Solved by verified expert :Which of the
following costs would be classified as a prevention cost on a quality report?
Reliability engineering.?
Materials inspection.?
Rework.?
Warranty repairs.?
Out-of-court liability settlements.?
The provisions of section 302 of the Sarbanes-Oxley
Act (as originally enacted) require the signing officers of a company to do all
of the following except:
Audit the internal controls over
financial reporting.?
Establish the internal controls over
financial reporting.?
Maintain the internal controls over
financial reporting.?
Evaluate the internal controls over
financial reporting.?
Disclose material weaknesses in the
internal controls over financial reporting.?
A manufacturer’s raw-material
purchasing department would likely be classified as a:
cost center.?
revenue center.?
profit center.?
investment center.?
contribution center.?
A general calculation method for
transfer prices that achieves goal congruence begins with the additional outlay
cost per unit incurred because goods are transformed and then
adds the opportunity cost per unit to
the organization because of the transfer.?
subtracts the opportunity cost per
unit to the organization because of the transfer.?
adds the sunk cost per unit to the
organization because of the transfer.?
subtracts the sunk cost per unit to
the organization because of the transfer.?
adds the sales revenue per unit to
the organization because of the transfer.?
A responsibility center in which the
manager is held accountable for the profitable use of assets and capital is
commonly known as a(n):
cost center.?
revenue center.?
profit center.?
investment center.?
contribution center.
Controllable costs, as used in a
responsibility accounting system, consist of:
only fixed costs.?
only direct materials and direct
labor.?
those costs that a manager can
influence in the time period under review.?
those costs about which a manager has
some knowledge.?
those costs that are influenced by
parties external to the organization.?
The Little Rock Division of Classics
Companies currently reports a profit of $3.6 million. Divisional invested
capital totals $9.5 million; the imputed interest rate is 12%. On the basis of
this information, Little Rock’s residual income is:
$432,000.?
$708,000.?
$1,140,000.?
$2,460,000.?
some other amount.?
Sand Fly Corporation operates two
stores: J and K. The following information relates to J:?Sales
revenue $1,300,000?Variable operating expenses 600,000?Fixed
expenses:? Traceable to J and controllable by J
275,000? Traceable to J and controllable by
others 80,000?J’s segment contribution margin is:
$345,000.??
$425,000.??
$620,000.??
$700,000.??
$745,000.
The basic idea behind residual income
is to have a division maximize its:
earnings per share.?
income in excess of a corporate
imputed interest charge.?
cost of capital.?
cash flows.?
invested capital.?
ROI is most appropriately used to
evaluate the performance of:
cost center managers.?
revenue center managers.?
profit center managers.?
investment center managers.?
both profit center managers and
investment center managers.?
The difference between the profit
margin controllable by a segment manager and the segment profit margin is
caused by:
variable operating expenses.?
allocated common expenses.?
fixed expenses controllable by the
segment manager.?
fixed expenses traceable to the
segment but controllable by others.?
sales revenue.
Sunrise Corporation has a return on
investment of 15%. A Sunrise division, which currently has a 13% ROI and
$750,000 of residual income, is contemplating a massive new investment that
will (1) reduce divisional ROI and (2) produce $120,000 of residual income. If
Sunrise strives for goal congruence, the investment:
should not be acquired because it
reduces divisional ROI.?
should not be acquired because it
produces $120,000 of residual income.?
should not be acquired because the
division’s ROI is less than the corporate ROI before the investment is
considered.?
should be acquired because it
produces $120,000 of residual income for the division.?
should be acquired because after the
acquisition, the division’s ROI and residual income are both positive numbers.?
Which of the following bodies
oversees audits and auditors, and sanctions firms and individuals for
violations of laws and regulations?
American Institute of Certified
Public Accountants (AICPA).?
American Accounting Association
(AAA).?
Public Company Accounting Oversight
Board (PCAOB).?
Financial Accounting Standards Board
(FASB).?
Accounting Principles Board (APB).?
When managers of subunits throughout
an organization strive to achieve the goals set by top management, the result
is:
goal congruence.?
planning and control.?
responsibility accounting.?
delegation of decision making.?
strategic control.
Which of the following is the correct
mathematical expression to derive a company’s capital turnover?
Sales revenue / invested capital.?
Contribution margin / invested
capital.?
Income / invested capital.?
Invested capital / sales revenue.?
Invested capital / income.
Which of the following describes the
goal that should be pursued when setting transfer prices?
Maximize profits of the buying
division.?
Maximize profits of the selling
division.?
Allow top management to become
actively involved when calculating the proper dollar amounts.?
Establish incentives for autonomous
division managers to make decisions that are in the overall organization’s best
interests (i.e., goal congruence).?
Minimize opportunity costs.?
Weston Company had sales revenue and
operating expenses of $5,000,000 and $4,200,000, respectively, for the year
just ended. If invested capital amounted to $6,000,000, the firm’s ROI was:
13.33%.?
83.33%.?
120.00%.?
750.00%.?
some other figure.?
The amounts charged for goods and
services exchanged between two divisions are known as:
opportunity costs.?
transfer prices.?
standard variable costs.?
residual prices.?
target prices.
Under section 404 of the
Sarbanes-Oxley Act, auditors are required to:
Attest to and report on management’s
assessment of internal controls.?
Establish and maintain internal
controls for audited companies.?
Advise management on its preparation
of the Report on Internal Controls.?
Evaluate the company’s internal
control system periodically throughout the year.?
All of these.
Which of the following is an
appropriate base to distribute the cost of building depreciation to
responsibility centers?
Number of employees in the
responsibility centers.?
Budgeted sales dollars of the
responsibility centers.?
Square feet occupied by the
responsibility centers.?
Budgeted net income of the
responsibility centers.?
Total budgeted direct operating costs
of the responsibility centers.?
