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Responsibility Centers & Reporting Segments Chapter Exam

Exam Instructions:

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

Page 1

Question 1 1. A responsibility report for a cost center takes each _____ from the budget and shows the real figures.

Question 2 2. What does a favorable variance mean for a cost center manager?

Question 3 3. Which of the following does NOT need to be included on a responsibility report for a cost center?

Question 4 4. What is the likely outcome of a manager who consistently posts responsibility reports for a cost center that have favorable variances?

Question 5 5. What is the main objective of a cost center?

Page 2

Question 6 6. Calculate the contribution margin given the following information: sales = $25,000; variable costs = $15,000; traceable fixed costs = $3,000; common fixed costs = $2,000.

Question 7 7. Jennifer is the owner of a home décor and furnishings store and is trying to decide whether to close the kitchenware department; she should consider all of the following except

Question 8 8. All of the following are examples of variable costs except

Question 9 9. Calculate net income (or net loss) given the following information: sales = $10,000; variable costs = $4,000; traceable fixed costs = $3,000; common fixed costs = $1,500.

Question 10 10. Which of the following costs would be considered a common fixed cost?

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Question 11 11. How do investment centers differ from profit centers?

Question 12 12. Which of these is the most common method to evaluate an investment center?

Question 13 13. What is the formula for return on investment?

Question 14 14. Which of these residual incomes is best for a business?

Question 15 15. What is residual income?

Page 4

Question 16 16. What can the worst-case scenario be for a firm that has subsidiaries that use cost-based transfer pricing?

Question 17 17. What generally happens to the selling subsidiary in a cost-based transfer pricing plan?

Question 18 18. What is the process by which subsidiaries transfer goods and assign prices?

Question 19 19. In cost-based transfer pricing, if goods cost a manufacturer $50 to produce, how much will they be costed to another subsidiary for?

Question 20 20. What price is assigned a good that is transferred via cost-based transfer pricing?

Page 5

Question 21 21. What price is charged for goods using market-based transfer pricing?

Question 22 22. Why does adjusted market-based transfer pricing allow special treatment?

Question 23 23. What is a weakness of market-based transfer pricing?

Question 24 24. What is adjusted market-based transfer pricing?

Question 25 25. What is a strength of market-based transfer pricing?

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Question 26 26. What kind of manager does negotiated transfer pricing benefit?

Question 27 27. What kind of company is most likely to use transfer pricing?

Question 28 28. What is negotiated transfer pricing?

Question 29 29. When is negotiated transfer pricing most efficient?

Question 30 30. What is transfer pricing?

Responsibility Centers & Reporting Segments Chapter Exam Instructions

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

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