Cost analysis has two dimensions, which are

A) financial and non-financial.

B) present and the future.

C) project and financial.

D) project and non-financial.

E) project and time.

Life cycle costing is the accounting system that corresponds to

A) the non-financial dimension of costs analysis.

B) the project dimension of costs analysis.

C) the cost dimension of costs analysis.

D) the financial dimension of costs analysis.

E) the time dimension of costs analysis.

Which of the following is NOT a part of the capital budgeting decision process model?

A) Determine which investment yields the greatest benefit and the least cost to the organization.

B) Track realized cash flows, compare against estimated numbers, and revise plans if necessary.

C) Forecast all potential cash flows attributable to the alternative projects.

D) Manage the control of non-quantitative factors.

E) Identify potential capital investments that agree with the organization's strategy.

The consequences of capital expenditures are

A) quantitative and financial.

B) quantitative and qualitative.

C) qualitative and nonfinancial.

D) appropriate and inappropriate.

E) nonfinancial and irrelevant.

Chapter 21Transfer Pricing and Multinational Management Control Systems

1. A management control system is a means of gathering and using information to aid and coordinate the process of making planning and control decisions throughout the organization, and to guide employee behaviour.

TRUEFALSE

2. Subunit managers are better informed about their suppliers than top management is.

TRUEFALSE

3.A management control system should have all of the following characteristics, EXCEPT

A) it should motivate employees.

B) it should be closely aligned to organizational goals and objectives.

C) it should provide information for individual managers for decision making.

D) it should motivate managers.

E) it should always focus on customer satisfaction.

The costs, as opposed to benefits, of decentralization include all of the following, EXCEPT

A) management development and learning.

B) duplication of output.

C) increased costs of information-gathering.

D) focus of manager's attention on the subunit rather than the company as a whole.

E) suboptimal decision making.

Which of the following is FALSE concerning profit centres and cost centres?

A) A profit centre can exist within a centralized organization.

B) A profit centre can exist within a decentralized organization.

C) A cost centre can exist within a centralized organization.

D) A cost centre can exist within a decentralized organization.

E) If a profit centre exists within a centralized organization, there cannot be any cost centres in the organization.

Which of the following is NOT a responsibility centre within an organization, whether centralized or decentralized?

A) cost centre

B) profit centre

C) revenue centre

D) savings centre

E) investment centre

All of the following are benefits of decentralization EXCEPT

A) it creates greater responsiveness to local needs.

B) it decreases management and worker morale.

C) it leads to quicker decision making.

D) it sharpens the focus of managers.

E) it leads to better supplier relationships.

Physical exertion and mental action towards a goal can best be described as

A) motivation.

B) effort.

C) goal congruence.

D) incentive.

E) loyalty.

Chapter 22Multinational Performance Measurement and Compensation

Use the information below to answer the following question(s).

The top management at Groundsource Company, a manufacturer of lawn and garden equipment, is attempting to recover from a flood, which destroyed some of its accounting records. The main computer system was also severely damaged. The following information was salvaged:

Tractor Division

Tiller Division

Digger Division

Sales

$10,000,000

(a)

$2,400,000

Net operating income

$1,000,000

$1,440,000

$600,000

Total assets

(b)

(c)

$2,000,000

Return on investment

0.20

0.10

(d)

Return on sales

(e)

0.12

0.25

Investment turnover

(f)

(g)

1.2

What were the sales for the Tiller Division?

A) $9,600,000

B) $12,000,000

C) $15,000,000

D) $15,500,000

E) $14,400,000

Explanation:Return on Sales = Net Inc/Sales

What is the value of the total assets belonging to the Tractor Division?

A) $3,500,000

B) $4,000,000

C) $4,500,000

D) $5,000,000

E) $2,000,000

Explanation:ROI = Net Income/Assets

What is the value of the total assets belonging to the Tiller Division?

A) $10,000,000

B) $12,000,000

C) $14,400,000

D) $15,000,000

E) $16,000,000

Explanation:ROI = Net Income/Assets

What is the Digger Division's return on investment?

A) .25

B) .30

C) .45

D) .60

E) .20

Explanation:ROI = Net Income/Net Assets = Return on Sales Asset Turnover

What is the Tractor Division's return on sales?

A) 0.10

B) 0.12

C) 0.15

D) 0.20

E) 0.25

Explanation:Net operating income/sales = Return on sales

What is the Tractor Division's investment turnover?

A) .50

B) 1.0

C) 2.0

D) 2.5

E) 3.0

Explanation:Investment Turnover = Sales/Assets

step 1 is to calculate the Assets

ROI = Net Income/Assets

Assets = net Income/ROI

What is the Tiller Division's investment turnover?

A) .50

B) 1.333

C) 1.2

D) 1.5

E) .833

Explanation:Return on Investment = Return on Sales Investment Turnover

Investment Turnover = Return on Investment/Return on Sales

Skill:Applying