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Which of the following statements is true regarding managerial decisions?A) the design and use of management control systems affects how an individual makes and implements decisionsB) rational managers will always make decisions that are in the best interest of the organization employing themA. Only A is trueDecentralization refers to the delegation of decision making authority tosubordinatesWhich of the following is NOT a characteristic of a decentralized organization?D. More decisions made by relatively few individualsWhich of the following statements is FALSE?A. The U.S. military is a good example of an organization that is highly decentralizedWhich of the following elements is NOT part of a management control system?C. Knowledge of local conditionsAn operating unit of an organization is called a cost center if it is responsibleA. Only for costsAn operating unit of an organization is called an investment center if it is responsibleD. For investments in assetsAn operating unit of an organization is called a revenue center if it is responsibleB. Only for revenuesAn operating unit of an organization is called a profit center if it is responsibleC. for costs and revenuesAn operating unit that is responsible for revenues and costs is commonly referred to as aC. Profit centerAn operating unit that is responsible for revenues only is commonly referred to as aB. Revenue centerAn operating unit that is responsible for only costs is commonly referred to as aA. Cost centerWhen managers are held responsible for costs but the input-output relationship is not well specified, a ________ is establishedC. Discretionary cost centerWhen managers are held responsible for costs and the input-output relationship is well specified, a _______ is establishedA. Standard cost centerDecentralized organizations can delegate authority and still maintain control and monitor managers' performance by designing appropriate management control systems. Which of the following responsibility centers would be evaluated similar to an independent business?C. Investment centerControllable revenue is included in a performance report of aProfit center: YES, Investment Center: YESControllable revenue is included in a performance report of a revenue center, cost centerRevenue center: YES, Cost Center: NO

cost centers do not have authority over revenuesControllable revenue is included in a performance report of a Cost center, Profit centerD. Cost center: NO, Profit Center: YESAssets invested in a responsibility center are included in a performance report of Profit Center, Investment CenterD. Profit Center: NO, Investment center: YES

only investment centers have asset authorityAssets invested in a responsibility center are included in a performance report of Profit Center, Cost CenterC. Profit Center: NO, Cost Center: NOA manager makes a decision that is beneficial for a specific investment center but not for the entire organization. From the organization's perspective, this decision results inA. Goal congruanceThe controllability concept states that managers should be held responsible forA. All items over which they have decision-making authorityRelative performance evaluations are NOT designed toD. Restate departmental goals so meaningful comparisons can be madeWhich of the following items would be classified as a fixed compensation item?A. Administrative salariesWhich of the following items would NOT be classified as a contingent compensation item?A. Administrative salariesWhich of the following statements is true regarding compensation?A) fixed compensation is generally not linked to measured performance, it is independent of measured performanceB) properly designed management control systems have contingent compensation items but not fixed compensation itemsA. Only A is trueThe use of dual rates in a cost allocation system assumes that common costs can beA. Separated into their fixed and variable componentsWhich of the following statements is FALSE regarding the effective use of management control systems?A) in general, single rate cost allocations should not be used in management control systems because clear control over the cost being allocated cannot be determinedB) the primary reason to use a dual rate allocation system is to focus on manager's performance evaluation on factors under the manager's direct controlD. Neither A nor B is falseExamples of pressures that can lead to financial fraud do NOT includeC. Overemphasis on long-term resultsThe Sarbanes- Oxley Act of 2002 requires that management of publicly traded companiesB. Report on the adequacy of the company's internal controls over financial reportingWhich of the following is not an internal controlD. Using absolute performance standardsInternal controls include all of the following EXCEPTA. Using contingent compensation plansBOXES 2 GO: What is the allocation rate for the upcoming year assuming Boxes 2 Go uses the SINGLE- RATE method and allocates common costs based on number of CALLSD. $25.00BOXES 2 GO: What is the allocation rate for the upcoming year assuming Boxes 2 Go uses the SINGLE RATE method and allocates common costs based on the TIME on the network?$10.00BOXES 2 GO: The cost accountant determined $2,700,000 of the communication network's costs were fixed and should be allocated based on the number of calls. the remaining costs should be allocated based on the time on the network. what is the total communication network costs allocated to the large box division assuming the company uses dual-rates to allocate common costs?C. $1,980,000BOXES 2 GO: The cost accountant determined $2,700,000 of the communication network's costs were fixed and should be allocated based on the number of calls. the remaining costs should be allocated based on the time on the network.What is the total communication network costs allocated to the Small Box Division assuming the company uses dual-rates to allocate common costs?A. $2,520,000THE COPY DEPT: If the copy department uses a DUAL RATE for allocating its costs based on usage, how much cost will be allocated to the marketing department?