Segment
margin ________.
ANSWER
INCORRECT
·
includes those fixed expenses
that can be traced to a profit center
·
is the difference between
actual and budget for a specific revenue or cost
·
YOU WERE SURE AND INCORRECT
includes expenses that cannot
be traced to the profit center
·
THE CORRECT ANSWER
is the operating income
generated by a profit or investment center before subtracting common fixed
costs that have been allocated to the center
·
I DON'T KNOW YET
WHAT
YOU NEED TO KNOW
Segment margin is
the operating income generated by a profit or investment center before
subtracting common fixed costs that have been allocated to the center.
Direct fixed expenses include those fixed
expenses that can be traced to a profit center.
Common fixed expenses include expenses that
cannot be traced to the profit center.
Variance
is the difference between actual and budget for a specific revenue or cost.
What
is the sales margin for the Framing Division?
ANSWER
INCORRECT
·
THE CORRECT ANSWER
66.7%
·
667%
·
YOU WERE SURE AND INCORRECT
6%
·
6.6%
·
I DON'T KNOW YET
WHAT
YOU NEED TO KNOW
The sales margin for the Framing Division
is 66.7%. The other answers are not correct.
$2,000,000
/ $3,000,000 = 66.7% rounded
In
a _______ managers are responsible for both revenues and costs.
ANSWER
INCORRECT
·
THE CORRECT ANSWER
profit center
·
investment center
·
YOU WERE SURE AND INCORRECT
cost center
·
revenue center
·
I DON'T KNOW YET
WHAT
YOU NEED TO KNOW
In a profit center,
managers are responsible for both revenues and costs.
In a revenue center, managers are responsible
for generating sales revenue.
In a cost center, managers are responsibility
for the costs only.
In
an investment center, managers generate revenues, control costs, and manage
divisional assets.
Return
on investment (ROI) ________.
ANSWER
INCORRECT
·
focuses on how efficiently the
division uses its assets to generate sales revenue
·
determines whether the division
has created any excess income above and beyond management’s expectations
·
YOU WERE SURE AND INCORRECT
focuses on profitability by
showing how much operating income a division may earn on every $1 of sales
revenue
·
THE CORRECT ANSWER
measures the amount of income
an investment center earns relative to the size of its assets
·
I DON'T KNOW YET
WHAT
YOU NEED TO KNOW
Return on investment (ROI) measures
the amount of income an investment center earns relative to the size of its
assets.
Sales margin focuses on profitability by
showing how much operating income a division may earn on every $1 of sales
revenue.
Capital turnover focuses on how efficiently
the division uses its assets to generate sales revenue.
Residual
income (RI) determines whether the division has created any excess income above
and beyond management’s expectations.
Which
of the following choices is correct about master budget variance reporting?
ANSWER
INCORRECT
·
A favorable flexible budget
variance ($3,000 F) and an unfavorable volume variance ($3,600 U) could be
netted to an unfavorable master budget variance of $6,600 U.
·
THE CORRECT ANSWER
A favorable flexible budget
variance ($7,000 F) and an unfavorable volume variance ($11,500 U) could be
netted to an unfavorable master budget variance of $4,500 U.
·
YOU WERE SURE AND INCORRECT
A favorable flexible budget
variance ($6,000 F) and an unfavorable volume variance ($11,500 U) could be
netted to an unfavorable master budget variance of $17,500 U.
·
A favorable flexible budget
variance ($2,000 F) and an unfavorable volume variance ($2,500 U) could be
netted to an unfavorable master budget variance of $4,500 U.
·
I DON'T KNOW YET
WHAT
YOU NEED TO KNOW
A favorable flexible budget variance ($7,000 F) and an unfavorable
volume variance ($11,500 U) could be netted to an unfavorable master budget
variance of $4,500 U is a correct statement about master budget variance
reporting. The other answers are NOT correct.
Which
of the following is a characteristic of an effective performance evaluation
system?
ANSWER
INCORRECT
·
THE CORRECT ANSWER
Benchmarks that promote goal
congruence and coordination amongst segments
·
Expectations are communicated
less clearly.
·
YOU WERE SURE AND INCORRECT
All benchmarks that promote
goal congruence and coordination amongst segments are avoided.
·
Tools to motivate managers are
eliminated.
·
I DON'T KNOW YET
WHAT
YOU NEED TO KNOW
Benchmarks that promote goal congruence and coordination amongst
segments is a characteristic of an effective performance evaluation
system. The characteristics of an effective performance evaluation system
include providing benchmarks that promote goal congruence and coordination
between segments, motivating managers, and clearly
communicating expectations. The other answers are not correct.
