perspective. D) financial perspective.

The number of warranty claims may be an example of the A) internal business perspective. B) financial perspective. C) learning and growth perspective. D) customer perspective.

Cash flows from operations and gross margin growth may be examples of the A) customer perspective. B) financial perspective. C) internal business perspective. D) learning and growth perspective.

New product development time may be an example of the A) customer perspective. B) learning and growth perspective. C) financial perspective. D) internal business perspective.