Hi tutor,

I have some multiple choice questions relating to my management control system class. I really need your help. Thanks you.

30. The Putente Hills Toyota case represented an example of an automobile retailer struggling to determine the right incentive pay. The dealership struggled with aligning the correct incentive with the right responsibility center. Which of the following is correct?

A. The salespersons are treated like little investment centers because their incentive is based on full allocated costs

B. The service advisors are paid commissions on the work sold because they are profit centers.

C. The dealership general manager is inline with that of a revenue center.

D. All of the above

E. None of the above

29. Of the following decisions, the one that would be made by a Revenue Center would be:

a. Factory Relocation

b. Install a new ERP system

c. Setting discounts to major customers for the coming year

d. Inventory reorder levels

e. None of the above

28. The different types of financial performance target used in planning and budgeting, as described in the textbook, are:

a. Model-based, historical and negotiated

b. Fixed versus flexible

c. Internal versus external

d. all of the above

e. None of the above

27. which of the following statements is correct regarding the purpose of planning and budgeting?

a. it establishes challenging but achievable performance targets

b. it engages in long(er) - term thinking

c. it engages managers in understanding the levers that impact the departments performance.

d. all of the above

e. none of the above

26. the activity - based budgeting approach is the best described as a:

a. process generating a budget from a series of activities, such as board members engaging in various marketing activities.

b. process generating a budget from a traditional product - market, responsibility center, or department focus.

c. process on generating a budget connected to the underlying operational model of the organization.

d. all of the above

e. none of the above.

25. Epsilon has two divisions P and Q. Division P only makes a component which it can only sell to Division Q. Division P has a total magical cost per unit of $240, a transfer price per unit of 396$, a total production and sales per year of 4000 units and total fixed costs for the component of 240,000$ per year. Alpha Co has offered to sell the component to Division Q for $350 per unit. If Division Q accepts the offer Division P will close. Epsilon should:

a. Accept the offer. Save the total fixed cost of Division P $240,000

b. Accept the offer. Save $56,000 in costs.

c. Decline the offer. Avoid losing $200,000 per year.

d. Decline the offer. Avoid losing $184,000 per year.

e. None of the above.

24. What is the benefit of subjective bonus determination approach?

a. the performance-reward link is explicit.

b. alleviates bias or favoritism in assessing and rewarding performance

c. Allows performance to be evaluated more completely considering any of a number of hard to quantify, but important, performance areas

d. all of the above

e. none of the above

23. The four types of responsibility centres are:

a. cost, selling, investment and profit centre

b. cost, revenue, investment and profit centre

c. expense, revenue, investment and profit centre

d. all of the above

e. none of the above

22. the myopia problem occur when:

a. Financial measure create pressure for short-term performance potentially at the expense of long-term value creation

b. Financial measure create pressure for long-term performance, potentially at the expense of employee retention

c. Financial measure create situations when from corporate perspective things are not valuable, but from a socioeconomic perspective they are.

d. all of the above

e. None of the above.

21. what is a transfer price?

A. The price at which products or service are transferred between profit centers between different firms.

b. the price at which products or services are taxed depending on the open market demand and supply.

c. the price at which products or services are transferred between profit centers within the same organization.

d. all of the above.

e. none of the above.

20. which of the following would be a control to ensure that data input is accurate?

a. Security Camera

b. Audit trail

c. Format and Numerical Check

d. Password

e. None of the above

19. the case on Kranworth Chair corporation discussed in class illustrated the use of a performance measure using operating division income and controllable assets. The controllable assets in this case was defined as:

a. Fixed assets + working capital

b. Account receivable + inventories

c. Machinery and Equipment + Account Receivable - Account Payable + Inventory

d. all of the above

e. None of the above

18. which one of the following statements about goal congruence in a decentralised organisation is correct?

a. Involves the minimisation of inter-divisional rivalries in order to serve the best interest of the organisation as a whole.

b. Means that all divisional managers are given the same level of profit-related bonus.

c. Requires the achievement of organisational goals within a tight timeframe.

d. All of the above

E. None of the above

17. which of the following could be a problem with using accounting data to evaluate performance?

a. some accounting data lags the actual economic development of the firm, and therefore measure cannot be tied to performance.

b. the accounting data represents the current period activity and does not provide a view of achieving long term goals.

c. Accounting data does not address the non-financial measures need to evaluate performance

d. All of the above

E. None of the above

16. the case on Kranworth Chair corporation discussed in class illustrated among other things:

a. the benefits and costs of decentralization.

b. the role of incentive compensation in a management control system.

c. the appropriate performance measure for different responsibility centers

d. All of the above

E. None of the above