ACCT 526 CH. 11 EXAM QUESTIONS ANSWERED CORRECTLY LATEST UPDATE 2026
False - Answers The length of time it takes to produce a unit of output from the time raw materials
are received (starting point) until the product is delivered to finished goods inventory (finishing point)
is called responsiveness time.
True - Answers Velocity is the number of units of output that can be produced in a given period of
time.
True - Answers Transfer price is the price paid on sales between two divisions of the same company.
True - Answers Transfer pricing policies are set by the overall company based on market price, full
cost, or negotiation.
False - Answers Margin is sales divided by assets, and turnover is operating income divided by sales.
True - Answers If a company has sales of $80,000, operating income of $5,000, and assets of $20,000,
it's ROI is 25%.
A - Answers Which of the following is a reason for decentralization?
a. It makes it easy to gather and use local information more effectively.
b. It helps top management to make proper decisions as top management generates all information.
c. It protects segments of a company from competitive pressures.
d. It segregates functions, where top management makes all decisions and local unit generates all
information.
D - Answers A profit center is a responsibility center in which a manager is responsible for:
a. only revenues.
b. only investments.
c. investments and costs.
d. revenues and costs.
D - Answers Which of the following represents the greatest degree of decentralization?
a. Profit centers
b. Revenue centers
c. Cost centers
d. Investment centers
A - Answers Which of the following is true of the financial perspective in a Balanced Scorecard?
a. It describes the economic consequences of actions taken in the other three perspectives.
b. It describes the customer and market segments in which the business unit will compete.
c. It describes the internal processes needed to provide value for customers and owners.
d. It describes the capabilities that an organization needs to create long-term growth and
improvement.
C - Answers Which of the following specifies management's desired relationships among the four
perspectives?
a. Vision documents
b. Objectives
c. Strategy
d. Balanced Scorecard
B - Answers Which of the following can be defined as set of linked objectives aimed at an overall
goal?
a. A budget manual
b. A testable strategy
c. A double-loop feedback
d. A prospectus
A - Answers Which of the following processes does the process value chain comprise?
a. Innovation, operations, and postsales service
b. Design, manufacture, and sales
c. Invention, satisfaction, and postsales service
d. Conception, satisfaction, and value
B - Answers A manufacturing company furnishes the following data for one of its manufacturing cells.
Maximum units produced in a quarter (3-month period): 250,000 units and time available in a quarter
is 50,000 hours. But only 180,000 units were actually manufactured. Calculate the theoretical cycle
time (in minutes) and theoretical velocity in units per hour.
a. 20 minutes per unit, 10 units per hour
, b. 12 minutes per unit, 5 units per hour
c. 15 minutes per unit, 7 units per hour
d. 24 minutes per unit, 12 units per hour
C - Answers A manufacturing company has 30,000 productive hours in a quarter. The company can
produce 100,000 units but actually produced 140,000 units. The theoretical cycle time was recorded
as 10 minutes, actual time was 14 minutes, and nonprocessing time was 4 minutes. Calculate
manufacturing cycle efficiency (MCE).
a. 65%
b. 59%
c. 71%
d. 77%
A - Answers Which of the following is affected by transfer price?
a. Cost of the buying division
b. Conversion cost of the buying division
c. Market prices of the product of the selling division
d. Manufacturing cost of the selling division
B - Answers If there is a competitive outside market for the transferred product, then the best
transfer price is the _____.
a. negotiated price
b. market price
c. variable cost price
d. value based price
B - Answers The transfer price that would leave the selling division no worse off if the good were sold
to an internal division than if the good were sold to an external party is known as _____.
a. external transfer pricing
b. minimum transfer pricing
c. cost-based transfer pricing
d. value-based transfer pricing
A - Answers The practice of delegating authority to division-level managers by top management is:
a. decentralization.
b. good business practice.
c. centralization.
d. autonomy.
e. never done in business today.
D - Answers Which of the following is not a reason for decentralizing?
a. Training and motivating managers.
b. Unmasking inefficiencies in subdivisions of an overall profitable company.
c. Allowing top management to focus on strategic decision making.
d. Allowing top management to make all key operating decisions throughout the company.
e. All of these.
D - Answers A responsibility center in which a manager is responsible only for costs is a(n)
a. investment center.
b. revenue center.
c. profit center.
d. cost center.
A - Answers A responsibility center in which a manager is responsible for revenues, costs, and
investments is a(n):
a. investment center.
b. revenue center.
c. profit center.
d. cost center.
B - Answers Division A manufactures an aircraft engine component with unit variable product cost of
$38 and market price of $50. Division A incurs shipping costs of $3 per unit for sales to outside parties
only. Division B uses this component in the manufacture of its own engine production activities. Top
management allows negotiated transfer pricing. If Division A is operating at full capacity, the
maximum transfer price (the ceiling of the bargaining range) is:
a. $38.