$170,000THE COPY DEPT: If the copy department uses a DUAL RATE for allocating its costs based on usage, how much cost will be allocated to the Economics department?A. $85,000THE COPY DEPT: If the copy department uses a dual-rate for allocating its costs, how much cost will be allocated to the economics department, assuming the economics department actually made 2,100,000 copies during the year?B. $92,500THE COPY DEPT: if the copy department uses a dual-rate for allocating its costs, how much cost will be allocated to the marketing department, assuming the marketing department actually made 3,000,000 copies during the year?C. $155,000THE COPY DEPT: If the copy department uses a dual rate for allocating its costs, how much cost will be allocated to the economics department, assuming the economics department actually made 1,500,000 copies during the year?A. $77,500THE COPT DEPT: If the copy department uses a dual-rate for allocating its costs, how much cost will be allocated to the marketing department, assuming the marketing deD.$175,000FENWAY TELECOM: What is the allocation rate for the upcoming year assuming Fenway Telcom uses the SINGLE RATE method and allocates common costs based on the number of CONNECTIONS?A. $10,000FENWAY TELCOM: Fenway uses the SINGLE RATE method and allocates common costs based on the number of CONNECTIONS. What is the total computer server network cost allocated to the Commercial Division?C. $600,000FENWAY TELCOM: What is the allocation rate for the upcoming year assuming Fenway Telcom uses the single rate method and allocates common costs based on the time on the network?C. $4.00FENWAY TELCOM: Fenway uses the single rate method and allocates common costs based on the time on the network. What is the total computer server network cost allocated to the Retail Division?$600,000FENWAY TELCOM: The cost accountant determined $1,700,000 of the server network's costs were fixed and should be allocated based on the number of connections. the remaining costs should be allocated based on the time on the network. What is the total server network costs allocated to the Commercial Division assuming the company uses dual-rates to allocate common costs?$565,000FENWAY TELCOM: the cost accountant determined $1,700,000 of the server network's costs were fixed and should be allocated based on the time on the network. What is total server network costs allocated to the Retail Division assuming the company uses dual-rates to allocate common costs?$741,667FENWAY TELCOM: the cost accountant determined $1,700,000 of the server network's costs were fixed and should be allocated based on the number of connections. The remaining costs should be allocated based on the time on the network. What is total server network costs allocated to the Consumer division assuming the company uses dual rates to allocate common costs?B. $1,093,333DOC CREATION CENTER: If DCC uses a dual rate for allocating its costs based on usage, how much cost will be allocated to the software development department?$112,000DCC: If DCC uses a dual rate for allocating its costs based on usage, how much cost will be allocated to the training department?$210,000DCC: If DCC uses a dual rate for allocating its costs based on usage, how much cost will be allocated to the Management Department?A. $168,000DCC: If DCC uses a dual-rate for allocating its costs, how much cost will be allocated to the Management Department, assuming the Management Department actually made 2,100,000 copies during the year?C. $159,000DCC: If DCC uses a dual rate for allocating its costs, how much cost will be allocated to the Management Department, assuming the Management Department actually made 2,950,000 copies during the year?A. $184,500DCC: If DCC uses a dual rate for allocating its costs, how much cost will be allocated to the training department, assuming the training department actually made 3,250,000 copies during the year?C. $217,500DCC: If DCC uses a dual rate for allocating its costs, how much cost will be allocated to the training department, assuming the training department actually made 2,770,000 copies during the year?D. $203,100DCC: If DCC uses a dual rate for allocating its costs, how much cost will be allocated to the software development department, assuming the software development department actually made 1,160,000 copies during the year?B. $98,800DCC: If DCC uses a dual rate for allocating its costs, how much cost will be allocated to the software development department, assuming the software development department actually made 1,780,000 copies during the year?A. $117,400In responsibility accounting, a center's performance is measured by those costs which are controllable. controllable costs are best described as includingB. only those costs that the manager can influence in the current periodRockford Manufacturing corporation uses a responsibility accounting system in its operations. which of the following items is LEAST likely to appear in a performance report for a manager of one of Rockford's assembly lines?D. Depreciation on the manufacturing facilityResponsibility accounting defines an operating center that is responsible for revenue and costs as aA. Profit centerWhen comparing performance report information for top management with that of lower level managementD. Lower level management reports are likely to contain more quantitative data and less financial dataThe least complex segment or area of responsibility for which costs are allocated is aD. Cost CenterWhich of the following will NOT occur in an organization that gives managers throughout the organization maximum freedom to make decisions?D. Delays in securing approval for the introduction of new productsWhich one of the following firms is likely