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Consider the following statements about pricing: 1. Prices are often determined by the market. II. Prices are rarely based on costs. III. A balance of market forces and cost is important when making pricing decisions. Which of the above statements is (are) true? Select one: a. I only. o b. ll only. c. I and III. d. I, II, and III. e. Il and III. Select the incorrect statement concerning the application of the controllability concept to responsibility accounting. Select one: O a. Managers should be held accountable for actions that are beyond their scope of control. O b. Each manager should be evaluated on the costs and revenues that are under his or her control. c. The concept of control is crucial to an effective responsibility accounting system. O d. As a practical matter, control of costs or revenues may be shared rather than absolute. Within an organizational structure, the person most likely to be evaluated in terms of controllable costs would be: Select one: a. A production line worker. o b. A sales representative. O c. A cost center manager. O d. A maintenance worker. e. A payroll clerk. The Markham Division of World Corporation, which has a current ROI of 20%, is studying an investment opportunity that will yield an ROI of 18%. Assuming that World uses an imputed interest charge of 14%, would the investment be attractive to: 1-Divisional management if ROI is used to evaluate divisional performance? 2-Divisional management if residual income (RI) is used to evaluate divisional performance? 3-The management of Global Corporation? Attractive to Markham: ROI Yes No Attractive to Markham: RI Yes Attractive to World Corp. Yes Yes Yes Yes Yes No No No No Yes No Yes Select one: a. Choice C b. Choice B c. Choice E d. Choice D e. Choice A Consider the following statements about pricing: 1. Prices are often determined by the market. II. Prices are rarely based on costs. III. A balance of market forces and cost is important when making pricing decisions. Which of the above statements is (are) true? Select one: a. I only. o b. ll only. c. I and III. d. I, II, and III. e. Il and III. Select the incorrect statement concerning the application of the controllability concept to responsibility accounting. Select one: O a. Managers should be held accountable for actions that are beyond their scope of control. O b. Each manager should be evaluated on the costs and revenues that are under his or her control. c. The concept of control is crucial to an effective responsibility accounting system. O d. As a practical matter, control of costs or revenues may be shared rather than absolute. Within an organizational structure, the person most likely to be evaluated in terms of controllable costs would be: Select one: a. A production line worker. o b. A sales representative. O c. A cost center manager. O d. A maintenance worker. e. A payroll clerk. The Markham Division of World Corporation, which has a current ROI of 20%, is studying an investment opportunity that will yield an ROI of 18%. Assuming that World uses an imputed interest charge of 14%, would the investment be attractive to: 1-Divisional management if ROI is used to evaluate divisional performance? 2-Divisional management if residual income (RI) is used to evaluate divisional performance? 3-The management of Global Corporation? Attractive to Markham: ROI Yes No Attractive to Markham: RI Yes Attractive to World Corp. Yes Yes Yes Yes Yes No No No No Yes No Yes Select one: a. Choice C b. Choice B c. Choice E d. Choice D e. Choice A