Which
of the following is TRUE about a flexible budget?
ANSWER
INCORRECT
·
THE CORRECT ANSWER
A manager compares actual
results against a flexible budget.
·
A manager would never use a
flexible budget for performance evaluation at the end of a period.
·
YOU WERE SURE AND INCORRECT
A manager uses a variance
budget to plan for uncertainties instead of a flexible budget.
·
A flexible budget is prepared
for the same level of volume as the one originally planned.
·
I DON'T KNOW YET
WHAT
YOU NEED TO KNOW
A manager compares actual results against a flexible budget is
a true statement. A flexible budget is prepared for a different level of volume
than the one originally planned. A manager would use a flexible budget for
performance evaluation at the end of a period.
Which
of the following choices is correct about master budget variance reporting?
ANSWER
INCORRECT
·
A favorable flexible budget
variance ($6,000 F) and an unfavorable volume variance ($11,500 U) could be
netted to an unfavorable master budget variance of $17,500 U.
·
YOU WERE SURE AND INCORRECT
A favorable flexible budget
variance ($2,000 F) and an unfavorable volume variance ($2,500 U) could be
netted to an unfavorable master budget variance of $4,500 U.
·
THE CORRECT ANSWER
A favorable flexible budget
variance ($7,000 F) and an unfavorable volume variance ($11,500 U) could be
netted to an unfavorable master budget variance of $4,500 U.
·
A favorable flexible budget
variance ($3,000 F) and an unfavorable volume variance ($3,600 U) could be
netted to an unfavorable master budget variance of $6,600 U.
·
I DON'T KNOW YET
Which of the following choices
is correct about master budget variance reporting?
ANSWER
INCORRECT
·
A
favorable flexible budget variance ($6,000 F) and an unfavorable volume
variance ($11,500 U) could be netted to an unfavorable master budget variance
of $17,500 U.
·
YOU WERE SURE AND INCORRECT
A
favorable flexible budget variance ($2,000 F) and an unfavorable volume
variance ($2,500 U) could be netted to an unfavorable master budget variance of
$4,500 U.
·
THE CORRECT ANSWER
A
favorable flexible budget variance ($7,000 F) and an unfavorable volume
variance ($11,500 U) could be netted to an unfavorable master budget variance
of $4,500 U.
·
A
favorable flexible budget variance ($3,000 F) and an unfavorable volume
variance ($3,600 U) could be netted to an unfavorable master budget variance of
$6,600 U.
·
I DON'T KNOW YET
WHAT
YOU NEED TO KNOW
A favorable flexible budget variance ($7,000
F) and an unfavorable volume variance ($11,500 U) could be netted to an
unfavorable master budget variance of $4,500 U is a correct statement about master budget variance
reporting. The other answers are NOT correct.
The
learning and growth perspective of the balanced scorecard focuses on ________.
ANSWER
INCORRECT
·
THE CORRECT ANSWER
employee capabilities,
information system capabilities, and the company’s climate for action
·
incorporation of innovation,
operations, and post-sales support
·
YOU WERE SURE AND INCORRECT
using a continuous process to
increase profits through increasing revenue, controlling costs, and increases
in productivity
·
customer demands which include
price, quality, sales service, and delivery time
·
I DON'T KNOW YET
WHAT
YOU NEED TO KNOW
The learning and growth perspective of the
balanced scorecard focuses on employee capabilities,
information system capabilities, and the company’s climate for action.
The customer perspective of the balanced
scorecard focuses on customer demands which include price, quality, sales
service, and delivery time.
The internal business perspective of the
balanced scorecard incorporates innovation, operations, and post-sales support.
The
financial perspective of the balanced scorecard is a continuous process to
increase profits through increases in revenue, cost control, and productivity
increases.
Which of the following choices
is correct about master budget variance reporting?
ANSWER
INCORRECT
·
YOU WERE SURE AND INCORRECT
A
favorable flexible budget variance ($3,000 F) and an unfavorable volume
variance ($3,600 U) could be netted to an unfavorable master budget variance of
$6,600 U.
·
THE CORRECT ANSWER
A
favorable flexible budget variance ($7,000 F) and an unfavorable volume
variance ($11,500 U) could be netted to an unfavorable master budget variance
of $4,500 U.
·
A
favorable flexible budget variance ($2,000 F) and an unfavorable volume
variance ($2,500 U) could be netted to an unfavorable master budget variance of
$4,500 U.
