1. Decentralized operations

a. may allow managers to get closer to the customer.

b. allow the manufacturing operations of the company to be focused in one location.

c. are substandard locations to train managers.

d. prevent duplications accross divisions.

2. Trafalger Company costs are under budget by $30,000. The company is divided into East and West regions. The East region's costs were over budget by $26,000. Determine the amount that the West region's costs were over or under budget.

a. Under budget by $56,000. b. Over budget by $4,000 c. Over budget by $56,000 d. Not an answer.

3. The following financial information is available for Beastie's Upper and Lower divisions:

UpperLower

Operating Income$380,000$240,000

Assets Invested$2,000,000$1,100,000

The company wants to invest in one of its divisions, Given the information above, which one is the better investment?

a. Don't pick this one. b. This is not a choice. c. Upper Division d. Lower Division.

4. In the DuPont Formula, Profit Margin indicates the profit earned on each dollar of Sales. True/False.

5. The market price approach is used to set a transfer price between Dep't A and Dep't B for the year on January 1. Transfers occur regularly throughout the year.

Market price for Dep't A's product falls 20% by July and remains there for the rest of the year. If all else remains the same, on December 31 the receiving division will

d. lose money on the units transferred in.

a. break even on transferred units.

b. neither lose nor gain money on the transaction.

c. make extra money on the transferred units.

6. Non-financial factors should not be considered when trying to decide on an investment decision. True/False.