Managerial Accounting
3rd Edition
ISBN: 9780077826482
Author: Stacey M Whitecotton Associate Professor, Robert Libby, Fred Phillips Associate Professor
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 10, Problem 3MC
Which of the following statements is true?
a. A profit center manager is responsible for investing company assets.
b. A cost center manager should be evaluated based on sales revenue.
c. A profit center manager should be evaluated based on
d. An investment center manager is responsible for costs, revenue, and the investment of assets.
Expert Solution & Answer
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Check out a sample textbook solutionStudents have asked these similar questions
____ 1.Which of the following is a responsibility center that incurs expenses, generates revenues, and is responsible for generating a return on assets?
a. Cost center
b. Revenue center
c. Profit center
d. Investment center
____ 2.Which one of the following is the most useful measure for evaluating a manager's performance in controlling revenues and costs in a profit center?
a. Contribution margin
b. Contribution net income
c. Contribution gross profit
d. Controllable margin
____ 3.Hanover Corporation desires to earn target net income of $42,000. The selling price per unit is $18, unit variable cost is $5.60, and total fixed costs are $123,912. How many units must the company sell to earn its target net income?
a. 13,380
b. 9,993
c. 3,387
d. 9,217
____ 4.Remark…
In a profit center, the manager has responsibility and authority for making decisions that affect
a.assets
b.investments
c.long-term liabilities
d.revenues
Instructions: Designate the best answer for each of the following questions.
1.Which of the following is a responsibility center that incurs expenses, generates revenues, and is responsible for generating a return on assets?
a. Cost center
b. Revenue center
c. Profit center
d. Investment center
2.Which one of the following is the most useful measure for evaluating a manager's performance in controlling revenues and costs in a profit center?
a. Contribution margin
b. Contribution net income
c. Contribution gross profit
d. Controllable margin
3.Hanover Corporation desires to earn target net income of $42,000. The selling price per unit is $18, unit variable cost is $5.60, and total fixed costs are $123,912. How many units must the company sell to earn its target net income?
a. 13,380
b. 9,993
c. 3,387
d. 9,217
4.Remark…
Chapter 10 Solutions
Managerial Accounting
Ch. 10 - Explain how centralized and decentralized...Ch. 10 - Why does decentralization create the need for...Ch. 10 - What is the controllability principle and why is...Ch. 10 - Prob. 4QCh. 10 - Prob. 5QCh. 10 - Prob. 6QCh. 10 - Prob. 7QCh. 10 - Prob. 8QCh. 10 - Return on investment may be separated into two...Ch. 10 - Prob. 10Q
Ch. 10 - Prob. 11QCh. 10 - Prob. 12QCh. 10 - Prob. 13QCh. 10 - Prob. 14QCh. 10 - Prob. 15QCh. 10 - Prob. 16QCh. 10 - Prob. 17QCh. 10 - Why must a company consider its incentive and...Ch. 10 - Prob. 19QCh. 10 - Prob. 20QCh. 10 - Prob. 21QCh. 10 - Prob. 22QCh. 10 - Prob. 23QCh. 10 - Prob. 24QCh. 10 - Prob. 25QCh. 10 - What are negotiated transfer prices? Explain two...Ch. 10 - Sally Thorne is a profit center manager for ABC...Ch. 10 - Prob. 2MCCh. 10 - Which of the following statements is true? a. A...Ch. 10 - Prob. 4MCCh. 10 - Prob. 5MCCh. 10 - Prob. 6MCCh. 10 - Prob. 7MCCh. 10 - Prob. 8MCCh. 10 - Which of the following is not a component of the...Ch. 10 - Prob. 10MCCh. 10 - Using Terms to Complete Sentences about...Ch. 10 - Prob. 2MECh. 10 - Prob. 3MECh. 10 - Applying Balanced Scorecard to Real World Company...Ch. 10 - Applying Balanced Scorecard to Online Company...Ch. 10 - Prob. 6MECh. 10 - Prob. 7MECh. 10 - Prob. 8MECh. 10 - Prob. 9MECh. 10 - Prob. 10MECh. 10 - Prob. 11MECh. 10 - Prob. 12MECh. 10 - Prob. 13MECh. 10 - Prob. 2ECh. 10 - Prob. 3ECh. 10 - Prob. 4ECh. 10 - Calculating Return on Investment, Residual Income,...Ch. 10 - Prob. 6ECh. 10 - Evaluating Managerial Performance Using Return on...Ch. 10 - Evaluating Managerial Performance Using Return on...Ch. 10 - Prob. 9ECh. 10 - Determining the Impact of Various Transactions on...Ch. 10 - Determining Different Types of Responsibility...Ch. 10 - Prob. 14ECh. 10 - Prob. 15ECh. 10 - Prob. 16ECh. 10 - Matching Measures of Performance with the Correct...Ch. 10 - Determining Minimum, Maximum, Negotiated Transfer...Ch. 10 - Prob. 19ECh. 10 - Prob. 20ECh. 10 - Calculating Return on Investment, Residual Income,...Ch. 10 - Prob. 1.2GAPCh. 10 - Calculating Unknowns, Predicting Relationship...Ch. 10 - Calculating Unknowns, Predicting Relationship...Ch. 10 - Prob. 2.3GAPCh. 10 - Prob. 2.4GAPCh. 