to experience dysfunctional motivation on the part of its managers due to its allocation methods?B. Manhattan Electronics uses the sales revenue of its various divisions to allocate costs connected with the upkeep of its headquarters building. it also uses ROI to evaluate the divisional performanceWhich of the following statements is true regarding the master budget?A) a master budget consists of organizational goals, strategic long range profit plans, and tactical short range profit planB) a master budget consists of only a budgeted income statement, balance sheet, and stockholders equity statementD. Neither A nor B is trueLong range planning as a management function is more importantA. at top management levelsWhich of the following terms is not an alternative for master budget?C. Profit planA master budgetC. presents the plan for only one level of activity and does not adjust to changes in the level of activityA continuous rolling budgetD. Drops the current month or quarter and adds a future month or quarter as the current month or quarter is completedBudgetary slack can best be defined asB. Underestimation of budgeted revenuesWhich of the following statements is true regarding the benefits associated with participative budgeting?A) goal congruence by divisions means top management need not be concerned with overall profitabilityB) budget assumptions and estimates are prepared by those closest to the budgeted activityB. Only B is trueIn general, the first budget prepared is theC. Sales budgetIn developing a master budget for a manufacturing company, which of the following items should be done first?A. Development of a sales budgetThe forecasting method in which individual forecasts of group members are submitted anonymously and evaluated by the group as a whole is calledC. Delphi techniqueThe statistical method of forecasting that relies heavily on regression models is calledA. Econometric modelsThe starting point in preparing a comprehensive budget for a manufacturing company limited by its ability to produce and not by its ability to sell isB. an estimate of productive capacityThe number of units required for production is equal toB. budgeted sales plus units in the ending inventory minus the units in the beginning inventory

Beg Inv + prod- Sales= end invThe amount of materials to be purchased during the budget period is equal to budgetedB. total production needs plus units in the ending materials inventory minus the units in the beginning materials inventoryWhich of the following budgets does not require the production budgetD. Marketing and administrative expensesThe manufacturing overhead budget requires that costs be separated into their fixed and variable components. Another budget that has this requirement is theD. Marketing and administrative expensesWhich of the following statements does NOT reflect a difficulty in preparing the marketing and administrative budgetD. Marketing and administrative expenses normally have a one year time horizonWhich of the following budgets would be the last one prepared in the master budget preparation processE. Cash budgetCash disbursements would NOT include payments forC. accounts receivableWhich of the following types of accounts would NOT be included on a budgeted balance sheet?E. RevenuesWhich of the following budgets is NOT required in a wholesale organizationC. ProductionWhich of the following budgets is NOT required in a service organization?D. Cost of goods soldSensitivity analysis can be best used in the budgeted process toC. answer "what-if" questions regarding key projectionsSLEDGE HAMMER COMPANY: Due to changes in prices, the new price for the hammer will be $4.30 per unit. this new price is expected to be in line with the competition and have no effect on the volume estimates. what are the estimated sales revenues in the coming year?C. $5,418,000TRS is a large securities dealer. What are the estimated commission's revenues for TRS in the coming year?B. $12,672,000TLC credit, Inc: What is TLC's estimated change in revenues next year?A. $460,000 decreaseHAWLE MANU COMP: What are estimated net sales for 2010, assuming the sales return/gross sales relationship remains constant?A. $646,893HAWLE MANU COMP: What is the estimated cost of goods sold for 2010 assuming the number of units sold does not change?D. $357,000HAWLE MANU COMP: The ending inventory of finished goods for each quarter should equal 25% of the next quarters budgeted sales in units. the finished goods inventory at the start of the year is 3,000 units. Scheduled production for the third quarter isA. 17,500 unitsTHE WAVERLY COMPANY: scheduled production for the second quarter isC. 15,000 unitsThe TOBLER COMPANY: Budgeted purchases of raw materials in the third quarter would beA. 63,200 lbsTHE TOBLER COMPANY: Budgeted purchases of raw materials in the second quarter would beC. 49,600 lbsKaufman industries: What is the estimated production level for the first month of the upcoming budget year?C. 6000THE SUN COMPANY: What is the production budget in units for 2008?B. 65,000THE SUN COMPANY: What are the materials requirements in feet for 2008?B. 336,250Purchases for month 1 would beC. 17,200DAVIS Corporation had the following transactions in their first year: What is the cash balance at year end?C. $210,000TASK COMPANY: What is the amount of cash to be collected in the month of july?B. $38,022TASK COMPANY: What is the amount of cash to be collected in the month of August?A. $40,106TASK COMPANY: assume charges 1.5% on any balance that is not collected in the following month. This changes collection percentages to 15% cash sales, 80% of the balance collected in the month following the sale, 16% the second month, 3% the third month. What is the amount of cash to be collected in July?D. $36,242PARDEE company: Total cash receipts in Month 4 will beD. $36,230PARDEE COMPANY: Total cash receipts in month 3 will beB. $53,290RIZZO CORP: How many units did