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MULTIPLE CHOICE QUESTIONS

1, the current income for a subunit is $36 000,on sales revenues of $360 000. its current invested capital is $200 000. the subunits invested capital will be $20 000,and the reduction will not change the subunits capital occurs what will be the new return on investnmeny for the subunits

a) 20%

b) 22%

c)19.08


2, Which of the formular for the general transfer pricing rule?

a) transfer price=additional outlay costs+opportunity cost

b) transfer price=actual variable costs+ opportunity cost

c)transfer price=external market price-opportunity cost

d)transfer price= external market price-additional outlay costs


3, Division one has excess capacity. The external market price is $10.00 per batch. the product can be transfer to division two and sold by division tow for $12.00 per batch.what is the transfer price?

a) $8.50

b) $10.00

c)$12.00

d)$8.00


4, What is the residual income

a)excess income earned after budgeted income has been achieved

b)income beyond the breakeven point determined by the product's lifecycle

c)A percentage of income received by an organisation for its participation in a joint venture

d) The excess of investment centre income over the minimum return set by management


5,What is the balance scorecard

a) A perfomance measurement system that is strictly directed toward sales growth

b)a perfomance measure that evaluates multiple categories related to organizational goals

c) a series of checks and balances designed to mutually cooperative with the financial statemets

d)an evaluation process that focuses on productivity


6, The difference between computing residual income and return on investment (ROI) is that the formula for residual income include includes third piece of data. which of the following is that piece of data?

a)age of the investment

b)life of the investment

c)inflation rate

d)imputed interest rate


7.The current profit for a subunit is $36 000. its current invested capital is $200 000.the subunit is considering purchasing for $20 000 equipment that will increase annual profit by an estimated $28 000.The firms cost of capital is 12%. if the equipment is purchased what will be the increase in residual income of subunit?

a)N$2800

b)N$16 800

c)N$400

d)4%


8, What are the payments of cash to managers who achieve or exceed specific perfomance benchmarks called?

a)pay for perfomance

b)any of the above

c)merit pay

d)cash bonuses


9, The current income of the subunit is $42 000. its current invested capital is $280 000. if the sales margin is increased to 8% and the capital turnover remain constant at 3,what will be the subunit's new return on investment(ROI)?

a)24%

b)15%

c)45%

d)21%


10, Division R sells one of its products to division S in the same group. The product cost consists of $160 for materials,$60 for direct labour,$10 for variable overhead.R division stets its profit margin eqaul to 40% of the variable cost.What is the ideal transfer price if R is operating at less than full capacity?

a)$230

b)$160

c)$432

d)$340

Step-by-step answer

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