MANAGERIAL ACCOUNTING - RESPONSIBILITY ACCOUNTING

11. When used for performance evaluation, internal reports based on a responsibility accounting system should not

a. Include allocated fixed costs.

b. Be related to the organizational chart.

c. Distinguish between controllable and non-controllable costs.

d. Include variances between actual and budgeted controllable costs.

12. In evaluating an investment center, top management should concentrate on

a. Peso rates c. Profit percentages

b. Net income d. Return on investment

13. The following information pertains to Bronze Co. for the year ended December 31, 2021:

Sales: P 600,000 Income: P 100,000 Capital investment: P 400,000

Which of the following equations should be used to complete Bronze's return on investment?

a. (4/6) x (6/1) = ROI c. (4/6) x (1/6) = ROI

b. (6/4) x (1/6) = ROI d. (6/4) x (6/1) = ROI

14. If Division Copper as a 10% return on sales, income of P 5,000, and an investment turnover of 4 times, divisional

investment is

a. P 5,000 c. P 20,000

b. P 12,500 d. P 50,000

15. If asset turnover increased by 50% and the profit margin increased by 50%, then RoI would increase by

. 50% c. 225%

b. 25% d. 125%

16. Compared to a jewelry store, a supermarket has

a. Higher margin and higher turnover c. Lower margin and higher turnover

b. Higher margin and lower turnover d. Lower margin and lower turnover

17. The following information pertains to Silver Co.'s Gold Division for the current year:

Sales P 311,000

Variable cost 250,000

Traceable fixed cost 50,000

Average invested capital 40,000

Imputed interest rate 10%

What was Gold's return on investment?

a. 10% c. 27.50%

b. 13.33% d. 30%

18. Listed below is selected financial information for Western Division of the Pearl Company for 2021:

Average working capital P 625

General and administrative expenses 75

Net sales 4,000

Average plant and equipment 1,775

Cost of goods sold 3,525

If Pearl treats the Western Division as an investment center, what is the before-tax ROI for 2021?

a. 34.78% c. 19.79%

b. 22.54% d. 16.67%

19. A firm earning a profit can increase its return on investment by

a. Increasing sales revenues and operating expenses by the same peso amount

b. Decreasing sales revenues and operating expenses by the same percentage

c. Decreasing sales revenues and operating expenses by the same percentage

d. Increasing sales revenue and operating expenses by the same percentage

20. Mercury Co. plans to sell 200 units using P 20,000 of assets. The company incurs total costs of P 8,000 for these units.

If a return on investment of 10% is targeted, how much should be the selling price?

a. P 50 c. P 30

b. P 40 d. Cannot be determined from given information