Exam 5

Question 1

compares actual costs with budgeted costs.

Answer 1

performance report

Question 2

Compare actual costs with the budgeted costs for the budgeted level of activity(created in advanced)

Answer 2

static budget

Question 3

enables a firm to compute expected costs for a range of activity levels. The key is to know fixed and variable costs

Answer 3

flexible budget

Question 4

Delegating decision-making authority to the lower levels of management in a company

Answer 4

decentralization

Question 5

-gathering and using information
-focussing of central management
-training and motivating segment managers
enhanced competition, exposing segments to market forces.

Answer 5

reasons for decentralization

Question 6

refers to earnings before interest and taxes.

Answer 6

operating income

Question 7

all assets acquired to generate operating income, including cash, receivables, inventories, land, buildings, and equipment.

Answer 7

operating assests

Question 8

the profit earned per dollar of investment.

Answer 8

return on investment (ROI)

Question 9

s the difference between operating income and the minimum dollar return required on a company’s operating assets

Answer 9

residual income

Question 10

is after tax operating income minus the dollar cost of capital employed.

Answer 10

economic value added (EVA)

Question 11

is the price charged for a component by the selling division to the buying division of the same company.

Answer 11

transfer price