Accounting final 23 and 24

The amount of increase or decrease in revenue that is expected from a particular course of action as compared with an alternative is

Differential revenue

Minimum acceptable income from operations

Invested assets * Minimum acceptable return 10%

Purchasing transfer

Market price - transfer price * units transferred

Businesses that are separated into two or more manageable units in which managers have authority and responsibility for operations are said to be

Decentralized

Variable cost method

Desired profit + Total Fixed cost and expenses/ Total variable cost

(TCM) Markup percentage on product cost

Desired profit / total product cost

(TOTAL COST METHOD)Desired Profit=

Desired return x total assets

Relevant revenues and costs refer to

Differences between the alternatives being considered

Residual income

Income from operations - minimum acceptable income from operations

Which of the following is not a disadvantage of decentralized operation?

Top management freed from everyday task to do strategic planning

Income from operations of the pierce automobile division is $2,225,000. If income from operations before service department charges is $3,250,000

Total service department charges are $1,025,000

Supplying transfer

Transfer price - VC per unit * Units transferred

A manager is responsible for cost only in a

cost center

In a profit center, the department manager has responsibility for and the authority to make decisions that affect

Both cost and revenues for the department or division

Which of the following is a measure of a cost center managers performance?

Budget performance report

ROI=

Operating income/ Invested assets

A responsibility center in which the department manager has responsibility for and athority over cost and revenues is called

Profit center

Which of the following is not one of the common types of responsibility centers?

Revenue center

Which of the following expenses incurred by a department store is an indirect expense?

Salary of vice president of finance

CM=

Sales - TVC

A cost that will not be affected by later decisions is termed a

Sunk cost

Income from operations

(Market price- VC units produced) * # of units

Which of the following expenses incurred by the sporting goods department of a department store is a direct expense

Insurance on inventory of sporting goods