Question 1

What was the operating income for Year 1?

Accepted Answer

A)   $240,000.
B)   $256,000.
C)   $384,000.
D)   $768,000.E) C) and D)
F) B) and D)

Question 2

Which of the following statements provide(s) an argument in favour of including only a plant's net book value rather than gross book value as part of operating assets in the ROI computation?
I.Net book value is consistent with how plant and equipment items are reported on a balance sheet.
II.Net book value is consistent with the computation of operating income,which includes amortization as an operating expense.
III.Net book value allows ROI to decrease over time as assets get older.

Accepted Answer

A)   I only.
B)   III only.
C)   I and II only.
D)   I and III only.E) B) and C)
F) All of the above

Question 3

How is a company's return on investment calculated?

Accepted Answer

A)   Dividing the margin by the turnover.
B)   Multiplying the margin by the turnover.
C)   Dividing the turnover by the average operating assets.
D)   Multiplying the turnover by the average operating assets.E) B) and D)
F) B) and C)

Question 4

(Appendix 11A) 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 D)
F) B) and C)

Question 5

(Appendix 11A) Suppose Cafeteria Department costs are allocated on the basis of number of employees and that the step-down method is used with costs of the Cafeteria Department allocated first.What would be the amount of cost allocated from the Cafeteria Department to Maintenance Department?

Accepted Answer

A)   $0.
B)   $625.
C)   $698.
D)   $750.E) None of the above
F) A) and D)

Question 6

Since the sales figure is neutral in the return on investment (ROI)formula,ROI = Margin x Turnover,a change in total sales will NOT affect ROI.

Accepted Answer

A) True 
 B)False

Question 7

The use of return on investment as a performance measure may lead managers to make decisions that are NOT in the best interests of the company as a whole.

Accepted Answer

A) True 
 B)False

Question 8

Suppose a manager's performance is to be evaluated by residual income.Which of the following will NOT result in an increase in the residual income figure for this manager,assuming other factors remain constant?

Accepted Answer

A)   An increase in sales.
B)   An increase in the minimum required rate of return.
C)   A decrease in expenses.
D)   A decrease in operating assets.E) None of the above
F) B) and C)

Question 9

What was the residual income?

Accepted Answer

A)   $10,000.
B)   $40,000.
C)   $50,000.
D)   $80,000.E) C) and D)
F) A) and B)

Question 10

The Northern Division of the Smith Company had average total operating assets of $150,000 last year.Its minimum required rate of return was 12%.The division reported operating income of $20,000.What was the residual income for the Northern Division last year?

Accepted Answer

A)   $2,000.
B)   $5,000.
C)   $18,000.
D)   $20,000.E) None of the above
F) A) and D)

Question 11

Effective decentralization is essential for which of the following management accounting practices in organizations?

Accepted Answer

A)   Break-even analysis.
B)   Product costing.
C)   Segment reporting.
D)   Activity-based costing.E) A) and B)
F) None of the above

Question 12

(Appendix 11A) What will be the total prevention cost appearing on the quality cost report?

Accepted Answer

A)   $43,000.
B)   $45,000.
C)   $47,000.
D)   $51,000.E) None of the above
F) A) and D)

Question 13

(Appendix 11A) Which of the following statements about quality costs is correct?

Accepted Answer

A)   They relate only to the manufacturing process.
B)   They should be focused on appraisal activities.
C)   They are minimized by having a team of well-trained quality control inspectors.
D)   They cut across departmental lines and often are not accumulated and reported to management.E) A) and D)
F) B) and C)

Question 14

During April,Division D of Carney Company had a segment margin ratio of 15%,a variable expense ratio of 60% of sales,and traceable fixed expenses of $15,000.Division D's sales were closest to which of the following?

Accepted Answer

A)   $22,500.
B)   $33,333.
C)   $60,000.
D)   $100,000.E) A) and D)
F) B) and C)

Question 15

What were the total variable expenses in Store K?

Accepted Answer

A)   $70,000.
B)   $110,000.
C)   $130,000.
D)   $200,000.E) B) and D)
F) A) and B)

Question 16

What was the turnover for Year 1?

Accepted Answer

A)   1.2.
B)   1.5.
C)   3.0.
D)   4.0.E) A) and B)
F) A) and C)

Question 17

(Appendix 11A) What will be the total appraisal cost appearing on the quality cost report?

Accepted Answer

A)   $99,000.
B)   $155,000.
C)   $170,000.
D)   $197,000.E) All of the above
F) None of the above

Question 18

(Appendix 11A) 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) All of the above
F) C) and D)

Question 19

(Appendix 11A) An increase in appraisal costs will usually result in an increase in which of the following?

Accepted Answer

A)   Prevention costs.
B)   Internal failure costs.
C)   External failure costs.
D)   Opportunity costs.E) All of the above
F) A) and B)

Question 20

(Appendix 11A)Rigoletto Company's quality cost report is to be based on the following data:  
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

The answer of (Appendix 11A)Rigoletto Company's quality cost report is...

