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ACCT 201 B Exam 3 Questions with 100%
Verified Answers 2025 | 2026
CH 9: Cost Center - ANSWER Manager has control over costs but
not over revenues and investment funds
ex: service departments such as accounting legal, and
personnel, manufacturing facilities
Profit Center - ANSWER Manager has control over both costs
and revenue but not over investment
ex: In charge of income statement
ex: Sales department (manager)
-profit watchers
Investment Center - ANSWER Manager has control over cost,
revenue, and investments in operating assets
ex: TV and movies, amusement parks, retail
-Different investment centers for each
-CEO is in charge of investment center
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Advantages - ANSWER -Making power is done by a lot of people
-Middle, lower, and upper management are all making decisions
Disadvantages - ANSWER -Lower-level managers don't see the
big picture
-Hard to communicate and spread ideas
Return on Investment (a percentage) - ANSWER Net operating
income / average operating assets
or
Margin x Turnover
(the higher the better)
Margin - ANSWER Net operating Income/sales
Turnover - ANSWER Sales/Average operating assets
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Net book value vs Gross cost - ANSWER Most companies use
net book value of depreciable to calculate operating assets
Difference is: depreciate assets
Net book value = acquisition cost - depreciation
Gross cost is original
ex: 1,000,000 (gross) - 100,000 (depreciation) = 900,000 (net
book value)
Criticisms of ROI - ANSWER -Managers may not know how to
increase ROI with no balanced scorecard
-Managers inherit committed costs which they have no control
-Managers evaluated on ROI may reject profitable investment
opportunities
Residual Income
ACCT 201 B Exam 3 Questions with 100%
Verified Answers 2025 | 2026
CH 9: Cost Center - ANSWER Manager has control over costs but
not over revenues and investment funds
ex: service departments such as accounting legal, and
personnel, manufacturing facilities
Profit Center - ANSWER Manager has control over both costs
and revenue but not over investment
ex: In charge of income statement
ex: Sales department (manager)
-profit watchers
Investment Center - ANSWER Manager has control over cost,
revenue, and investments in operating assets
ex: TV and movies, amusement parks, retail
-Different investment centers for each
-CEO is in charge of investment center
,2|Page
Advantages - ANSWER -Making power is done by a lot of people
-Middle, lower, and upper management are all making decisions
Disadvantages - ANSWER -Lower-level managers don't see the
big picture
-Hard to communicate and spread ideas
Return on Investment (a percentage) - ANSWER Net operating
income / average operating assets
or
Margin x Turnover
(the higher the better)
Margin - ANSWER Net operating Income/sales
Turnover - ANSWER Sales/Average operating assets
, 3|Page
Net book value vs Gross cost - ANSWER Most companies use
net book value of depreciable to calculate operating assets
Difference is: depreciate assets
Net book value = acquisition cost - depreciation
Gross cost is original
ex: 1,000,000 (gross) - 100,000 (depreciation) = 900,000 (net
book value)
Criticisms of ROI - ANSWER -Managers may not know how to
increase ROI with no balanced scorecard
-Managers inherit committed costs which they have no control
-Managers evaluated on ROI may reject profitable investment
opportunities
Residual Income
