FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 8: Performance Evaluation for Decentralized Operations

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 51

Essay

Review LaterAdd Note

Review Later

The Bottlebrush Company has income from operations of $60,000, invested assets of $345,000, and sales of $786,000.Use the DuPont formula to calculate the rate of return on investment, and show a the profit margin, b the investment turnover, and c rate of return on investment.Round the profit margin percentage to two decimal places and the investment turnover to three decimal places.

Correct Answer

verified

a Profit margin = $60,000/$786...

View Answer

Show Answer

Question 52

Multiple Choice

Review LaterAdd Note

Review Later

Central Division for Chemical Company has a rate of return on investment of 22% and an investment turnover of 1.4.What is the profit margin?

A) 20%
B) 15.7%
C) 14%
D) 6.36%

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

Correct Answer

verified

Show Answer

Question 53

Multiple Choice

Review LaterAdd Note

The investment turnover for Chicks is

Developing and retaining quality managers are advantages of decentralization.

The term used to describe expenses that are incurred by a specific department is

An activity base is used to charge service department expenses.Match each of the following activity bases with the appropriate department a-h. -Number of computers in department

If income from operations for a division is $30,000, sales are $263,750, and invested assets are $187,500, the investment turnover is 1.3.

Operating expenses directly traceable to or incurred for the sole benefit of a specific department and usually subject to the control of the department manager are

If divisional income from operations is $75,000, invested assets are $737,500, and the minimum rate of return on invested assets is 6%, the residual income is $36,750.

A decentralized business organization is one in which all major planning and operating decisions are made by top management.

Piano Company's costs were over budget by $47,000.The Piano Company is divided in two regions.The first region's costs were over budget by $5,000.Determine the amount that the second region's cost was over or under budget.

The profit margin for Chicks is

Match each definition that follows with the term a-e it defines. -Income from operations divided by invested assets

The ratio of sales to invested assets is termed the investment turnover component of the rate of return on investment.

Responsibility accounting reports for profit centers will include

What is the rate of return on investment for Division A?

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

Investment turnover as used in determining the rate of return on investment focuses on the rate of profit earned on each sales dollar.

The materials used by the Holly Company's Division A are currently purchased from an outside supplier.Division B is able to supply Division A with 20,000 units at a variable cost of $42 per unit.The normal price that Division B normally sells its units is $53 per unit.What is the range of transfer prices within which the two division managers should negotiate?

The manager of a profit center does not make decisions concerning the fixed assets invested in the center.