13. All other things equal, which of the followving would inscreas a division\'s

Question

13. All other things equal, which of the followving would inscreas a division's residual income? Increase in expenses b. a. Decreases in average operating assets c. Increase in minimum required return d. Decrease in net operating income 14. A cost is considered controllable at a given level of managerial responsibility if a. the manager has the power to incur the cost within a given time period b. the cost has not exceeded the budget amount in the master budget c. it is a variable cost, but it is uncontrollable if it is a fixed cost. d. it changes in magnitude in a flexible budget. 15. Given below is an excerpt from a responsibility performance report for a profit center Contribution margin Controllable fixed costs $600,000 5200,000 $580,000 $20,000 U 220,000 $20,000U a b. The manager's overall performance is 10% above expectations. The manager's overall performance is 10% below expectations. The manager's overall performance is equal to expectations. d. The manager's overall performance cannot be determined from the information provided 16. Costs incurred indirectly and allocated to a responsibility level are considered to be: b. mixed. d. noncontrollable 17. Which of the following would produce a materials price variance? a. An excess quantity of materials used b. An excess number of direct labor bours worked in completing a job. c. Shipping materials to the plant by air freight rather than by truck. d. Breakage of materials in production. 18. The difference between a budget and a standard is that: a. a budget expresses what costs were, while a standard expresses what costs should be. b. a budget expresses management's plans, while a standard reflects what actuaily happened. e. a budget expresses a total amount, while a standard expresses a unit amount. d. standards are excluded from the cost accounting system, whereas budgets are generally incorporated into the cost accounting system. 19. Which of the following would produce a labor rate variance? b. Use of persons with high hourly wage rates in tasks that call for low hourly wage rates. c. Excessive number of hours worked in completing a job. a. Poor quality materials causing breakage and work interruptions. d. An unfavorable variable overhead spending variance.

Explanation / Answer

13. Option b:

Decrease in average operating assets

Explanation:

Residual income formula is:

=Net operating income-(Average invested assets×hurdle rate)

So decrease in two things increase the residual income, One is hurdle rate and other is average assets. So option b is correct, in which operating assets is decreasing.

14. Option a

15. Option b

16. Option d

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