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Chapter 12 Quiz 3
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1

United Industries has two divisions-the Manchester Division and the Rooney Division. Information about a product that the Manchester Division produces is as follows:

Revenue

$150 per unit

Variable manufacturing costs

$40 per unit

Fixed manufacturing overhead

$15 per unit

Expected annual sales

10 000 units

The Manchester Division can produce up to 12 000 units of this product per year. It is a component of a product that the Rooney Division manufactures. The Rooney Division requires 500 units of this component, which it can purchase from an outside supplier for $151 each.

The minimum transfer price that the Manchester Division would accept is:

A)$15
B)$40
C)$55
D)$9
2

United Industries has two divisions-the Manchester Division and the Rooney Division. Information about a product that the Manchester Division produces is as follows:

Revenue

$150 per unit

Variable manufacturing costs

$40 per unit

Fixed manufacturing overhead

$15 per unit

Expected annual sales

10 000 units

The Manchester Division can produce up to 12 000 units of this product per year. It is a component of a product that the Rooney Division manufactures. The Rooney Division requires 500 units of this component, which it can purchase from an outside supplier for $151 each.

The maximum transfer price that the Rooney Division would accept is:

A)$40
B)$55
C)$95
D)$150
3

The following information was taken from the segmented profit statement of Victorian Quality Bakers:


Victorian Quality Bakers

Geelong Division

Bendigo Division

Sales revenue

$12 000 000

$5 000 000

$7 000 000

Variable operating expenses:

7 000 000

3 000 000

4 000 000

Controllable fixed expenses

500 000

300 000

200 000

Non-controllable fixed expenses

300 000

200 000

100 000

Common costs

2 000 000



The profit margin attributable to Geelong Division is:

A)$2 000 000
B)$1 700 000
C)$1 500 000
D)$2 200 000
4

The following information was taken from the segmented profit statement of Victorian Quality Bakers:


Victorian Quality Bakers

Geelong Division

Bendigo Division

Sales revenue

$12 000 000

$5 000 000

$7 000 000

Variable operating expenses:

7 000 000

3 000 000

4 000 000

Controllable fixed expenses

500 000

300 000

200 000

Non-controllable fixed expenses

300 000

200 000

100 000

Common costs

2 000 000



The profit margin controllable by the manager of Geelong Division is:

A)$2 000 000
B)$1 700 000
C)$1 500 000
D)$2 200 000
5
When a multinational company transfers goods and services between business units located in different countries:
A)the company will effectively move profits from one country to another
B)the company will attempt to maximise the tax advantages if there any are available
C)the company will think carefully about the prices they set for international transfers of goods and services to ensure that they comply with the taxation regulations of the countries involved
D)all of the given answers
6
When evaluating the economic performance of a sub-unit, the focus is on:
A)all revenues and costs that are allocated to the sub-unit
B)all revenues and variable costs incurred by the sub-unit
C)all revenues and costs under the control of the sub-unit manager
D)all revenues and costs attributable to the sub-unit
7
The sales department of an international airline is an example of:
A)an investment centre
B)a profit centre
C)a cost centre
D)a revenue centre
8
The risks associated with self-managed work teams include:
A)increased cost of employee selection and training
B)resistance to change from employees who are asked to form teams and take on the added responsibilities
C)increased stress among team members resulting from the additional responsibility
D)all of the given answers
9
The Murray Corporation has two divisions-the Albury Division and the Wodonga Division. The Albury Division manufactures Component Z which it sells to external customers and has no excess capacity in its manufacturing facility. If Albury Division is approached by the Wodonga Division to supply them with 10 000 Component Zs and the Murray Corporation implements the general transfer pricing rule, opportunity cost to the supplying division is equal to:
A)the variable product costs
B)the incremental variable costs of production
C)the additional outlay costs per unit
D)the contribution margin foregone from the lost external sales
10
An accounting system where managers are held responsible for the activities and performance of their area of business is termed:
A)a decentralised accounting system
B)a centralised accounting system
C)a responsibility accounting system
D)a dependable accounting system





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