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Principles of Accounting, Volume 2: Managerial Accounting

Exercise Set B

Principles of Accounting, Volume 2: Managerial AccountingExercise Set B

Exercise Set B

EB 1.

LO 12.1For the following situations identify whether the description is a centralized or decentralized organization.

  1. the United States Navy
  2. Farah’s Domino’s franchise store
  3. Domino’s Pizza
  4. Middie’s Furniture, which is divided into separate operating units, such as living room, kitchen, flooring
  5. the local community college, which has a single payroll department, a single administrative headquarters, and a single human resources department since it “flattened” its organization structure
  6. Conner Corporation, which promotes managers from within the organization whenever possible and which has formal training programs for lower-level managers
EB 2.

LO 12.1For the following descriptions, state whether the cost is controllable or uncontrollable by responsibility center managers.

  1. advertising for a merchandiser
  2. corporate income taxes
  3. office supplies for a merchandiser
  4. donations to the Salvation Army
  5. insurance for delivery vehicles
EB 3.

LO 12.1Identify the type of responsibility center (revenue center, cost center, profit center, or investment center) for each of the following situations.

  1. the legal department for Avon Manufacturing
  2. the Macy’s store in Mansfield, Ohio
  3. the food and beverage division of the Best Western
  4. the marketing department of the Hershey Company
  5. the Walmart #5030 on Central Avenue in Toledo, Ohio
  6. Apple’s Braeburn Capital Inc., where most of Apple’s billions of dollars are invested
  7. Zappo’s department store
  8. the men’s clothing department in the Walmart #5030 in Toledo, Ohio
EB 4.

LO 12.2Padma completed her doctoral degree and has taken a position as an assistant professor at a local university. She was given the following performance measures for her new position. Identify whether these goals are long or short term.

  1. Interact in a fair and impartial way with students.
  2. Promote and access student academic achievement.
  3. Counsel students within the norms of society and the regulations of the college.
  4. Motivate students.
  5. Effectively plan and organize lectures and labs in accordance with the college course outlines.
  6. Report class attendance in accordance with the college policy and procedure.
  7. Serve on academic committees as assigned.
  8. Make progress toward tenure necessary at her university.
EB 5.

LO 12.3During the current year, Plainfield Manufacturing earned income of $845,000 from total sales of $9,350,000 and average capital assets of $13,500,000. What is the sales margin?

EB 6.

LO 12.3During the current year, Plainfield Manufacturing earned income of $845,000 from total sales of $9,350,000 and average capital assets of $13,500,000. Using the sales margin from the previous exercise, what is the total ROI for the company during the current year?

EB 7.

LO 12.3Assume Plainfield Manufacturing has debt of $6,500,000 with a cost of capital of 9.5% and equity of $4,500,000 with a cost of capital of 11.5%. What is Tyler’s weighted average cost of capital?

EB 8.

LO 12.3Though a high ROI is desired, what are some reasons that might lead to a low or decreased ROI?

EB 9.

LO 12.4Classify each of the following performance measures into the balanced scorecard perspective to which it relates: financial perspective, internal operations perspective, learning and growth perspective, or customer perspective.

  1. Employee satisfaction surveys
  2. Units of waste per production process, uniformity of products and inventory control
  3. Number of energy-efficient bulbs replaced
  4. Management training course certificates awarded
  5. Divisional profit
  6. Number of customer referrals
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