A) Dept. 2; $100,000.
B) Dept. 3; $400,000.
C) Dept. 3; $250,000.
D) Dept. 2; $150,000.
E) Dept. 1; $1,000,000.
130) A system of performance measures, including nonfinancial measures, used to assess company and
division manager performance is:
A) Hurdle rate.
B) Residual income.
C) Balanced scorecard.
D) Return on investment.
E) Investment turnover.
131) Which of the following is not one of the perspectives used to analyze performance using the
balanced scorecard?
A) Internal process
B) Financial/owners
C) Customer
D) Number of employees
E) Innovation and learning
132) Return on investment can be split into which of the following two measures?
A) Profit margin and net income.
B) Profit margin and investment turnover.
C) Residual income and operating income.
D) Investment center average assets and investment turnover.
E) Investment center income and profit margin.
133) Profit margin for an investment center measures:
A) Investment center income generated from its invested assets.
B) Departmental contribution to overhead.
C) How efficiently an investment center generates sales from its invested assets.
D) Investment center income compared to target investment center income.
E) Investment center income earned per dollar of sales.
134) Carter Company reported the following financial numbers for one of its divisions for the year;
average total assets of $4,100,000; sales of $4,525,000; cost of goods sold of $2,550,000; and
operating expenses of $1,372,000. Compute the division’s return on investment:
A) 10.4%. B) 14.7%. C) 30.3%. D) 13.3%. E) 23.6%.
135) Carter Company reported the following financial numbers for one of its divisions for the year;
average total assets of $4,100,000; sales of $4,525,000; cost of goods sold of $2,550,000; and
operating expenses of $1,372,000. Assume a target income of 10% of average invested assets.
Compute residual income for the division:
A) $197,500. B) $193,000. C) $60,300. D) $203,000. E) $150,500.
136) Dartford Company reported the following financial data for one of its divisions for the year;
average investment center total assets of $3,500,000; investment center income $610,000; a target
income of 12% of average invested assets. The residual income for the division is:
A) $1,030,000.
B) $190,000.
C) $536,800.
D) $493,200.
E) $683,200.
137) Kragle Corporation reported the following financial data for one of its divisions for the year;
average invested assets of $470,000; sales of $930,000; and income of $105,000. The investment
center profit margin is:
A) 22.3%. B) 447.6%. C) 50.5%. D) 197.9%. E) 11.3%.
138) Kragle Corporation reported the following financial data for one of its divisions for the year;
average invested assets of $470,000; sales of $930,000; and income of $105,000. The investment
turnover is:
A) 1.98. B) 50.5. C) 447.6. D) 11.3. E) 22.3.
139) If a company reports profit margin of 31.6% and investment turnover of 1.30 for one of its
investment centers, the return on investment must be:
A) 32.9%. B) 24.3%. C) 30.3%. D) 41.1%. E) 4.11%.
140) Holo Company reported the following financial numbers for one of its divisions for the year;
average total assets of $5,800,000; sales of $5,375,000; cost of goods sold of $3,225,000; and
operating expenses of $1,147,000. Compute the division’s return on investment:
A) 17.3%. B) 14.7%. C) 21.3%. D) 18.6%. E) 10.4%.
141) Holo Company reported the following financial numbers for one of its divisions for the year;
average total assets of $5,800,000; sales of $5,375,000; cost of goods sold of $3,225,000; and
operating expenses of $1,147,000. Assume a target income of 15% of average invested assets.
Compute residual income for the division:
A) $133,000. B) $196,750. C) $150,450. D) $100,300. E) $150,500.
142) Pleasant Hills Properties is developing a golf course subdivision that includes 250 home lots; 100
lots are golf course lots and will sell for $95,000 each; 150 are street frontage lots and will sell for
$65,000. The developer acquired the land for $1,800,000 and spent another $1,400,000 on street
and utilities improvement. Compute the amount of joint cost to be allocated to the golf course lots
using value basis. (Round your intermediate percentages to 2 decimal places.)
A) $1,620,800.
B) $1,080,000.
C) $720,000.
D) $1,920,000.
E) $1,579,200.
143) Pleasant Hills Properties is developing a golf course subdivision that includes 250 home lots; 100
lots are golf course lots and will sell for $95,000 each; 150 are street frontage lots and will sell for
$65,000. The developer acquired the land for $1,800,000 and spent another $1,400,000 on street
and utilities improvement. Compute the amount of joint cost to be allocated to the street frontage
lots using value basis. (Round your intermediate percentages to 2 decimal places.)
A) $1,920,000.
B) $720,000.
C) $1,080,000.
D) $1,579,200.
E) $1,620,800.
144) The following is a partially completed lower section of a departmental expense allocation
spreadsheet for Brickland. It reports the total amounts of direct and indirect expenses for the four
departments. Purchasing department expenses are allocated to the operating departments on the
basis of purchase orders. Maintenance department expenses are allocated based on square footage.
Compute the amount of Purchasing department expense to be allocated to Fabrication.
Purchasing
Maintenance
Fabrication
Assembly
Operating costs
$ 32,000
$ 18,000
$ 96,000
$ 62,000
No. of purchase orders
16
4
Sq. ft. of space
3,300
2,700
A) $25,600. B) $17,600. C) $6,400. D) $8,100. E) $9,900.
