Chapter 11 Activity

It is defined as net operating income divided by average operating assets.

• Residual Income

• Return on Investment

• Balanced Scorecard

• Manufacturing Cycle Efficiency

It is used for any part of an organization whose manager has control over and is accountable for cost, profit, or investments.

• Responsibility Center

• Cost Center

• Profit Center

• Investment Center

Financial measures are __________ that report on the results of the past actions.

• Lag Indicator

• Leading Indicator

Non Financial measures are ___________ of future financial performance.

• Lag Indicator

• Leading Indicator

The upper limit of the range of acceptable transfer price is determined by the situation of the _______ division.

• Selling

• Buying

• Negotiating

The lower limit of the range of acceptable transfer price is determined by the situation of the _______ division.

• Selling

• Buying

• Negotiating

This occurs when managers do not act in the

best interests of the overall company or even in the best interests of their own division.

• Suboptimization

• Decentralization

• Negotiation

A variable cost should be charged to _______ departments according to whatever

activity causes the incurrence of the cost.

• Service

• Human Resource

• Accounting

• Operating

An investment is multiplied to required rate of return, to calculate

• Congruent cost of investment

• operating cost of investment

• imputed cost of investment

The rupee amount for required return of investment is subtracted from income to calculate

• Residual Income

• Operating Income

• Net Income

• After Tax Income