False - Answers The length of time it takes to produce a unit of output from the time raw materials
are received (starting point) until the product is delivered to finished goods inventory (finishing point)
is called responsiveness time.
True - Answers Velocity is the number of units of output that can be produced in a given period of
time.
True - Answers Transfer price is the price paid on sales between two divisions of the same company.
True - Answers Transfer pricing policies are set by the overall company based on market price, full
cost, or negotiation.
False - Answers Margin is sales divided by assets, and turnover is operating income divided by sales.
True - Answers If a company has sales of $80,000, operating income of $5,000, and assets of $20,000,
it's ROI is 25%.
A - Answers Which of the following is a reason for decentralization?
a. It makes it easy to gather and use local information more effectively.
b. It helps top management to make proper decisions as top management generates all information.
c. It protects segments of a company from competitive pressures.
d. It segregates functions, where top management makes all decisions and local unit generates all
information.
D - Answers A profit center is a responsibility center in which a manager is responsible for:
a. only revenues.
b. only investments.
c. investments and costs.
d. revenues and costs.
D - Answers Which of the following represents the greatest degree of decentralization?
a. Profit centers
b. Revenue centers
c. Cost centers
d. Investment centers
A - Answers Which of the following is true of the financial perspective in a Balanced Scorecard?
a. It describes the economic consequences of actions taken in the other three perspectives.
b. It describes the customer and market segments in which the business unit will compete.
c. It describes the internal processes needed to provide value for customers and owners.
d. It describes the capabilities that an organization needs to create long-term growth and
improvement.
C - Answers Which of the following specifies management's desired relationships among the four
perspectives?
a. Vision documents
b. Objectives
c. Strategy
d. Balanced Scorecard
B - Answers Which of the following can be defined as set of linked objectives aimed at an overall
goal?
a. A budget manual
b. A testable strategy
c. A double-loop feedback
d. A prospectus
A - Answers Which of the following processes does the process value chain comprise?
a. Innovation, operations, and postsales service
b. Design, manufacture, and sales
c. Invention, satisfaction, and postsales service
d. Conception, satisfaction, and value
B - Answers A manufacturing company furnishes the following data for one of its manufacturing cells.
Maximum units produced in a quarter (3-month period): 250,000 units and time available in a quarter
is 50,000 hours. But only 180,000 units were actually manufactured. Calculate the theoretical cycle
time (in minutes) and theoretical velocity in units per hour.
a. 20 minutes per unit, 10 units per hour
, b. 12 minutes per unit, 5 units per hour
c. 15 minutes per unit, 7 units per hour
d. 24 minutes per unit, 12 units per hour
C - Answers A manufacturing company has 30,000 productive hours in a quarter. The company can
produce 100,000 units but actually produced 140,000 units. The theoretical cycle time was recorded
as 10 minutes, actual time was 14 minutes, and nonprocessing time was 4 minutes. Calculate
manufacturing cycle efficiency (MCE).
a. 65%
b. 59%
c. 71%
d. 77%
A - Answers Which of the following is affected by transfer price?
a. Cost of the buying division
b. Conversion cost of the buying division
c. Market prices of the product of the selling division
d. Manufacturing cost of the selling division
B - Answers If there is a competitive outside market for the transferred product, then the best
transfer price is the _____.
a. negotiated price
b. market price
c. variable cost price
d. value based price
B - Answers The transfer price that would leave the selling division no worse off if the good were sold
to an internal division than if the good were sold to an external party is known as _____.
a. external transfer pricing
b. minimum transfer pricing
c. cost-based transfer pricing
d. value-based transfer pricing
A - Answers The practice of delegating authority to division-level managers by top management is:
a. decentralization.
b. good business practice.
c. centralization.
d. autonomy.
e. never done in business today.
D - Answers Which of the following is not a reason for decentralizing?
a. Training and motivating managers.
b. Unmasking inefficiencies in subdivisions of an overall profitable company.
c. Allowing top management to focus on strategic decision making.
d. Allowing top management to make all key operating decisions throughout the company.
e. All of these.
D - Answers A responsibility center in which a manager is responsible only for costs is a(n)
a. investment center.
b. revenue center.
c. profit center.
d. cost center.
A - Answers A responsibility center in which a manager is responsible for revenues, costs, and
investments is a(n):
a. investment center.
b. revenue center.
c. profit center.
d. cost center.
B - Answers Division A manufactures an aircraft engine component with unit variable product cost of
$38 and market price of $50. Division A incurs shipping costs of $3 per unit for sales to outside parties
only. Division B uses this component in the manufacture of its own engine production activities. Top
management allows negotiated transfer pricing. If Division A is operating at full capacity, the
maximum transfer price (the ceiling of the bargaining range) is:
a. $38.