10 - Prob. 2.5GAPCh. 10 - Prob. 2.6GAPCh. 10 - Prob. 3.1GAPCh. 10 - Prob. 3.2GAPCh. 10 - Prob. 3.3GAPCh. 10 - Prob. 3.4GAPCh. 10 - Prob. 3.5GAPCh. 10 - Prob. 3.6GAPCh. 10 - Prob. 4.1GAPCh. 10 - Prob. 4.2GAPCh. 10 - Prob. 4.3GAPCh. 10 - Prob. 4.4GAPCh. 10 - Prob. 4.5GAPCh. 10 - Prob. 5.1GAPCh. 10 - Prob. 5.2GAPCh. 10 - Prob. 5.3GAPCh. 10 - Prob. 5.4GAPCh. 10 - Prob. 6GAPCh. 10 - Prob. 1.1GBPCh. 10 - Prob. 1.2GBPCh. 10 - Prob. 2.1GBPCh. 10 - Prob. 2.2GBPCh. 10 - Prob. 2.3GBPCh. 10 - Prob. 2.4GBPCh. 10 - Prob. 2.5GBPCh. 10 - Prob. 2.6GBPCh. 10 - Prob. 3.1GBPCh. 10 - Prob. 3.2GBPCh. 10 - Prob. 3.3GBPCh. 10 - Prob. 3.4GBPCh. 10 - Prob. 3.5GBPCh. 10 - Prob. 3.6GBPCh. 10 - Prob. 4.1GBPCh. 10 - Prob. 4.2GBPCh. 10 - Prob. 4.3GBPCh. 10 - Prob. 4.4GBPCh. 10 - Prob. 4.5GBPCh. 10 - Prob. 5.1GBPCh. 10 - Prob. 5.2GBPCh. 10 - Prob. 5.3GBPCh. 10 - Prob. 5.4GBPCh. 10 - Prob. 6GBP
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Differentiate between a profit center and an investment center.arrow_forwardA responsibility center structure that considers investments made by the operating segments by using a common cost of capital percentage is called_______. A. return on investment B. residual income C. a profit center D. a discretionary cost centerarrow_forwardExplain the benefits of a residual income structure within an investment center framework. It may help to think of an example using an existing company.arrow_forward
- Which of the following does not describe a management control system? A. establishes a companys strategic goals B. implements a companys strategic goals C. monitors a companys strategic goals D. a system that only measures profitabilityarrow_forwardBased on the profit maximization goal, the financial manager would choose Asset D. Asset B. Asset A. Asset C.arrow_forwardThe systematic examination of the relationships among selling prices, volume of sales and production, costs, and profits is termed a. cost-volume-profit analysis b. contribution margin analysis c. budgetary analysis d. gross profit analysis In a profit center, the manager has responsibility and authority for making decisions that affect a. assets b. investments c. long-term liabilities d. costsarrow_forward
- Which statement below best describes a profit center?a. The authority to make decisions affecting the major determinants of profit, including the power to choose its markets and sources of supply.b. The authority to make decisions affecting the major determinants of profit, including the power to choose its markets, sources of supply, and significant control over the amount of invested capital.c. The authority to make decisions over the most significant costs of operations, including the power to choose the sources of supply.d. The authority to provide specialized support to other units within the organization.e. The responsibility for combining the raw materials, direct labor, and other factors of production into a final product.arrow_forwardIn evaluating the profit center manager, the operating income should be compared a.across profit centers b.to the competitor's net income c.to the total company earnings per share d.to a budgetarrow_forwardA profit center manager often also supervises revenue and cost center managers. True or False True False Investment center managers have control over the investment of assets. True or False True False The balanced scorecard attempts to focus managers' attention on more than just financial measures. True or False True Falsearrow_forward
- Which statement below best describes an investment center? a. The authority to make decisions affecting the major determinants of profit, including the power to choose its markets and sources of supply. b. The authority to make decisions affecting the major determinants of profit, including the power to choose its markets and sources of supply, and significant control over the amount of invested capital. c. The authority to make decisions over the most significant costs of operations, including the power to choose the sources of supply. d. The authority to provide specialized support to other units within the organization. e. The responsibility for developing markets for and selling of the output of the organization.arrow_forwardIn your own understanding, please answer the following: 1. What are the importance of knowing, analyzing and assessing the financial statement in the decision making of internal and external users in the organization? 2. Explain briefly how do you understand the concept of Cost of Good Sold.arrow_forwardDiscuss the Cost- Volume- Profit assumptions and its importance to the business organization in profitplanning.arrow_forward
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