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