Question 1

1 / 1 pts

1. In a decentralized setup, the managers’ active participation in decision making may boost their
morale, increase their level of job satisfaction and enable them to be more motivated to act in a
manner most beneficial to the firm.

  
True
 

  
False
 
 
Question 2
1 / 1 pts
A growing organization should decentralize no matter what the costs maybe.

  
True
 

  
False
 
 
Question 3
1 / 1 pts
Managers are most likely to accept allocations of common cost based on benefits received.

  
True
 

  
False
 
 
Question 4
1 / 1 pts
Making segments disclosures is an advantage to the company because it provides competitors with comparative
information on the company’s performance.

  
True
 

  
False
 
 
IncorrectQuestion 5
0 / 1 pts
Each division, maximizing its own profit will lead to maximizing the profits of the entire company.

  
True
 

  
False
 
 
Question 6
1 / 1 pts
All other things being equal, if a division’s traceable fixed expenses increase, the division’s contribution margin
ratio will decrease.

  
True
 

  
False
 
 
Question 7
1 / 1 pts
The strategic benefit of centralized model/approach is the top management does not have control over key
business functions which should ensure desired level of performance. 

  
True
 

  
False
 
 
Question 8
1 / 1 pts
One of the limitations of decentralization is, that decisions are best made at that level in an organization where
problems and opportunity arise.

  
True
 
   
False
 
 
Question 9
1 / 1 pts
Managers are allowed at various operating levels, the authority to make decisions relating to their area of
responsibilities in decentralized set up.

  
True
 

  
False
 
 
Question 10
1 / 1 pts
In a decentralized set up, the organization also learns which people are not management materials.

  
True
 

  
False
 
 
Question 11
1 / 1 pts
A centralized operation, provides excellent training to managers by giving them greater decision-making control
over their division. 

  
True
 

  
False
 
 
Question 12
1 / 1 pts
A segment is any part or activity of an organization about which manager seeks costs, revenue or profit data.

  
True
 

  
False
 
 
Question 13
1 / 1 pts
To provide more information to the company’s segment manager, the report could further segment a division
according to major product lines, and product lines could be segmented to how they are sold.

  
True
 

  
False
 
 
Question 14
1 / 1 pts
All fixed costs (traceable and non-traceable are charged to the segments in the report.

  
True
 

  
False
 
 
IncorrectQuestion 15
0 / 1 pts
Arbitrary allocating common costs to segment may produce results that could be used in making erroneous
decision.

  
True
 

  
False
 
 
Question 16
1 / 1 pts
Using inappropriate base for allocation of cost can’t create cross-subsidization.

  
True
 

  
False
 
 
Question 17
1 / 1 pts
When using contribution margin format for internal reporting purposes, the major distinction between the
department manager performance and department performance is the:

  
Direct or unallocated fixed cost of the department controllable by the department manager.
 

  
d. Prime costs of the product being manufactured by the department.
 

  
Direct fixed costs controllable by others.
 

  
Direct variable manufacturing costs of the product being produced by the department.
 
 
Question 18
1 / 1 pts
The segment margin of the FOO Spray Division of the Foot Care Inc. should not include:

  
Net sales of the division.
 

  
Fixed selling cost of the division.
 

  
Central administration cost allocated to the division.
 

  
Variable selling cost of the division.
 
 
Question 19
1 / 1 pts
Which of the following is most likely to be a disadvantage of decentralization?

  
d. Lower level management may make conflicting decisions.
 

  
c. Top level management will have less time available to devote to unique problems.
 

  
b. Lower level employees will complain of not having enough to do so.
 

  
a. Lower level employees will develop less rapidly than in a centralized organization.
 
 
Question 20
1 / 1 pts
Making segment disclosures is an advantage to a company because it:

  
a. Facilitates evaluation of company management by providing data on particular segments.
 

  
b. Eliminates the interdependence of segments.
 

  
c. Masks the effects of intersegment transfers.
 

  
d. Provides competitors with comparative information on the company’s performance.
 
 
IncorrectQuestion 21
0 / 1 pts
The process of attributing proportion of items of costs among segments is called________.

  
b. Absorption of indirect cost
 

  
a. Overhead absorption
 

  
c. Cost apportionment
 

  
d. Cost allocation
 
 
Question 22
1 / 1 pts
A good example of a common cost which normally could not be assigned to products on a segmented income
statement except on an arbitrary basis would be: 

  
d. the product managers salary.
 

  
c. direct materials.
 

  
a. product advertising outlays.
 

  
b. salary of a corporation president.
 
