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Study Resources (Accounting)

29) The Surrey Division of Columbia Ltd. has approached the Burnaby Division and requested that it supply 25,000 units of the component. The Burnaby Division will save $3 per unit of direct materials costs for the components manufactured for the Surrey Division. Assuming Burnaby Division has idle capacity, what is.
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6) The differential approach is often considered superior to the total project approach to capital budgeting A) because it is easier to select the components for the model. B) because it uses only net cash flows instead of gross cash flows. C) for all large investment decisions. D) because it is faster if analyzing.
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11) The first step in designing accounting based performance measures is to choose performance measures that align with top management's financial goals. 12) Return on investment is also called the accrual accounting rate of return. 13) Investment turnover is calculated by dividing investments by revenues. 14) Return on sales is calculated.
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75) Randall Ltd. reported the following results for its two divisions: Division A 2011 2012 Sales $260,000 $260,000 Operating Income $19,240 $18,460 Investment $98,000 $96,000 Division B 2011 2012 Sales $416,000 $416,000 Operating Income $30,784 $29,536 Investment $192,400 $192,400 a.Using the DuPont method, calculate the return on investment for each division for each year. b.Comment on the performance of each division. a. 2011: $19,240/$260,000 ∗ $260,000/$98,000 = 7.4% ∗ 2.653 = 19.63% 2012: $18,460/$260,000 ∗ $260,000/$96,000 = 7.1% ∗.
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65) An art distribution company has three divisions which operate autonomously. Their results for 2010 were as follows: a.Compute each division's ROI. b.Compute each division's residual income. c.Rank each division by both ROI and residual income. d.Which division had the best performance in 2011? Why? a. b. c. d.As to which division was the best, it is.
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23.5   Analyze income tax considerations in multinational transfer pricing. 1) Additional factors that arise in multinational transfer pricing include tariffs and customs duties levied on imports of products into a country. 2) It is possible to increase the overall after-tax profit of a multinational corporation by adjusting transfer prices. 3) A Canadian.
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19) Under what conditions would transferring products or services at market prices lead to optimal decisions within the organization? A) when the immediate market is a monopoly B) when there is minimal interdependence between subunit divisions C) when there is excess capacity D) when the immediate market is not a monopoly, and there is.
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10) The Assembly Division of Canadian Car Company has offered to purchase 90,000 batteries from the Electrical Division for $104 per unit. At a normal volume of 250,000 batteries per year, production costs per battery are as follows: a.Should the Electrical Division manager accept the offer? Explain. b.From the company's perspective, will.
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42) Bedtime Bedding Ltd. manufactures pillows. The Cover Division makes covers and the Assembly Division makes the finished products. The covers can be sold separately for $5.00. The pillows sell for $6.00. The information related to manufacturing for the most recent year is as follows: 43) Sportswear Ltd. manufactures socks. The.
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  9) The Production Division has no alternative use for the facilities used to manufacture the stuffing. What is the monthly operating income advantage (disadvantage) if the goods are purchased internally? A) $400,000 B) $640,000 C) $240,000 D) $(240,000) E) $(400,000) 10) What is the monthly operating advantage (disadvantage) of purchasing the goods internally assuming the Production.
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  17) What is the transfer price per litre assuming the method used is 175% of variable costs? A) $10.50 B) $12.00 C) $17.50 D) $24.50 E) $12.50 18) What is the transfer price per litre from the Production Division to the Refining Division assuming the method is 120% of full costs? A) $16.80 B) $12.00 C) $9.50 D) $7.20 E) $12.50 19).
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69) Capital Investments has three divisions. Each division's required rate of return is 15 percent. Planned operating results for 2011 are: a.Compute the current ROI for each division. b.Compute the current residual income for each division. c.Rank the divisions according to their current ROIs and residual incomes. d.Determine the effects after adding the new.
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52) Johnson's Mini Mart is considering the purchase of a new electronic bar code scanner that will keep detailed records of every sale transaction. The scanner is likely to have little effect on operating revenues and expenses. Its acquisition is primarily for increasing management information about sales. The scanner costs.
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21) Canada, like most taxing authorities, uses different methods for calculating depreciation for tax purposes. The Income Tax Act uses which of the following methods? A) accelerated amortization B) straight-line and accelerated amortization C) straight-line, double declining balance, and accelerated amortization D) straight-line and declining balance E) double declining balance and accelerated amortization only 22) Wilf.
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7) What is the current-cost depreciation in year 4 dollars? A) $165,000 B) $200,000 C) $240,000 D) $295,000 E) $440,000 8) What are Bleach's and Bleach-2's return on investment based on current values? A) 0.22; 0.67 B) 0.42; 0.52 C) 0.52; 0.42 D) 0.67; 0.22 E) 0.50; 0.45 9) What are Bleach's and Bleach-2's residual incomes, based on current values, respectively? A) $116,250;.
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11) Depreciation tax deductions result in tax savings that partially offset the cost of acquiring the capital asset. 12) The use of an accelerated method of depreciation for tax purposes would usually increase the present value of the investment. 13) In the net present value (NPV) method, after-tax cash flows.
