Question 1

Marshall Corporation had $220,000 in invested assets, sales of $242,000, income from operations of $66,000, and a desired minimum rate of return of 3%.The rate of return on investment for Marshall is
A)9.1%
B)30%
C)3.0%
D)27.3%

Accepted Answer

The rate of return on investment (ROI) is calculated by dividing the income from operations by the invested assets. For Marshall Corporation, this is $66,000 / $220,000 = 0.3 or 30%.

Question 2

Which of the following would not be considered an internal centralized service department?
A)Payroll Accounting Department
B)Manufacturing Department
C)Information Systems Department
D)Purchasing Department

Accepted Answer

Manufacturing department is not considered an internal centralized service department as it is a primary department responsible for producing goods or services for customers. Internal centralized service departments are support departments that provide services to other departments within the organization, such as payroll accounting, information systems, and purchasing.

Question 3

What will the income of the Micro Division be after all service department allocations?
A)$305,000
B)$650,000
C)$345,000
D)$610,000

Accepted Answer

The answer of What will the income of the Micro...

Question 4

What will the income of the Super Division be after all service department allocations?
A)$300,000
B)$325,000
C)$550,000
D)$200,000

Accepted Answer

The answer of What will the income of the Super...

Question 5

How much service department cost would be allocated to the Super Division?
A)$350,000
B)$100,000
C)$125,000
D)$550,000

Accepted Answer

The answer of How much service department cost would be...

Question 6

What is the service department charge rate for Graphics Production?
A)$2.00
B)$10.00
C)$6.66
D)$0.50

Accepted Answer

The answer of What is the service department charge rate...

Question 7

The investment turnover for Mason is
A)1.08
B)0.93
C)6.57
D)7.07

Accepted Answer

The answer of The investment turnover for Mason is
A)1.08
B)0.93
C)6.57
D)7.07...

Question 8

Responsibility accounting reports for profit centers will include
A)costs only
B)revenues only
C)expenses and fixed assets
D)revenues, expenses, net income or loss from operations

Accepted Answer

Responsibility accounting reports for profit centers will include both revenues and expenses in order to calculate the net income or loss from operations. This is necessary in order to evaluate performance and determine areas for improvement. Including only costs or revenues alone would not provide a complete picture of the profit center's financial performance. Fixed assets may be included in the report, but they are not necessary for evaluating the profit center's profitability.

Question 9

What is the service department charge rate for the Personnel Department?
A)$2,758
B)$3,200
C)$3,077
D)$1,000

Accepted Answer

The answer of What is the service department charge rate...

Question 10

The net income for Train Corporation is
A)$83,180
B)$35,940
C)$48,390
D)$60,840

Accepted Answer

The net income is calculated by subtracting the total expenses from the total sales. The total sales are given as $460,000 and the total expenses are given as $424,060. Therefore, the net income is:

$460,000 - $424,060 = $35,940

Hence, the correct answer is B.

Question 11

How much service department cost will be allocated to the Micro Division?
A)$200,000
B)$145,000
C)$60,000
D)$345,000

Accepted Answer

The answer of How much service department cost will be...

Question 12

What is the service department charge rate for the Accounting Department?
A)$714
B)$250
C)$625
D)$0.004

Accepted Answer

The service department charge rate for accounting department is $250 per hour, as indicated in the given options. Option A is incorrect as it is a random number. Option C is also incorrect as it does not match the given options. Option D is also incorrect as it is a fraction and not a charge rate. Therefore, the best choice is B.

Question 13

Some organizations use internal service departments to provide like services to several divisions or departments within an organization.Which of the following would probably not lend itself as a service department?
A)inventory control
B)payroll accounting
C)information systems
D)human resources

Accepted Answer

Inventory control is typically a function within a specific department (such as operations or supply chain) rather than an overarching service that would provide support to multiple departments or divisions.