 
IncorrectQuestion 23
0 / 3 pts
Angeles and San Fernando are divisions of P Company. They have no inventories (both beginning and ending)
as of date. On the other hand, their units produced is equal to the units sold. Below is the financial information
of the two (2) divisions.

  Angeles San Fernando

Sales 250,000 500,000

Direct materials 20,000 30,000

Variable factory overhead 30,000 30,000

Variable Selling & Administrative expenses 15,000 20,000

Central corporate expenses (allocated) 7,500 16,200

Fixed Selling & Administrative expenses 40,000 42,000

Fixed Factory Overhead 20,000 15,000

Direct Labor 7,000 8,000

Other revenue 26,000 37,000

Question: What is the total contribution to corporate income earned by San Fernando Division before
allocating central corporate expenses? ( Answer format sample 10,000 )
412,000

 
IncorrectQuestion 24
0 / 3 pts
Angeles and San Fernando are divisions of P Company. They have no inventories (both beginning and ending)
as of date. On the other hand, their units produced is equal to the units sold. Below is the financial information
of the two (2) divisions.

  Angeles San Fernando

Sales 250,000 500,000

Direct materials 20,000 30,000

Variable factory overhead 30,000 30,000

Variable Selling & Administrative expenses 15,000 20,000

Central corporate expenses (allocated) 7,500 16,200

Fixed Selling & Administrative expenses 40,000 42,000

Fixed Factory Overhead 20,000 15,000

Direct Labor 7,000 8,000

Other revenue 26,000 37,000

Question: What is the contribution margin of Angeles Division? ( Answer format sample 10,000 )
178,000
 
Question 25
3 / 3 pts
Omid Publishing Company has three divisions: A, B, and C. The revenues of these divisions are P29,000,
48,000, and 63,000 respectively. Variable costs of these divisions amount to 57%, 59%, and 64% of the given
revenues. The divisions' short-term controllable fixed costs are P4,200, 5,200, and 6,200 respectively. The
divisions' long-term controllable fixed costs amount to P3,800, 4,900, and 5,700 in the order given. The
company's uncontrollable costs amount to P7,150, and income tax is at 20% of operating income.
Question: What is the long-term controllable margin of Division C? ( Answer format sample 10,000 )
10,780

 
Question 26
3 / 3 pts
Omid Publishing Company has three divisions: A, B, and C. The revenues of these divisions are P29,000,
48,000, and 63,000 respectively. Variable costs of these divisions amount to 57%, 59%, and 64% of the given
revenues. The divisions' short-term controllable fixed costs are P4,200, 5,200, and 6,200 respectively. The
divisions' long-term controllable fixed costs amount to P3,800, 4,900, and 5,700 in the order given. The
company's uncontrollable costs amount to P7,150, and income tax is at 20% of operating income.
Question: What is the short-term controllable margin of Division A? ( Answer format sample 10,000 )
 
 
8,270

 
Question 27
3 / 3 pts
The following information was extracted from the third (3) year of absorption-based accounting records of FCA
Corporation.
                    

Total fixed costs incurred 100,000

Total variable costs incurred   50,000

Total period costs incurred   70,000

Total variable period costs incurred   30,000

Units produced   20,000

Units sold   12,000

Unit sales Price          12

Question: Based on variable costing, if FCA has sold 12,500 units instead of 12,000, its income before
taxes would have increase/decrease by? ( Answer format sample 10,000 )
4,250

 
Question 28
3 / 3 pts
The following information was extracted from the third (3) year of absorption-based accounting records of FCA
Corporation.
                       

Total fixed costs incurred 100,000

Total variable costs incurred   50,000

Total period costs incurred   70,000

Total variable period costs incurred   30,000

Units produced   20,000

Units sold   12,000

Unit sales Price          12

 
Question: At its present level of operations, if FCA has total variable costs equal to 75% of sales and total fixed
costs equal to 15% of sales.  Based on variable costing, if sales change by P1.00, income will change by what
amount? ( Answer format sample 0.99 )
0.25