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11. Which of the following is an ethical problem during the budgeting process? A. Board of Directors must effectively evaluate all managers' individual performance using
11. Which of the following is an ethical problem during the budgeting process? A. Board of Directors must effectively evaluate all managers' individual performance using the same metric B. Board of Directors cannot effectively evaluate all managers' individual performance using the same metric C. Managers may be incentivized to underestimate budgets D. Managers may be incentivized to overestimate budgets 12. Which of the following is not a component of a profit variance? A. Price Variance B. Efficiency Variance C. Sales Activity Variance D. All of the Above are components E. None of the Above are components 13. When managers compare the difference between flexible budget profits and master budget profits, they are analyzing the A. Price Variance B. Efficiency Variance C. Sales Activity Variance D. Both A and B E. Both A and C Questions 14-15 utilize the following information. Sport Mountain Bikes (SMB) has two divisions: North and South. SMB has a cost of capital of 15 percent and the following selected financial information for its Year 1 activities. North South Sales Income 10,000 11,000 1,200 1,390 Investment (Beg of Year) 5,000 4,000 Current Liabilities (Beg of Year) 700 500 Advertising Expenditures 800 600 14. What are the ROI's for each division? A. North: 24%; South: 35% B. North: 35%; South: 24% C. North: 50%; South: 36% 15. D. North: 36%; South: 50% What are the residual incomes for each division? A. North: 790; South: 450 B. North: 450; South: 790 C. North: 400; South: 790 D. North: 790; South: 400
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