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LO 9.1Which of the following is not a common goal of an organization?

  1. operational efficiency
  2. being acquired by another business
  3. achieving strategic goals
  4. measuring financial performance

LO 9.1Which of the following does not describe a management control system?

  1. establishes a company’s strategic goals
  2. implements a company’s strategic goals
  3. monitors a company’s strategic goals
  4. a system that only measures profitability

LO 9.1In centralized organizations, primary decisions are made by ________.

  1. an individual at the top of the organization
  2. various managers throughout the organization
  3. outside consultants
  4. low-level management

LO 9.1A key advantage of a decentralized organization is ________.

  1. increased administrative costs
  2. quicker decisions and response time
  3. the ease of aligning segment and company goals
  4. duplication of efforts

LO 9.1Strategic decisions occur ________.

  1. frequently and involve immediate decisions
  2. frequently and involve long-term decisions
  3. infrequently and involve long-term decisions
  4. infrequently and involve immediate decisions

LO 9.2Segments are uniquely identifiable components of the business and can be categorized by all of the following except ________.

  1. products produced
  2. services provided
  3. geographical location
  4. number of employees

LO 9.2Organizational charts ________.

  1. list the salaries of all employees
  2. outline the strategic goals of the organization
  3. show the structure of an organization
  4. help management measure financial performance

LO 9.2In a centralized organization, where are goals established?

  1. at the lower level of the organization and promoted upward
  2. outside the organization based on best practices in the industry
  3. by each segment of the organization
  4. at the highest level of the organization and promoted downward

LO 9.2Managers in decentralized organizations make decisions relating to all of the following except ________.

  1. the company’s stock price
  2. equipment purchases
  3. personnel
  4. prices to charge customers

LO 9.3Which of the following is not a type of responsibility center?

  1. concentrated cost center
  2. investment center
  3. profit center
  4. cost center

LO 9.3A system that establishes financial accountability for operating segments within an organization is called ________.

  1. a financial statement
  2. an internal control system
  3. responsibility accounting
  4. centralization

LO 9.3A responsibility center in which managers are held accountable for both revenues and expenses is called a ________.

  1. discretionary cost center
  2. revenue center
  3. cost center
  4. profit center

LO 9.3A responsibility center structure that considers investments made by the operating segments by using a common cost of capital percentage is called ________.

  1. return on investment
  2. residual income
  3. a profit center
  4. a discretionary cost center

LO 9.3An important goal of a responsibility accounting framework is to help ensure which of the following?

  1. decision-making is made by the top executives.
  2. investments made by each segment are minimized.
  3. identification of operating segments that should be closed.
  4. segment and company financial goals are congruent.

LO 9.4Costs that a company or manager can influence are called ________.

  1. discretionary costs
  2. fixed costs
  3. variable costs
  4. controllable costs

LO 9.4An example of an uncontrollable cost would include all of the following except ________.

  1. real estate taxes charged by the county in which the business operates
  2. per-gallon cost of fuel for the company’s delivery trucks
  3. hourly rate of pay for the company’s purchasing manager
  4. federal income tax rate paid by the company

LO 9.4Internal costs that are charged to the segments of a business are called ________.

  1. controllable costs
  2. variable costs
  3. fixed costs
  4. allocated costs

LO 9.4A transfer pricing arrangement that uses the price that would be charged to an external customer is a ________.

  1. market-based approach
  2. negotiated approach
  3. cost approach
  4. decentralized approach

LO 9.4A transfer pricing structure that considers the opportunity costs of selling to internal rather than external customers uses ________.

  1. the cost approach
  2. the general transfer pricing approach
  3. the market-based approach
  4. the opportunity cost approach
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