Choose that which correctly fills the blanks in the following paragraph?

1.) Divisional managers should be assessed on cost and revenue that are _________ the division. To allow for the different sizes of the divisions, _________ should be used to compare the divisions. Cost variances _________ be used to assess managers of investment centers. *

A. traceable to/RI/cannot

B. traceable to/ROI/cannot

C. Some other answer

D. controllable by/RI/can

E. controllable by/ROI/can

2.) One aim of a system of transfer pricing is that divisional _________ is measured correctly to allow performance to be assessed fairly. If the correct_________ is decided, it should result in goal congruence and organizational profits should be _________

A. Profit/transfer price/maximised

B. Profit/profit margin/maximised

C. Sales revenue/transfer price/satisfactory

D. Sales revenue/profit margin/satisfactory

3.) Which of the choices best describe the statements below?

A. False,False,True,True,False

B. True,False,False,False,True

C. False, True,True,False,False

D. Some other answer

E. True,False,True,True,True

4.) Which of the choices best describe the statements below?

A. Three of the Statements are false.

B. Some other answer.

C. All of the statements are true.

D. Two of the statements are false

E. One statement is False.

5.) Ladies Department of Kikay Clothing Company has retained a positive residual income and is now planning to invest in a new venture that will increase residual income but decreases the department's total return on investment .Which statement describes the inter relations between the expected rate of return on the new venture, the firms cost of capital, and the departments present ROI?

A. The department's current return on investment is higher than the expected rate of return on the new project but lower than the firm's cost of capital used as the required rate of return.

B. The expected rate of return on the new venture is higher than the department's current return on investment but lower than the firm's cost of capital, which is being used as its required rate of return.

C. The firm's cost of capital used as the required rate of return is higher than the expected rate of return on the new venture but lower than the department's current return on investment.

D. The expected rate of return on the new venture is higher than the firm's cost of capital used as the required rate of return but lower than the department's current return on investment.

E. Some other answer.

Choose the best answer Statement 1: Return on investment (ROI) encourages managers to accept all investment decisions that will benefit the company as a whole when it is used as a measure of performance. Statement 2. The selling division in a transfer pricing situation would want the transfer price to be set to cover at least the full cost per unit plus the lost contribution margin per unit on outside sales. Statement 3:All profit centers are responsibility centers, but not all responsibility centers are profit centers. Statement 4. A company has two divisions, each selling several product lines. If segment reports are prepared at the product line level, the division managers' salaries would be considered as common fixed costs of the product lines. Statement 5: Transfer prices based on standard cost provide an incentive for the receiving division to control costs. Statement 1. Purchasing managers may be held accountable for total purchase costs, because of their ability to predict uncontrollable prices and explain uncontrollable price changes. Statement 2. Performance reports for responsibility centers also may include uncontrollable items which may change behavior in the direction top management desires Statement 3: The best way to encourage managers to act in the firm's best interests is to measure sure their performance in relation to actual results. Statement 4:When fixed costs are considered and allocated to divisions, the resulting direct profit figure is more a measure of the divisional manager's performance rather than the division's performance. Statement 5: Two of the advantages of using Non financial indicators is that they directly measure an entity's performance in the activities that create shareholder wealth, such as producing and delivering quality goods and services to customers and that non financial measures may better predict the direction of future cash flows because they measure productive activity directly