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31.How is performance evaluated for a cost center? 
 

A. Actual costs incurred compared to budgeted costs.

B. Actual segment margin compared to budgeted segment margin.

C. Comparison of actual and budgeted return on investment (ROI) based on segment margin and assets controlled by the segment.

D. None of these.

32.How is performance evaluated for a profit center? 
 

A. Actual costs incurred compared to budgeted costs.

B. Actual segment margin compared to budgeted segment margin.

C. Comparison of actual and budgeted return on investment (ROI) based on segment margin and assets controlled by the segment.

D. None of these.

33.How is performance evaluated for an investment center? 
 

A. Actual costs incurred compared to budgeted costs.

B. Actual segment margin compared to budgeted segment margin.

C. Comparison of actual and budgeted return on investment (ROI) based on segment margin and assets controlled by the segment.

D. None of these.

34._____________ allows managers to focus their attention on maximizing an amount of earnings above a minimum required ROI: 
 

A. Optimization

B. The DuPont model

C. Residual income

D. Transfer pricing

35.ROI used to evaluate the performance of an investment center manager can sometimes lead to suboptimization. A performance measure designed to avoid the risk of suboptimization is: 
 

A. operating income.

B. residual income.

C. segment income.

D. the DuPont model.

36.The term transfer price refers to: 
 

A. The price at which a product or service is sold to a government entity.

B. The price at which a product or service is sold by one segment to another related segment.

C. The price at which a product or service is sold by a segment to an outside party.

D. None of these.

37.A favorable materials quantity variance would occur if: 
 

A. more material is purchased than is used.

B. actual pounds of materials used were less than the standard pounds allowed.

C. actual labor hours used was greater than the standard labor hours allowed.

D. actual pounds of materials used was greater than the standard pounds allowed.

38.April Corporation developed the following per-unit standards for its product: 2 pounds of direct materials at $3.75 per pound. Last month, 2,000 pounds of direct materials were purchased for $7,600. The direct materials price variance for last month was: 
 

A. $3,800 favorable.

B. $200 favorable.

C. $100 unfavorable.

D. $200 unfavorable.

39.A set of integrated financial and operating performance measures that communicate an organization's priorities associated with achieving strategic goals is known as a: 
 

A. balancedscorecard.

B. segment report.

C. responsibility report.

D. master budget.


Essay Questions

40.Patrick Company manufactures a single product. The original budget for April was based on expected production of 12,000 units; actual production for April was 10,600 units. The original budget and actual costs for the manufacturing department are shown below:

  

Prepare an appropriate performance report for the manufacturing department. 
 




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