Question 1

Kragle Corporation reported the following financial data for one of its divisions for the year;average invested assets of $470,000;sales of $930,000;and income of $105,000.The investment turnover is:

Accepted Answer

Investment turnover is calculated as Sales divided by Average Invested Assets. Therefore, $930,000 / $470,000 = 1.98.

Question 2

Ultimo Co.operates three production departments as profit centers.The following information is available for its most recent year.Which department has the greatest departmental contribution to overhead and what is the amount contributed?

Accepted Answer

The answer of Ultimo Co.operates three production departments as profit...

Question 3

Dartford Company reported the following financial data for one of its divisions for the year;average investment center total assets of $3,500,000;investment center income $610,000;a target income of 12% of average invested assets.The residual income for the division is:

Accepted Answer

Residual income is calculated as the investment center income minus the target income. The target income is 12% of $3,500,000, which is $420,000. Therefore, the residual income is $610,000 - $420,000 = $190,000.

Question 4

Fallow Corporation has two separate profit centers.The following information is available for the most recent year:  The West Division occupies 5,000 square feet in the plant.The East Division occupies 3,000 square feet.Rent,which was $40,000 for the year,is an indirect expense and is allocated based on square footage.Compute operating income for the West Division.

Accepted Answer

The answer of Fallow Corporation has two separate profit centers.The...

Question 5

Kragle Corporation reported the following financial data for one of its divisions for the year;average invested assets of $470,000;sales of $930,000;and income of $105,000.The investment center profit margin is:

Accepted Answer

The answer of Kragle Corporation reported the following financial data...

Question 6

The amount by which a department's sales exceed its direct expenses is:

Accepted Answer

The departmental contribution to overhead is the amount by which a department's sales exceed its direct expenses, contributing to covering the fixed costs and overhead of the business.

Question 7

Carter Company reported the following financial numbers for one of its divisions for the year;average total assets of $4,100,000;sales of $4,525,000;cost of goods sold of $2,550,000;and operating expenses of $1,372,000.Compute the division's return on investment:

Accepted Answer

Return on Investment (ROI) is calculated as (Net Operating Income / Average Total Assets). Net Operating Income is Sales - Cost of Goods Sold - Operating Expenses = $4,525,000 - $2,550,000 - $1,372,000 = $603,000. ROI = $603,000 / $4,100,000 = 14.7%.

Question 8

A system of performance measures,including nonfinancial measures,used to assess company and division manager performance is:

Accepted Answer

A balanced scorecard is a system of performance measures that includes financial and non-financial measures, allowing managers to evaluate company and division performance from multiple perspectives. The other options listed are all individual performance measures, but do not provide a comprehensive view of overall performance.

Question 9

Return on investment can be split into which of the following two measures?

Accepted Answer

Return on investment (ROI) is typically broken down into profit margin and investment turnover, where profit margin measures how much profit is generated from sales, and investment turnover measures how efficiently assets are used to generate sales.

Question 10

If a company reports profit margin of 31.6% and investment turnover of 1.30 for one of its investment centers,the return on investment must be:

Accepted Answer

Return on Investment (ROI) is calculated by multiplying the profit margin by the investment turnover. Therefore, ROI = 31.6% * 1.30 = 41.08%, which rounds to 41.1%.

Question 11

Ultimo Co.operates three production departments as profit centers.The following information is available for its most recent year.Department 2's contribution to overhead in dollars is:

Accepted Answer

The answer of Ultimo Co.operates three production departments as profit...

Question 12

Departmental contribution to overhead is calculated as the amount of sales of the department less:

Accepted Answer

Departmental contribution to overhead is calculated as the amount of sales of the department less direct expenses, which are costs directly attributable to the department.

Question 13

Holo Company reported the following financial numbers for one of its divisions for the year;average total assets of $5,800,000;sales of $5,375,000;cost of goods sold of $3,225,000;and operating expenses of $1,147,000.Assume a target income of 15% of average invested assets.Compute residual income for the division:

Accepted Answer

The answer of Holo Company reported the following financial numbers...

Question 14

The Menswear Department of Major's Department Store had sales of $188,000,cost of goods sold of $132,500,indirect expenses of $13,250,and direct expenses of $27,500 for the current period.The Menswear Department's contribution to overhead as a percent of sales is:

Accepted Answer

The contribution to overhead can be calculated by subtracting the cost of goods sold and direct expenses from sales, and then subtracting indirect expenses. 
Contribution to overhead = Sales - Cost of goods sold - Direct expenses - Indirect expenses 
= $188,000 - $132,500 - $27,500 - $13,250 
= $14,750 
To find the contribution as a percentage of sales, we need to divide the contribution by sales and multiply by 100. 
Contribution to overhead as a percentage of sales = (Contribution to overhead / Sales) x 100 
= ($14,750 / $188,000) x 100 
= 7.85%
Therefore, the correct answer is option B) 14.9%.

