1. The level of the transfer price can affect the overall company because

a.it may impact on the taxes paid by the multinational company.

b.the higher the transfer price, the higher the operating income.

c.the transfer price may be higher than the cost-based price.

d.the lower the transfer price, the lower the total costs.

e.internal transfers are always costly to the firm.

2. A responsibility center in which a manager is responsible for revenues, cost, and investment is a(n)

a.cost center.

b.profit center.

c.investment center.

d.revenue center.

e.None of these choices are correct.

3. The following information pertains to the three divisions of Yang Company:

	Division A	Division B	Division C
Sales	?	?	$1,345,000
Net operating income	$48,000	$18,000	$82,000
Average operating assets	$420,000	?	?
Return on investment	?	15%	20%
Margin	0.2	0.015	?
Turnover	2.1	?	?
Target ROI	17%	14%	8%

What are the average operating assets for Division B?

a.$18,000

b.$120,000

c.$420,000

d.$125,000

4. Which of the following formulas calculates the return on investment (ROI)?

a.Operating Income / Minimum Expected Return

b.Residual Income / Sales

c.After-tax Operating Income / Total Capital Employed

d.Total Capital Employed / Operating Income

e.Operating Income / Average Operating Assets

5. Unique Company makes children's board games. One popular game requires the following amounts of time: processing 2.5 hours; waiting 7 hours; moving 4.5 hours. Which of the following is the manufacturing cycle efficiency (MCE) of Unique Company? (Note: Round answer to two decimal places.)

a.17.86%

b.25.56%

c.33.60%

d.20.00%

e.100.00%