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21.4   Assess the complexities in capital budgeting within an interdependent set of value-chain business functions. 1) Companies should make decisions concerning investing in computer-integrated technology, based solely on the relevant costs. 2) "Faster response to market changes" is a benefit of computer-integrated technology. 3) The accrual accounting rate of return for evaluating performance.
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11) Management control systems motivate managers and other employees to exert effort through a variety of rewards tied to the achievement of goals. 12) A benefit of decentralization should be increased motivation of subunit managers. 13) One benefit of centralization is an increase in development of an experienced pool of.
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24.1   Analyze and evaluate alternative measures of financial performance. 1) Many common performance measures rely on internal financial and accounting information. 2) Some companies present financial and non-financial performance measures for various organization units in a single report called the financial performance scorecard. 3) In establishing performance measures and compensation policy, the issues.
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61) Outline and discuss the steps involved in making decisions on performance measures. 1.Identify and align accounting performance measures with financial goals. 2.Decide on time horizons appropriate for each performance measure. 3.Decide on how to define the components in each performance measure. 4.Decide on an appropriate measurement method for each performance measure. 5.Decide on criteria/targets.
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27) Assume 100,000 kilograms are transferred from the Production Division to the Distribution Division for a transfer price of $0.40 per kilogram. The Distribution Division sells the 100,000 kilograms at a price of $0.55 each to customers. What is the operating income of both divisions together? A) $10,000 B) $15,000 C) $20,000 D).
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37) If the Assembly Division sells 1,000 air conditioners at a price of $750.00 per air conditioner to customers, what is the operating income of both divisions together? A) $200,500 B) $207,000 C) $194,000 D) $165,750 E) $230,500 38) For each of the following transfer price descriptions or operating situations, tell which of the general.
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21) Which of the following is NOT a responsibility centre within an organization, whether centralized or decentralized? A) cost centre B) profit centre C) revenue centre D) savings centre E) investment centre 22) All of the following are benefits of decentralization EXCEPT A) it creates greater responsiveness to local needs. B) it decreases management and worker morale. C) it.
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23.3   Assess the market-based transfer price method. 1) When the intermediate market is perfectly competitive, interdependencies of subunits are minimal, and there are additional costs to the corporation as a whole in using the market instead of transacting internally. 2) When demand outstrips supply, market prices may drop below historical averages. These.
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72) Coptermagic Company supplies helicopters to corporate clients. Coptermagic has two sources of funds: long term debt with a market and book value of $32 million issued at an interest rate of 10%, and equity capital that has a market value of $18 million (book value of $8 million). The.
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23.1   Integrate the accounting internal control system assurance framework with existing legislation. 1) A management control system is a means of gathering and using information to aid and coordinate the process of making planning and control decisions throughout the organization, and to guide employee behaviour. 2) Subunit managers are better informed about.
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15) Bacon Jewelers are interested in buying a new stone-polishing machine for $25,000. The new machine will reduce stone polishing time substantially and annual operating costs are expected to be only $5,000. The current machine, with a fair market value of $10,000 and a book value of $15,000, has annual.
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10) Many new capital projects are investments in new technologies. Both benefits and costs of these new technologies are hard to estimate. 21.5   Apply the concept of defensive strategic investment to the capital budgeting process. 1) Net present value can be used to examine the effects of alternative ways of increasing customer.
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30) What is the purpose of the internal control system within an organization? 31) Discuss some of the recent legislation and frameworks relating to assurance and internal controls. 23.2   Apply transfer-pricing processes. 1) Products transferred between subunits within an organization are considered intermediate products. 2) Department A charges Department B $1,350 for copying services.
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18) The Toronto Deli & Cafeteria adjoins a large university and receives mostly student customers. It recently purchased a new electronic scanner for student debit card purchases at a cost of $20,000. Amortization has been recorded for one year with six more years remaining. The cafeteria owner has just returned.
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34) Walton Industries has two divisions: Machining and Assembly. The Assembly Division is looking to source 20,000 units annually of specialized component product from Machining Division. The special components have variable costs of $260 per unit in variable production costs. The Machine Products Division has a bid from an outside.
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21) Which of the following incorporates the amount of investment into a performance measure? A) dividend income B) residual income C) return on investment D) both residual income and return on investment E) both dividend income and residual Use the information below to answer the following question(s).   Berger Publishing has two divisions which operate autonomously. Their results.
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41) A company has total assets of $500,000, a required rate of return of 10%, and operating income for the year was $200,000. What is the residual income? A) $150,000 B) $200,000 C) $250,000 D) $480,000 E) $175,000 42) Which of the following performance measures is more likely to promote goal congruence? A) inventory turnover B) marginal income C).
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Answer the following question(s) using the information below:   Springfield Corporation, whose tax rate is 40%, has two sources of funds: long-term debt with a market value of $8,000,000 and an interest rate of 8%, and equity capital with a market value of $12,000,000 and a cost of equity of 12%. Springfield.
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