·
A
favorable flexible budget variance ($6,000 F) and an unfavorable volume
variance ($11,500 U) could be netted to an unfavorable master budget variance
of $17,500 U.
·
I DON'T KNOW YET
WHAT
YOU NEED TO KNOW
A favorable flexible budget variance ($7,000
F) and an unfavorable volume variance ($11,500 U) could be netted to an
unfavorable master budget variance of $4,500 U is a correct statement about master budget variance
reporting. The other answers are NOT correct.
Which
of the following is TRUE about a flexible budget?
ANSWER
INCORRECT
·
A flexible budget is prepared
for the same level of volume as the one originally planned.
·
THE CORRECT ANSWER
A manager compares actual
results against a flexible budget.
·
YOU WERE SURE AND INCORRECT
A manager would never use a
flexible budget for performance evaluation at the end of a period.
·
A manager uses a variance
budget to plan for uncertainties instead of a flexible budget.
·
I DON'T KNOW YET
WHAT
YOU NEED TO KNOW
A manager compares actual results against a flexible budget is
a true statement. A flexible budget is prepared for a different level of volume
than the one originally planned. A manager would use a flexible budget for
performance evaluation at the end of a period.
Return
on investment (ROI) ________.
ANSWER
INCORRECT
·
determines whether the division
has created any excess income above and beyond management’s expectations
·
YOU WERE SURE AND INCORRECT
focuses on how efficiently the
division uses its assets to generate sales revenue
·
THE CORRECT ANSWER
measures the amount of income
an investment center earns relative to the size of its assets
·
focuses on profitability by
showing how much operating income a division may earn on every $1 of sales
revenue
·
I DON'T KNOW YET
WHAT
YOU NEED TO KNOW
Return on investment (ROI) measures
the amount of income an investment center earns relative to the size of its
assets.
Sales margin focuses on profitability by
showing how much operating income a division may earn on every $1 of sales
revenue.
Capital turnover focuses on how efficiently
the division uses its assets to generate sales revenue.
Residual
income (RI) determines whether the division has created any excess income above
and beyond management’s expectations.
Common
fixed expenses ________.
ANSWER
INCORRECT
·
THE CORRECT ANSWER
include expenses that cannot be
traced to the profit center
·
is the operating income
generated by a profit or investment center before subtracting common fixed
costs that have been allocated to the center
·
YOU WERE SURE AND INCORRECT
include those fixed expenses
that can be traced to a profit center
·
are the differences between
actual and budgeted for specific revenues or expenses
·
I DON'T KNOW YET
WHAT
YOU NEED TO KNOW
Common fixed expenses include
expenses that cannot be traced to the profit center.
Direct fixed expenses include those fixed
expenses that can be traced to a profit center.
Segment margin is the operating income
generated by a profit or investment center before subtracting common fixed
costs that have been allocated to the center.
The
difference between actual and budget for a specific revenue or expense is known
as a variance.
Frames,
Inc. manufactures, produces, and sells picture frames. The frame sells for $25
and the variable operating costs per unit are $12. The managerial accountant
reported fixed costs of $50,000 per month, which produces a sales volume of
25,000 frames. The manager needs to sell 26,000 frames to meet the sales quota
and incur no more than $70,000 of fixed costs.
The
flexible budget, with a sales volume of 30,000 frames, would show operating
income of:
ANSWER
INCORRECT
·
THE CORRECT ANSWER
$320,000
·
$23,000
·
YOU WERE SURE AND INCORRECT
$32,000
·
$230,000
·
I DON'T KNOW YET
WHAT
YOU NEED TO KNOW
The operating income for a sales volume of
30,000 frames on the flexible budget is $320,000.
The other answers are not correct.
Sales Revenue (units × selling price) = 30,000
× $25 = $750,000
Variable Costs (units × variable cost per
unit) = 30,000 × $12 = $360,000
Fixed Expenses = $70,000
Total Expenses = $360,000 + $70,000 = $430,000
Total
Operating Income= $750,000 - $430,000 = $320,000 shown on the flexible budget
The
managerial accountant at the Frame Shop reported $2,000,000 of operating income
and $3,000,000 in sales revenue for the Framing Division.
What
is the sales margin for the Framing Division?
ANSWER
INCORRECT
·
6%
·
667%
·
THE CORRECT ANSWER
66.7%
·
YOU WERE SURE AND INCORRECT
6.6%
·
I DON'T KNOW YET
WHAT
YOU NEED TO KNOW
The sales margin for the Framing Division
is 66.7%. The other answers are not correct.
$2,000,000
/ $3,000,000 = 66.7% rounded
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