Rizzo purchase in 2009?A. 224,500RICHBURN MANU COMP: What were the cash disbursements for the year?A. $721,750THE JACK COMPANY: what are the estimated cash disbursements for inventories in june?C. $335,250THE SMART COMPANY: what are the estimated cash receipts from accounts receivable collections in June?D. $239,250THE SPORT COMPANY: What are the estimated collections in july?B. $131,250T JACKSON RETAIL: What are the budgeted merchandise purchases for May?A. $338,250T JACKSON RETAIL: What are the budgeted merchandise purchases in dollars for June?C. $364,500T JACKSON RETAIL: What are the budgeted cash disbursements during the month of June?B. $419,400T JACKSON RETAIL: What are the budgeted cash collections during the month of May?A. $445,894T JACKSON RETAIL: What are the budgeted number of inventory units that need to be purchased in July?C. 12,250The major objectives of any budget system are toC. Foster the planning of operations, provide a framework for performance evaluation, and promote communication and coordination among organization segmentsFrom the perspective of corporate management, the use of budgetary slackD. increases the likelihood of inefficient resource allocationthe master budget process usually begins with theD. sales budgetA company has the following annual budget data: What are total budgeted production costs for the year?B. $2,180,000Selana Company: What would be the budgeted cost for the coming year if Selana were to operate seven sales offices?B. $672,000Brown Company: Brown's budgeted cash collections for the third calendar quarter areC. $414,000A company is preparing its cash budget for the coming month. All sales are on account. What is the expected cash balance of the company at the end of the coming month?B. $40,000A company is fomulating its plans for the coming year, including prep of its cash budget. For the month of April, the total cash receipts from sales and collections on account would beB. $3,781,600LYNNDORF CORP: The number of tables to be produced during August isB. 2,340 tablesLYNNDORF CORP: The number of table legs to be purchased in August isA. 6,520 legsLYNNDORF CORP: How many employees will be required for the assembly department?B. 3.75 employeesResearch has shown that having several levels of management participate in the budgetary process is beneficial to both the company and the employees. However, there are certain behavioral problems encountered in the process, one of which is the use of budgetary slack. budgetary slack can best be described asB. The planned overestimation of budgeted expensesResearch has shown that having several levels of management particiapte in the budgetary process is beneficial to both the company and the employees. however, there are certain behavioral problems encountered in the process, one of which is the use of budgetary slack. the use of budgetary slack does not allow the preparer of the budgets toD. Use the budget to control subordinate performanceResearch has shown that having several levels of management participate in the budgetary process is beneficial to both the company and the employees. however, there are certain behavioral problems encountered in the process, one of which is the use of budgetary slack. From the perspective of corporate management, the use of budgetary slackE. Increases the likelihood of inefficient resource allocationWhich of the following statements is true?A) divisional income statements do not include allocated common costs.B) the gross margin ratio is computed by dividing operating income by sales.D. Neither A nor B is trueAfter tax income divided by sales is called theB. Profit margin ratioThe measure that reflects the performance of a manager regarding sales and cost of goods sold, but not other operating costs and income taxes is called theA. gross margin ratio

gross margin= sales- cost of goods soldIf a division is evaluated using ROI without regard to how assets are financed, the denominator in the ROI calculation will beC. Total assets availableROI can be decomposed into the asset turnover and theB. Profit margin ratioThe asset turnover is a measure of an investment center's ability toB. Generate salesWhich of the following statements does NOT represent a limitation of using ROI for measuring and evaluating performance?ROI cannot be used to compare divisions of different sizesHow will INCREASES in the following items affect ROIA. Expenses: decrease, Inventory: DecreaseHow will DECREASES in the following items affect ROIB. Sales: Decrease, Equipment: IncreaseA division earning a profit will increase its ROI if it increases operating expenses andB. sales by the same percentageWhich of the following statements is true:A) if a divisions ROI exceeds its cost of capital, the its residual income is positiveB) if a division's cost of capital equals its ROI, then its residual income is zeroC. Both A and B are trueResidual income is similar to the _____ notion of profit as being the amount left over after all costs, including the cost of the capital employed in the division, are subtracted.D. EconomistsWhich of the following statements is FALSE:A) residual income can be used to compare divisions of different sizesB) residual income can be used to compare divisions that are profit centersC. Both A and B are falseManagerial performance can be measured in many different ways including ROI and residual income. A good reason for using residual income instead of ROI is thatB. Appropriate goal congruence behavior is more likely to occur when using residual incomeHow will decreases in the following items affect residual income?D. Expenses: Increase, Inventory: IncreaseHow will INCREASES in the following items affect residual income?C. SALES: increase, EQUIPMENT: decreaseWhich of the following should NOT be used for the cost of capital to compute residual income?D. ROIA manager can always increase his/her ROI byC. Increasing the operating profit marginBottom of Form