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Unformatted text preview: Chapter 8 Review 1. Which of the following would be most effective in a small owner/manager-operated business? Centralization 2. Which is the best example of a decentralized operation? Each unit is responsible for their own operations and decision making. 3. The following are advantages of decentralization except: Each decentralized operation purchases their own assets and pays for operating costs. 4. Which of the following is a disadvantage of decentralization? Decisions made by one manager may negatively affect the profitability of the entire company. 5. In a profit center, the department manager has responsibility for and the authority to make decisions that affect: both costs and revenues for the department or division 6. Which of the following expenses incurred by the sporting goods department of a department store is a direct expense? Insurance on inventory of sporting goods 7. Which of the following expenses incurred by a department store is an indirect expense? Salary of vice-president of finance 8. Operating expenses directly traceable to or incurred for the sole benefit of a specific department and usually subject to the control of the department manager are termed: direct expenses 9. Income from operations of the Commercial Aviation Division is $2,225,000. If income from operations before service department charges is $3,250,000: total service department charges are $1,025,000 10. To calculate income from operations, total service department charges are: subtracted from income from operations before service department charges 11. The following data are taken from the management accounting reports of Dulcimer Co.: Div. A Div. B Div. C Income from operations $1,800,000 $1,350,000 $1,350,000 Total service department charges 1,700,000 1,050,000 1,100,000 If an incentive bonus is paid to the manager who achieved the highest income from operations before service department charges, it follows that: Division A's manager is given the bonus 12. Some organizations use internal service departments to provide like services to several divisions or departments within an organization. Which of the following would probably not lend itself as a service department? Inventory Control 13. Avey Corporation had $275,000 in invested assets, sales of $330,000, income from operations amounting to $49,500 and a desired minimum rate of return of 7.5%. The rate of return on investment for Avey Corporation is: 18% 14. Mason Corporation had $650,000 in invested assets, sales of $700,000, income from operations amounting to $99,000, and a desired minimum rate of return of 15%. The profit margin for Mason is: 14.1% 15. Mason Corporation had $650,000 in invested assets, sales of $700,000, income from operations amounting to $99,000, and a desired minimum rate of return of 15%. The investment turnover for Mason is: 1.08 16. Mason Corporation had $650,000 in invested assets, sales of $700,000, income from operations...
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- Spring '11
- Decision Making