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

The Puente Hills Toyota case represented an example of an automobile retailer struggling to determine the right incentive way. 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 incentives 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.

What is a transfer price?

A. The price at which products or services 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.

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

A. Fixed assets + Working Capital

B. Accounts receivables + inventories

C. Machinery and Equipment + Accounts receivables - Accounts Payable + Inventories

D. All of the above

E. None of the above.

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 can not 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. The accounting data does not address the non-financial measures to evaluate performance.

D. All of the above.

E. None of the above.

An example of a long-term incentive for an employee is:

A. Profit sharing

B. Annual vacation

C. Stock option plan

D. All of the above

E. None of the above.

What is an example of gamesmanshift?

A. Creation of slack resources.

B. Lengthy review processes.

C. Negative attitudes.

D. All of the above

E. None of the above.

From our ethics lecture, we discussed amongst other things earnings management. What is earnings management?

A. Change procedure to include sales orders received in monthly sales when they haven't been shipped.

B. A change in accounting policy to reduce the limit of any expenditure to be capitalized.

C. A change in accounting policy from LIFO to FIFO to improve earnings.

D. All of the above

E. None of the above.

The case on Diagnostic Products identifies the following major ethical principles:

A. Utilitarianism, Fairness, Duties and Obligations, and Virtues.

B. Utilitarianism, Rights, Privileges, and Virtues.

C. Nepotism, Rights, Obligations, and Virtues.

D. All of the above

E. None of the above.

What is the benefit of setting high targets for performance pay?

A. To maintain vertical compensation equity.

B. To avoid undeserved bonuses due to windfall gains.

C. To avoid paying bonuses for performance which is considered mediocre or worse.

D. All of the above

E. None of the above.