Which of the choices best describe the statements below? Statement 1: Department A has operating profit of 30000, operating assets of 100000, imputed interest of 12000, return on investment is 30% and residual income of 18000. An additional investment of 10000 is offered that will increase operating income by 1400. Department A manager would resist the new investment if they were to be judged on Residual Income, but would welcome the investment if they were judged according to ROI since there would be decrease of 200 in residual income from the investment and an increase of 1.5% in ROI Statement 2: If transfer prices are to be based on cost, then the costs should be actual costs rather than standard costs Statement 3: A segment margin is computed by deducting variable and traceable fixed expenses from the sales of a segment Statement 4: Labor turnover rate. Percentage of revenue generated by new products and services and Average time taken to develop new products and services are measures under innovation and learning Statement 5: Responsibility accounting functions most effectively in decentralized organizations a. False, False, True, True, True b. True, False, True, False, True c. All Statements are true. d. All Statements are false

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

Which of the choices best describe the statements below?

Statement 1: Department A has operating profit of 30000, operating assets of 100000, imputed interest of 12000, return on investment is 30% and residual income of 18000. An additional investment of 10000 is offered that will increase operating income by 1400. Department A manager would resist the new investment if they were to be judged on Residual Income, but would welcome the investment if they were judged according to ROI since there would be decrease of 200 in residual income from the investment and an increase of 1.5% in ROI

Statement 2: If transfer prices are to be based on cost, then the costs should be actual costs rather than standard costs

Statement 3: A segment margin is computed by deducting variable and traceable fixed expenses from the sales of a segment

Statement 4: Labor turnover rate. Percentage of revenue generated by new products and services and Average time taken to develop new products and services are measures under innovation and learning

Statement 5: Responsibility accounting functions most effectively in decentralized organizations

a. False, False, True, True, True

b. True, False, True, False, True

c. All Statements are true.

d. All Statements are false

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

Expert Solution