Question 15

Profit margin for an investment center measures:

Accepted Answer

Profit margin for an investment center measures the income earned per dollar of sales, indicating how much profit is generated from each dollar of sales.

Question 16

Carter Company reported the following financial numbers for one of its divisions for the year;average total assets of $4,100,000;sales of $4,525,000;cost of goods sold of $2,550,000;and operating expenses of $1,372,000.Assume a target income of 10% of average invested assets.Compute residual income for the division:

Accepted Answer

Residual income = Operating income - (Target rate of return x Average invested assets)
Target income = 10% of $4,100,000 = $410,000
Operating income = Sales - Cost of goods sold - Operating expenses = $4,525,000 - $2,550,000 - $1,372,000 = $603,000
Residual income = $603,000 - ($410,000) = $193,000. Therefore, the correct answer is choice B.

Question 17

Marian Corporation has two separate divisions that operate as profit centers.The following information is available for the most recent year:  The Black Division occupies 20,000 square feet in the plant.The Navy Division occupies 30,000 square feet.Rent is an indirect expense and is allocated based on square footage.Rent expense for the year was $50,000.Compute departmental income for the Black and Navy Divisions,respectively.

Accepted Answer

The answer of Marian Corporation has two separate divisions that...

Question 18

Holo Company reported the following financial numbers for one of its divisions for the year;average total assets of $5,800,000;sales of $5,375,000;cost of goods sold of $3,225,000;and operating expenses of $1,147,000.Compute the division's return on investment:

Accepted Answer

The answer of Holo Company reported the following financial numbers...

Question 19

Ultimo Co.operates three production departments as profit centers.The following information is available for its most recent year.Department 1's contribution to overhead as a percent of sales is:

Accepted Answer

The answer of Ultimo Co.operates three production departments as profit...

Question 20

Which of the following is not one of the perspectives used to analyze performance using the balanced scorecard?

Accepted Answer

The perspectives used to analyze performance using the balanced scorecard are customer, financial/owners, internal process, and innovation and learning. The number of employees is not a perspective used in the balanced scorecard approach.

Quiz 24: Performance Measurement and Responsibility Accounting

Kragle Corporation reported the following financial data for one of its divisions for the year;average invested assets of $470,000;sales of $930,000;and income of $105,000.The investment turnover is:

Ultimo Co.operates three production departments as profit centers.The following information is available for its most recent year.Which department has the greatest departmental contribution to overhead and what is the amount contributed?

Dartford Company reported the following financial data for one of its divisions for the year;average investment center total assets of $3,500,000;investment center income $610,000;a target income of 12% of average invested assets.The residual income for the division is:

Kragle Corporation reported the following financial data for one of its divisions for the year;average invested assets of $470,000;sales of $930,000;and income of $105,000.The investment center profit margin is:

The amount by which a department's sales exceed its direct expenses is:

Carter Company reported the following financial numbers for one of its divisions for the year;average total assets of $4,100,000;sales of $4,525,000;cost of goods sold of $2,550,000;and operating expenses of $1,372,000.Compute the division's return on investment:

A system of performance measures,including nonfinancial measures,used to assess company and division manager performance is:

Return on investment can be split into which of the following two measures?

If a company reports profit margin of 31.6% and investment turnover of 1.30 for one of its investment centers,the return on investment must be:

Ultimo Co.operates three production departments as profit centers.The following information is available for its most recent year.Department 2's contribution to overhead in dollars is:

Departmental contribution to overhead is calculated as the amount of sales of the department less:

The Menswear Department of Major's Department Store had sales of $188,000,cost of goods sold of $132,500,indirect expenses of $13,250,and direct expenses of $27,500 for the current period.The Menswear Department's contribution to overhead as a percent of sales is:

Profit margin for an investment center measures:

Holo Company reported the following financial numbers for one of its divisions for the year;average total assets of $5,800,000;sales of $5,375,000;cost of goods sold of $3,225,000;and operating expenses of $1,147,000.Compute the division's return on investment:

Ultimo Co.operates three production departments as profit centers.The following information is available for its most recent year.Department 1's contribution to overhead as a percent of sales is:

Which of the following is not one of the perspectives used to analyze performance using the balanced scorecard?