Exam 11: Reporting for Control

(Appendix 11A)Rigoletto Company's quality cost report is to be based on the following data: Required: Prepare a quality cost report in good form with separate sections for prevention costs,appraisal costs,internal failure costs,and external failure costs.

Correct Answer
verified

Effective decentralization is essential for which of the following management accounting practices in organizations?

Correct Answer
verified

(Appendix 11A) What will be the total appraisal cost appearing on the quality cost report?

Correct Answer
verified

The use of return on investment as a performance measure may lead managers to make decisions that are NOT in the best interests of the company as a whole.

Correct Answer
verified

(Appendix 11A) Which of the following statements about quality costs is correct?

Correct Answer
verified

(Appendix 11A) An increase in appraisal costs will usually result in an increase in which of the following?

Correct Answer
verified

During April,Division D of Carney Company had a segment margin ratio of 15%,a variable expense ratio of 60% of sales,and traceable fixed expenses of $15,000.Division D's sales were closest to which of the following?

Correct Answer
verified

(Appendix 11A) Suppose Cafeteria Department costs are allocated on the basis of number of employees and that the step-down method is used with costs of the Cafeteria Department allocated first.What would be the amount of cost allocated from the Cafeteria Department to Maintenance Department?

Correct Answer
verified

(Appendix 11A) What will be the total prevention cost appearing on the quality cost report?

Correct Answer
verified

How is a company's return on investment calculated?

Correct Answer
verified

(Appendix 11A) What will be the total internal failure cost appearing on the quality cost report?

Correct Answer
verified

Suppose a manager's performance is to be evaluated by residual income.Which of the following will NOT result in an increase in the residual income figure for this manager,assuming other factors remain constant?

Correct Answer
verified

The Northern Division of the Smith Company had average total operating assets of $150,000 last year.Its minimum required rate of return was 12%.The division reported operating income of $20,000.What was the residual income for the Northern Division last year?

Correct Answer
verified

(Appendix 11A) Which of the following would be classified as a prevention cost on a quality cost report?

Correct Answer
verified

What was the residual income?

Correct Answer
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Correct Answer
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What was the operating income for Year 1?

Correct Answer
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What were the total variable expenses in Store K?

Correct Answer
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What was the turnover for Year 1?

Correct Answer
verified

Since the sales figure is neutral in the return on investment (ROI)formula,ROI = Margin x Turnover,a change in total sales will NOT affect ROI.

Correct Answer
verified

Exam 11: Reporting for Control

(Appendix 11A)Rigoletto Company's quality cost report is to be based on the following data: Required: Prepare a quality cost report in good form with separate sections for prevention costs,appraisal costs,internal failure costs,and external failure costs.

Correct AnswerverifiedShow Answer

Effective decentralization is essential for which of the following management accounting practices in organizations?

Correct AnswerverifiedShow Answer

(Appendix 11A) What will be the total appraisal cost appearing on the quality cost report?

Correct AnswerverifiedShow Answer

The use of return on investment as a performance measure may lead managers to make decisions that are NOT in the best interests of the company as a whole.

Correct AnswerverifiedShow Answer

(Appendix 11A) Which of the following statements about quality costs is correct?

Correct AnswerverifiedShow Answer

(Appendix 11A) An increase in appraisal costs will usually result in an increase in which of the following?

Correct AnswerverifiedShow Answer

During April,Division D of Carney Company had a segment margin ratio of 15%,a variable expense ratio of 60% of sales,and traceable fixed expenses of $15,000.Division D's sales were closest to which of the following?

Correct AnswerverifiedShow Answer

(Appendix 11A) Suppose Cafeteria Department costs are allocated on the basis of number of employees and that the step-down method is used with costs of the Cafeteria Department allocated first.What would be the amount of cost allocated from the Cafeteria Department to Maintenance Department?

Correct AnswerverifiedShow Answer

(Appendix 11A) What will be the total prevention cost appearing on the quality cost report?

Correct AnswerverifiedShow Answer

How is a company's return on investment calculated?

Correct AnswerverifiedShow Answer

(Appendix 11A) What will be the total internal failure cost appearing on the quality cost report?

Correct AnswerverifiedShow Answer

Suppose a manager's performance is to be evaluated by residual income.Which of the following will NOT result in an increase in the residual income figure for this manager,assuming other factors remain constant?

Correct AnswerverifiedShow Answer

The Northern Division of the Smith Company had average total operating assets of $150,000 last year.Its minimum required rate of return was 12%.The division reported operating income of $20,000.What was the residual income for the Northern Division last year?

Correct AnswerverifiedShow Answer

(Appendix 11A) Which of the following would be classified as a prevention cost on a quality cost report?

Correct AnswerverifiedShow Answer

What was the residual income?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

What was the operating income for Year 1?

Correct AnswerverifiedShow Answer

What were the total variable expenses in Store K?

Correct AnswerverifiedShow Answer

What was the turnover for Year 1?

Correct AnswerverifiedShow Answer

Since the sales figure is neutral in the return on investment (ROI)formula,ROI = Margin x Turnover,a change in total sales will NOT affect ROI.

Correct AnswerverifiedShow Answer

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