Question 1

The Northern Division of the Gordon Company reported the following data for last year:

-What was the return on investment last year for the Northern Division?

Accepted Answer

A)   18.000%.
B)   28.125%.
C)   40.000%.
D)   62.500%.E) A) and D)
F) All of the above

Question 2

(Appendix 11A)If two products are close substitutes,the sales volume variance for each product can be split into a sales quantity variance and a sales mix variance.

Accepted Answer

A) True 
 B)False

Question 3

Eacker Company's quality cost report is to be based on the following data:

-What will be the total appraisal cost appearing on the quality cost report?

Accepted Answer

A)   $128,000.
B)   $165,000.
C)   $185,000.
D)   $196,000.E) None of the above
F) B) and C)

Question 4

When a division is operating at full capacity,the transfer price to other divisions should include opportunity costs.

Accepted Answer

A) True 
 B)False

Question 5

Harwood Company's quality cost report is to be based on the following data:

$\begin{array}{ll}
\text { Amortization of test equipment } & \$ 94,000 \
\text { Quality cireles } & \$ 54,000 \
\text { Product recalls } & \$ 20,000 \
\text { Test and inspection of incoming materials } & \$ 82,000 \
\text { Debugging software errors } & \$ 11,000 \
\text { Rework labour and overhead } & \$ 48,000 \
\text { Technical support provided to suppliers } & \$ 12,000 \
\text { Net cost of scrap } & \$ 29,000 \
\text { Lost sales due to poor quality } & \$ 74,000
\end{array}$

Required: Prepare a quality cost report in good form with separate sections for prevention costs,appraisal costs,internal failure costs,and external failure costs.

Accepted Answer

None...

Question 6

Some managers believe that residual income is superior to return on investment as a means of measuring performance,as it encourages the manager to make investment decisions that are more consistent with the interests of the company as a whole.

Accepted Answer

A) True 
 B)False

Question 7

Delmar Corporation is considering the use of residual income as a measure of the performance of its divisions.What major disadvantage of this method should the company consider before deciding to institute it?

Accepted Answer

A)   This method does not make allowance for difference in the size of compared divisions.
B)   Opportunities may be undertaken that will decrease the overall return on investment.
C)   The minimum required rate of return may eliminate desirable opportunities from consideration.
D)   Residual income does not measure how effectively the division manager controls costs.E) A) and B)
F) A) and C)

Question 8

Division P of Turbo Corporation has the capacity for making 75,000 wheel sets per year and regularly sells 60,000 each year on the outside market.The regular sales price is $100 per wheel set,and the variable production cost per unit is $65.Division Q of Turbo Corporation currently buys 30,000 wheel sets (of the kind made by Division P) yearly from an outside supplier at a price of $90 per wheel set.Division Q would like to buy the 30,000 wheel sets it needs annually from Division P at $87 per wheel set.What would be the change in annual operating income for the company as a whole,compared to what it is currently?

Accepted Answer

A)   $135,000.
B)   $225,000.
C)   $600,000.
D)   $750,000.E) A) and C)
F) None of the above

Question 9

Ricric Corporation has provided the following data for one of its products:

-The manufacturing cycle efficiency for this operation is closest to which of the following?

Accepted Answer

A)   0.18.
B)   0.33.
C)   0.375.
D)   0.45.E) A) and B)
F) A) and D)

Question 10

Which of the following is the main assumption that is made about managers in general in support of decentralization?

Accepted Answer

A)   Managers at the local/divisional level will act in the best interest of the organization.
B)   Top managers at corporate headquarters will act in the best interest of the organization.
C)   Top managers at corporate headquarters have access to better information for operational decisions..
D)   Managers at the local/divisional level have access to better information for operational decisions.E) All of the above
F) B) and C)

Question 11

The Millard Division's operating data for the past two years are provided below:

Millard Division's margin in Year 2 was 150% of the margin in Year 1.
-What were the sales for Year 2?

Accepted Answer

A)   $1,200,000.
B)   $3,000,000.
C)   $3,200,000.
D)   $3,333,333.E) A) and D)
F) A) and C)

Question 12

Which of the following would be classified as an appraisal cost on a quality cost report?

Accepted Answer

A)   Supervision of testing and inspection activities.
B)   Systems development.
C)   Quality engineering.
D)   Quality training.E) B) and C)
F) None of the above

Question 13

The emphasis in the balanced scorecard is on improvement rather than meeting a preset standard.

Accepted Answer

A) True 
 B)False

Question 14

Thais Company's quality cost report is to be based on the following data:

-What will be the total prevention cost appearing on the quality cost report?

Accepted Answer

A)   $84,000.
B)   $92,000.
C)   $98,000.
D)   $113,000.E) A) and B)
F) A) and C)

Question 15

(Appendix 11A)If two products are good substitutes,the sales quantity variance for each product can be analyzed further into a market volume variance and a market share variance.

Accepted Answer

A) True 
 B)False

Question 16

Eade Company's quality cost report is to be based on the following data:

-What will be the total internal failure cost appearing on the quality cost report?

Accepted Answer

A)   $54,000.
B)   $75,000.
C)   $80,000.
D)   $121,000.E) A) and B)
F) None of the above

Question 17

The Holmes Division recorded operating data as follows for the past year:

-For the past year,what was the turnover?

Accepted Answer

A)   2.
B)   4.
C)   10.
D)   25.200,000/100,000E) B) and C)
F) A) and C)

Question 18

Which of the following best describes a segment of a business responsible for both revenues and expenses?

Accepted Answer

A)   A cost centre.
B)   An investment centre.
C)   A profit centre.
D)   A residual income centre.E) A) and B)
F) A) and C)

Question 19

Which of the following would be classified as a prevention cost on a quality cost report?

