t2_s08s - Managerial Accounting Exam 4 Summer 2006 Student...

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Managerial Accounting – Exam 4 Summer 2006 Student Number: __________________________ Pledge: On my honor I have neither given or received help on this exam. I understand that any violation of the University Honor Policy will result in an automatic zero on this exam, and that I will be subject to all sanctions available under the University's Honor Policy. Part I - Multiple Guess (135 points) 1. A segment of a business responsible for both revenues and expenses would be called: A) a cost center. B) an investment center. C) a profit center. D) residual income. 2. Lanta Restaurant compares monthly operating results with a static budget prepared at the beginning of the year. When actual sales are less than budget, would the restaurant usually report favorable variances on variable food costs and fixed supervisory salaries? Food Costs Supervisory Salaries A) No No B) No Yes C) Yes No D) Yes Yes 3. All other things equal, a company's return on investment (ROI) would generally increase when: A) average operating assets increase. B) sales decrease. C) operating expenses decrease. D) operating expenses increase. 4. The performance of the manager of Division A is measured by residual income. Which of the following would increase the manager's performance measure? A) Increase in average operating assets. B) Decrease in average operating assets. C) Increase in minimum required return. D) Decrease in net operating income. 1
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5. Consider the following three statements: I. A profit center has control over both cost and revenue. II. An investment center has control over invested funds, but not over costs and revenue. III. A cost center has no control over sales Which statement(s) is/are correct? A) Only I B) Only II C) Only I and III D) Only I and II 6. A company's return on investment is the: A) margin divided by turnover. B) margin multiplied by turnover. C) turnover divided by average operating assets. D) turnover multiplied by average operating assets. E) none of the above. 7. Delmar Corporation is considering the use of residual income as a measure of the performance of its divisions. What major disadvantage of this method should the company consider before deciding to institute it? A) this method does not make allowance for difference in the size of compared divisions. B) opportunities may be undertaken which will decrease the overall return on investment. C) the minimum required rate of return may eliminate desirable opportunities from consideration. D) residual income does not measure how effectively the division manager controls costs. E) none of the above. 8. Which department is usually held responsible for an unfavorable materials quantity variance? A) Marketing.
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This note was uploaded on 11/30/2011 for the course ACCTG 222 taught by Professor Silvers during the Fall '11 term at UMass (Amherst).

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t2_s08s - Managerial Accounting Exam 4 Summer 2006 Student...

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