5/4/2019 Quiz 5 - Chapter 12 & 13

Started on Saturday, 4 May 2019, 3:41 PM

State Finished
Completed on Saturday, 4 May 2019, 4:04 PM
Time taken 23 mins 1 sec
Overdue 3 mins 1 sec
Mark 10.00 out of 10.00 (100%)

Question 1
Correct
Mark 1.00 out of 1.00

Which of the following statements best completes this sentence? ‘The biggest challenge(s) facing
all decentralised firms is …'

Select one:
A. to reap the advantages of autonomy AND to attempt to ensure goal congruence

B. to attempt to ensure goal congruence

C. to choose the most appropriate transfer price
D. to reap the advantages of autonomy

The correct answer is: to reap the advantages of autonomy AND to attempt to ensure goal congruence

Question 2
Correct
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A sales department manager is an example of a:

Select one:
A. profit centre manager
B. cost centre manager
C. investment centre manager
D. revenue centre manager

The correct answer is: revenue centre manager

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5/4/2019 Quiz 5 - Chapter 12 & 13

Question 3
Correct
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Business unit reporting shows profit and loss statements for the company as a whole and for:

Select one:
A. its major business units
B. the contribution margin
C. controllable expenses
D. uncontrollable expenses

The correct answer is: its major business units

Question 4
Correct
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Joy Home Fashions reported a return on investment during the year of 6 per cent and a profit
margin of 12 per cent. What was the investment turnover for the year?

Select one:
A. 0.18 times
B. 0.2 times
C. 0.72 times
D. 0.5 times

The correct answer is: 0.5 times

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5/4/2019 Quiz 5 - Chapter 12 & 13

Question 5
Correct
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Callahan Company consists of two divisions, Northern and Southern. During 2008, many of the
accounting records were destroyed in a fire. The managing director has asked the accountant for
information relating to 2008. The following information is available to the accountant.

Northern Southern
Total
Divsion Division
(000)
(000) (000)

Revenues $1,200 $700 $500

Variable operating expenses 720

Contribution Margin

Controllable fixed expenses 120

Fixed expenses controllable by

150 80
others

Business unit margin 50

Common fixed costs z

Profit before taxes 85

In addition, the contribution margin ratio for both divisions was the same. What were the common
fixed costs (z) during 2008?

Select one:
A. $70 000
B. $45 000
C. $130 000
D. $65 000

The correct answer is: $45 000

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5/4/2019 Quiz 5 - Chapter 12 & 13

Question 6
Correct
Mark 1.00 out of 1.00

Which of the following managers is held accountable for the profit of the subunit?

Select one:
A. Revenue centre manager
B. Profit centre manager
C. Investment centre manager
D. Both B and C

The correct answer is: Both B and C

Question 7
Correct
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The return on investment of a division will increase if the division is able to:

Select one:
A. increase return on sales or increase investment turnover
B. increase return on sales and increase investment turnover
C. increase return on sales and/or increase investment turnover
D. increase sales revenue and decrease asset turnover

The correct answer is: increase return on sales and/or increase investment turnover

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5/4/2019 Quiz 5 - Chapter 12 & 13

Question 8
Correct
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Which of the following is not a benefit of decentralisation?

Select one:
A. Relief to upper-level management
B. Narrow focus on the manager's own subunit
C. Specialised information about the local markets
D. Motivation

The correct answer is: Narrow focus on the manager's own subunit

Question 9
Correct
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Which of the following statements is false?

Select one:
A. A reward system can include both cash and non-cash rewards.
B. Reward systems focus on long-term results.
C. Reward systems can be used at all levels of the organisation.
D. Tying rewards to a profit-based measure can provide an incentive for managers to
manipulate accounting results.

The correct answer is: Reward systems focus on long-term results.

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5/4/2019 Quiz 5 - Chapter 12 & 13

Question 10
Correct
Mark 1.00 out of 1.00

One advantage of business unit reports is that they make a distinction between business units
and:

Select one:
A. budgets
B. allocated costs
C. business unit managers
D. cost objects

The correct answer is: business unit managers

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