145) The following is a partially completed lower section of a departmental expense allocation
spreadsheet for Brickland. It reports the total amounts of direct and indirect expenses for the four
departments. Purchasing department expenses are allocated to the operating departments on the
basis of purchase orders. Maintenance department expenses are allocated based on square footage.
Purchasing
Maintenance
Fabrication
Assembly
Operating costs
$ 32,000
$ 18,000
$ 96,000
$ 62,000
No. of purchase orders
16
4
Sq. ft. of space
3,300
2,700
Required:
Compute the amount of Purchasing department expense to be allocated to Assembly.
A) $8,100. B) $6,400. C) $25,600. D) $9,900. E) $14,400.
146) The following is a partially completed departmental expense allocation spreadsheet for Brickland.
It reports the total amounts of direct and indirect expenses for its four departments. Purchasing
department expenses are allocated to the operating departments on the basis of purchase orders.
Maintenance department expenses are allocated based on square footage. Compute the amount of
Maintenance department expense to be allocated to Fabrication.
Purchasing
Maintenance
Fabrication
Assembly
Operating costs
$ 32,000
$ 18,000
$ 96,000
$ 62,000
No. of purchase orders
16
4
Sq. ft. of space
3,300
2,700
A) $6,400. B) $25,600. C) $8,100. D) $9,900. E) $9,000.
147) The following is a partially completed lower section of a departmental expense allocation
spreadsheet for Brickland. It reports the total amounts of direct and indirect expenses for the four
departments. Purchasing department expenses are allocated to the operating departments on the
basis of purchase orders. Maintenance department expenses are allocated based on square footage.
Compute the amount of Maintenance department expense to be allocated to Assembly.
Purchasing
Maintenance
Fabrication
Assembly
Operating costs
$ 32,000
$ 18,000
$ 96,000
$ 62,000
No. of purchase orders
16
4
Sq. ft. of space
3,300
2,700
A) $6,400. B) $9,000. C) $8,100. D) $9,900. E) $25,600.
148) Which of the following represents the correct formula for calculating cycle time for a
manufacturer?
A) Process time – inspection time + move time + wait time.
B) Process time + inspection time – move time – wait time.
C) Process time + inspection time + move time + wait time.
D) Process time + inspection time + move time – wait time.
E) Process time – inspection time – move time – wait time.
149) Which of the following statements is correct concerning the elements of cycle time?
A) Process time is considered non-value-added time.
B) Wait time is considered value-added time.
C) Inspection time is the time spent producing the product.
D) Cycle efficiency is the ratio of non-value-added time to total cycle time.
E) Move time is the time spent moving (1) raw materials from storage to production and (2)
goods in process from one factory location to another factory location.
150) Using the information below, compute the manufacturing cycle time:
Process time
6.0
hours
Inspections time
.5
hours
Move time
.6
hours
Wait time
.9
hours
Warehouse storage time
72.0
hours
A) 80.0 hours.
B) 7.1 hours.
C) 7.5 hours.
D) 6.5 hours.
E) 8.0 hours.
151) Using the information below, compute the cycle efficiency:
Process time
6.0
hours
Inspections time
.5
hours
Move time
.6
hours
Wait time
.9
hours
Warehouse storage time
72.0
hours
A) 88.8%. B) 100.0%. C) 81.3%. D) 93.8%. E) 75.0%.
152) When the selling division in an internal transfer has unsatisfied demand from outside customers for
the product that is being transferred, then the lowest acceptable transfer price as far as the selling
division is concerned is:
A) the full absorption cost of producing a unit of product.
B) the amount that the purchasing division would have to pay an outside seller to acquire a
similar product for its use.
C) all the costs of producing a unit of product.
D) variable cost of producing a unit of product.
E) the market price charged to outside customers, less costs saved by transferring internally.
153) Division M makes a part that it sells to customers outside of the company. Data concerning this part
appear below:
Selling price to outside customers
$ 75
Variable cost per unit
$ 50
Total fixed costs
$ 400,000
Capacity in units
25,000
Division O of the same company would like to use the part manufactured by Division M in one of its
products. Division O currently purchases a similar part made by an outside company for $70 per unit
and would substitute the part made by Division M. Division O requires 5,000 units of the part each
period. Division M can sell every unit it produces on the outside market. What should be the lowest
acceptable transfer price from the perspective of Division O?
A) $16 B) $25 C) $66 D) $75 E) $50
154) Part AR3 costs the Southwestern Division of Luxon Corporation $26 to make-direct materials are
$10, direct labor is $4, variable manufacturing overhead is $9, and fixed manufacturing overhead is
$3. Southwestern Division sells Part AR3 to other companies for $30. The Northeastern Division
of Luxon Corporation can use Part AR3 in one of its products. The Southwestern Division has
enough idle capacity to produce all of the units of Part AR3 that the Northeastern Division would
require. What is the lowest transfer price at which the Southwestern Division should be willing to
sell Part AR3 to the Northeastern Division?
A) $23 B) $27 C) $21 D) $26 E) $30