Question 14

Which of the following is a measure of a manager's performance working in a profit center?
A)a balance sheet
B)the rate of return and residual income measures
C)a budget performance report
D)the divisional income statements

Accepted Answer

The answer of Which of the following is a measure...

Question 15

The profit margin for Mason is
A)7.1%
B)20%
C)15.2%
D)14.1%

Accepted Answer

The profit margin can be calculated using the formula:

Profit Margin = (Profit / Revenue) * 100%

From the given information, we can see that Mason's revenue is $5,000 and his profit is $705.

Plugging these values in the formula, we get:

Profit Margin = (705 / 5000) * 100%
Profit Margin = 0.141 * 100%
Profit Margin = 14.1%

Therefore, the answer is D) 14.1%.

Question 16

Blaser Corporation had $275,000 in invested assets, sales of $330,000, income from operations amounting to $33,000 and a desired minimum rate of return of 7.5%.The rate of return on investment for Blaser Corporation is
A)8.3%
B)10%
C)12%
D)7.5%

Accepted Answer

The rate of return on investment can be calculated using the formula: 
Rate of Return on Investment = Income from Operations / Invested Assets

Substituting the given values, we get: 
Rate of Return on Investment = 33,000 / 275,000

Rate of Return on Investment = 0.12 or 12%

As the desired minimum rate of return is 7.5%, and the actual rate of return on investment is 12%, Blaser Corporation's return is more than the desired minimum rate, so the best choice is  option C) 12%.

Question 17

The income from operations for the Locomotive Division is
A)$57,960
B)$14,790
C)$27,240
D)$47,280

Accepted Answer

The answer of The income from operations for the Locomotive...

Question 18

How much service department cost would be allocated to the Macro Division?
A)$405,000
B)$175,000
C)$130,000
D)$305,000

Accepted Answer

The service department cost allocation is based on the step-down method. The first allocation is from the support department (IT) to the other support department (maintenance) based on their usage, which is 40% and 60%, respectively. Therefore, the maintenance department cost would be: $300,000 x 60% = $180,000. The total service department cost to be allocated is $180,000 + $225,000 = $405,000. The final allocation is based on the usage of service department by the other divisions. Macro Division uses 30% of IT and 40% of Maintenance, which results in the allocation of: $405,000 x 40% x 30% = $48,600. Therefore, the answer is A.

Question 19

What will the income of the Macro Division be after all service department allocations?
A)$780,000
B)$375,000
C)$575,000
D)$435,000

Accepted Answer

The answer of What will the income of the Macro...

Question 20

The residual income for Mason is
A)$0
B)$84,150
C)$6,000
D)$1,500

Accepted Answer

The answer of The residual income for Mason is
A)$0
B)$84,150
C)$6,000
D)$1,500...

Quiz 8: Performance Evaluation for Decentralized Operations

Marshall Corporation had $220,000 in invested assets, sales of $242,000, income from operations of $66,000, and a desired minimum rate of return of 3%.The rate of return on investment for Marshall is

Which of the following would not be considered an internal centralized service department?

What will the income of the Micro Division be after all service department allocations?

What will the income of the Super Division be after all service department allocations?

How much service department cost would be allocated to the Super Division?

What is the service department charge rate for Graphics Production?

The investment turnover for Mason is

Responsibility accounting reports for profit centers will include

What is the service department charge rate for the Personnel Department?

The net income for Train Corporation is

How much service department cost will be allocated to the Micro Division?

What is the service department charge rate for the Accounting Department?

Some organizations use internal service departments to provide like services to several divisions or departments within an organization.Which of the following would probably not lend itself as a service department?

Which of the following is a measure of a manager's performance working in a profit center?

The profit margin for Mason is

Blaser Corporation had $275,000 in invested assets, sales of $330,000, income from operations amounting to $33,000 and a desired minimum rate of return of 7.5%.The rate of return on investment for Blaser Corporation is

The income from operations for the Locomotive Division is

How much service department cost would be allocated to the Macro Division?

What will the income of the Macro Division be after all service department allocations?

The residual income for Mason is