Accepted Answer

A)   Cost of field servicing and handling complaints.
B)   Warranty repairs and replacements.
C)   Systems development.
D)   Rework labour and overhead.E) None of the above
F) B) and D)

Question 20

Ordinarily,managers are NOT aware of the magnitude of their quality costs since these costs cut across departmental lines and are not normally tracked and accumulated by the cost system.

Accepted Answer

A) True 
 B)False

Exam 11: Reporting for Control

Correct Answer
verified
None...
View Answer

Which of the following best describes a segment of a business responsible for both revenues and expenses?

Correct Answer
verified

The Millard Division's operating data for the past two years are provided below: Millard Division's margin in Year 2 was 150% of the margin in Year 1. -What were the sales for Year 2?

Correct Answer
verified

Which of the following would be classified as a prevention cost on a quality cost report?

Correct Answer
verified

When a division is operating at full capacity,the transfer price to other divisions should include opportunity costs.

Correct Answer
verified

The Holmes Division recorded operating data as follows for the past year: -For the past year,what was the turnover?

Correct Answer
verified

Thais Company's quality cost report is to be based on the following data: -What will be the total prevention cost appearing on the quality cost report?

Correct Answer
verified

The emphasis in the balanced scorecard is on improvement rather than meeting a preset standard.

Correct Answer
verified

Which of the following would be classified as an appraisal cost on a quality cost report?

Correct Answer
verified

The Northern Division of the Gordon Company reported the following data for last year: -What was the return on investment last year for the Northern Division?

Correct Answer
verified

(Appendix 11A)If two products are good substitutes,the sales quantity variance for each product can be analyzed further into a market volume variance and a market share variance.

Correct Answer
verified

Ricric Corporation has provided the following data for one of its products: -The manufacturing cycle efficiency for this operation is closest to which of the following?

Correct Answer
verified

(Appendix 11A)If two products are close substitutes,the sales volume variance for each product can be split into a sales quantity variance and a sales mix variance.

Correct Answer
verified

Delmar Corporation is considering the use of residual income as a measure of the performance of its divisions.What major disadvantage of this method should the company consider before deciding to institute it?

Correct Answer
verified

Eade Company's quality cost report is to be based on the following data: -What will be the total internal failure cost appearing on the quality cost report?

Correct Answer
verified

Some managers believe that residual income is superior to return on investment as a means of measuring performance,as it encourages the manager to make investment decisions that are more consistent with the interests of the company as a whole.

Correct Answer
verified

Ordinarily,managers are NOT aware of the magnitude of their quality costs since these costs cut across departmental lines and are not normally tracked and accumulated by the cost system.

Correct Answer
verified

Eacker Company's quality cost report is to be based on the following data: -What will be the total appraisal cost appearing on the quality cost report?

Correct Answer
verified

Correct Answer
verified

Which of the following is the main assumption that is made about managers in general in support of decentralization?

Correct Answer
verified

Exam 11: Reporting for Control

Correct AnswerverifiedNone...View AnswerShow Answer

Which of the following best describes a segment of a business responsible for both revenues and expenses?

Correct AnswerverifiedShow Answer

The Millard Division's operating data for the past two years are provided below: Millard Division's margin in Year 2 was 150% of the margin in Year 1. -What were the sales for Year 2?

Correct AnswerverifiedShow Answer

Which of the following would be classified as a prevention cost on a quality cost report?

Correct AnswerverifiedShow Answer

When a division is operating at full capacity,the transfer price to other divisions should include opportunity costs.

Correct AnswerverifiedShow Answer

The Holmes Division recorded operating data as follows for the past year: -For the past year,what was the turnover?

Correct AnswerverifiedShow Answer

Thais Company's quality cost report is to be based on the following data: -What will be the total prevention cost appearing on the quality cost report?

Correct AnswerverifiedShow Answer

The emphasis in the balanced scorecard is on improvement rather than meeting a preset standard.

Correct AnswerverifiedShow Answer

Which of the following would be classified as an appraisal cost on a quality cost report?

Correct AnswerverifiedShow Answer

The Northern Division of the Gordon Company reported the following data for last year: -What was the return on investment last year for the Northern Division?

Correct AnswerverifiedShow Answer

(Appendix 11A)If two products are good substitutes,the sales quantity variance for each product can be analyzed further into a market volume variance and a market share variance.

Correct AnswerverifiedShow Answer

Ricric Corporation has provided the following data for one of its products: -The manufacturing cycle efficiency for this operation is closest to which of the following?

Correct AnswerverifiedShow Answer

(Appendix 11A)If two products are close substitutes,the sales volume variance for each product can be split into a sales quantity variance and a sales mix variance.

Correct AnswerverifiedShow Answer

Delmar Corporation is considering the use of residual income as a measure of the performance of its divisions.What major disadvantage of this method should the company consider before deciding to institute it?

Correct AnswerverifiedShow Answer

Eade Company's quality cost report is to be based on the following data: -What will be the total internal failure cost appearing on the quality cost report?

Correct AnswerverifiedShow Answer

Some managers believe that residual income is superior to return on investment as a means of measuring performance,as it encourages the manager to make investment decisions that are more consistent with the interests of the company as a whole.

Correct AnswerverifiedShow Answer

Ordinarily,managers are NOT aware of the magnitude of their quality costs since these costs cut across departmental lines and are not normally tracked and accumulated by the cost system.

Correct AnswerverifiedShow Answer

Eacker Company's quality cost report is to be based on the following data: -What will be the total appraisal cost appearing on the quality cost report?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is the main assumption that is made about managers in general in support of decentralization?

Correct AnswerverifiedShow Answer

Correct Answer
verified
None...
View Answer

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