Chap13 Quiz Q

1.
Consider the following statements about goal congruence:
I. Goal congruence is obtained when managers of subunits throughout an organization strive to

achieve the goals set by top management.
II. Managers are often more concerned about the performance of their own subunits rather than
the performance of the entire organization.
III. Achieving goal congruence in most organizations is relatively straightforward and easy to
accomplish.
Which of the above statements is (are) true?
2. The ROI calculation will indicate:

3. Capital turnover shows:
4. Jamison Company had sales revenue and operating expenses of $5,000,000 and $4,200,000,
respectively, for the year just ended. If invested capital amounted to $6,000,000, the firm's ROI
was:
5. Vello, Inc. reported a return on investment of 12%, a capital turnover of 5, and income of
$180,000. On the basis of this information, the company's invested capital was:
6. The information that follows relates to Khan Corporation:
Sales margin: 7.5%
Capital turnover: 2
Invested capital: $20,000,000
On the basis of this information, the company's sales revenue is:
7. A division's return on investment may be improved by increasing:

8. The Nashville Division of Country Classics currently reports a profit of $3.6 million. Divisional
invested capital totals $9.5 million; the imputed interest rate is 12%. On the basis of this
information, Nashville’s residual income is:
9. The following information relates to the Corner Division of Hometown Enterprises:
Income for the period just ended: $1,500,000
Invested capital: $12,000,000
If the company has an imputed interest rate of 11%, Corner’s residual income would be:
10. The following information pertains to Travis Concrete:
Sales revenue $ 1,500,000
Gross margin 600,000
Income 90,000
Invested capital 450,000
The company's imputed interest rate is 8%.
The capital turnover is:
11. For the period just ended, Global Industries’ Western Division reported profit of $31.9
million and invested capital of $220 million. Assuming an imputed interest rate of 12%, which of
the following choices correctly denotes Western’s return on investment (ROI) and residual
income?
ROI Residual Income
A. 12.0% $(5.5 million)
B. 12.0% $5.5 million
C. 14.5% $(5.5 million)
D. 14.5% $5.5 million
E. 14.5% $26.4 million
12. The following information relates to the Falcon Division of Xenon Enterprises:
Interest rate on debt capital 8 %
Cost of equity capital 12 %
Market value of debt capital $ 50 million
Market value of equity capital $ 80 million
Income tax rate 30 %
On the basis of this information, Falcon’s weighted-average cost of capital is closest to:
13. Endotrope Corporation has an after-tax operating income of $3,200,000 and a 9% weighted-
average cost of capital. Assets total $7,000,000 and current liabilities total $1,800,000. On the
basis of this information, Endotrope’s economic value added is:
14. Economic value added (EVA) analysis indicates:

15. Buzz’s Florida Division is currently purchasing a part from an outside supplier. The company's
Georgia Division, which has excess capacity, makes and sells this part for external customers at a
variable cost of $22 and a selling price of $34. If Georgia begins sales to Florida, it (1) will use the
general transfer-pricing rule and (2) will be able to reduce variable cost on internal transfers by
$4. If sales to outsiders will not be affected, Georgia would establish a transfer price of:
16. Darrin’s Auto Northern Division is currently purchasing a part from an outside supplier. The
company's Southern Division, which has no excess capacity, makes and sells this part for external
customers at a variable cost of $19 and a selling price of $31. If Southern begins sales to
Northern, it (1) will use the general transfer-pricing rule and (2) will be able to reduce variable
cost on internal transfers by $3. On the basis of this information, Southern would establish a
transfer price of:
Genesis Scents has two divisions: the Cologne Division and the Bottle Division. The Bottle
Division produces containers that can be used by the Cologne Division. The Bottle Division's
variable manufacturing cost is $2, shipping cost is $0.10, and the external sales price is $3. No
shipping costs are incurred on sales to the Cologne Division, and the Cologne Division can
purchase similar containers in the external market for $2.60.
The Bottle Division has sufficient capacity to meet all external market demands in addition to
meeting the demands of the Cologne Division. Using the general rule, the transfer price from the
Bottle Division to the Cologne Division would be:
18. Genesis Scents has two divisions: the Cologne Division and the Bottle Division. The Bottle
Assume the Bottle Division has no excess capacity and could sell everything it produced
externally. Using the general rule, the transfer price from the Bottle Division to the Cologne
Division would be:
19. Genesis Scents has two divisions: the Cologne Division and the Bottle Division. The Bottle
The maximum amount the Cologne Division would be willing to pay for each bottle transferred
would be:
20. Consider the following statements about transfer pricing:
I. Income taxes and import duties are an important consideration when setting a transfer price
for companies that pursue international commerce.
II. Transfer prices cannot be used by organizations in the service industry.
III. Transfer prices are totally cost-based in nature, not market-based.
Which of the above statements is (are) true?

Chap13 Quiz Q

Uploaded by

Copyright:

Available Formats

Chap13 Quiz Q

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Chap13 Quiz Q

Uploaded by

Copyright:

Available Formats

1.

Consider the following statements about goal congruence:

I. Goal congruence is obtained when managers of subunits throughout an organization strive to

Which of the above statements is (are) true?

2. The ROI calculation will indicate:

Sales margin: 7.5%

Invested capital: $20,000,000

On the basis of this information, the company's sales revenue is:

7. A division's return on investment may be improved by increasing:

Income for the period just ended: $1,500,000

Invested capital: $12,000,000

10. The following information pertains to Travis Concrete:

Sales revenue $ 1,500,000

Gross margin 600,000

The company's imputed interest rate is 8%.

The capital turnover is:

A. 12.0% $(5.5 million)

B. 12.0% $5.5 million

C. 14.5% $(5.5 million)

D. 14.5% $5.5 million

E. 14.5% $26.4 million

Cost of equity capital 12 %

Market value of debt capital $ 50 million

Market value of equity capital $ 80 million

Income tax rate 30 %

14. Economic value added (EVA) analysis indicates:

II. Transfer prices cannot be used by organizations in the service industry.

III. Transfer prices are totally cost-based in nature, not market-based.

Which of the above statements is (are) true?

You might also like