DeVry University Chicago AC505 Quiz Test 101 AC 505 Quiz Test Managerial Accounting Exam 4 Summer Student Number: __________________________ Pledge: On my honor I have neither given or received help on this exam.  I understand that any violation of the University Honor Policy will result in an automatic zero on this exam, and that I will be subject to all sanctions available under the University’s Honor Policy. Part I – Multiple Guess  (135 points) 1.         A segment of a business responsible for both revenues and expenses would be called: A)  a cost center. B)  an investment center. C)  a profit center. D)  residual income. Lanta Restaurant compares monthly operating results with a static budget prepared at the beginning of the year. When actual sales are less than budget, would the restaurant usually report favorable variances on variable food costs and fixed supervisory salaries? Food Costs Supervisory Salaries A) No No B) No Yes C) Yes No D) Yes Yes 3.         All other things equal, a company’s return on investment (ROI) would generally increase when: A)  average operating assets increase. B)  sales decrease. C)  operating expenses decrease. D)  operating expenses increase. 4.         The performance of the manager of Division A is measured by residual income. Which of the following would increase the manager’s performance measure? A)  Increase in average operating assets. B)  Decrease in average operating assets. C)  Increase in minimum required return. D)  Decrease in net operating income. 5.               Consider the following three statements: A profit center has control over both cost and revenue. An investment center has control over invested funds, but not over costs and revenue. A cost center has no control over sales Which statement(s) is/are correct? A)  Only I B)  Only II C)  Only I and III D)  Only I and II 6.         A company’s return on investment is the: A)  margin divided by turnover. B)  margin multiplied by turnover. C)  turnover divided by average operating assets. D)  turnover multiplied by average operating assets. E)  none of the above. 7.         Delmar Corporation is considering the use of residual income as a measure of the performance of its divisions. What major disadvantage of this method should the company consider before deciding to institute it? A)  this method does not make allowance for difference in the size of compared divisions. B)  opportunities may be undertaken which will decrease the overall return on investment. C)  the minimum required rate of return may eliminate desirable opportunities from consideration. D)  residual income does not measure how effectively the division manager controls costs. E)  none of the above. 8.         Which department is usually held responsible for an unfavorable materials quantity variance? A)  Marketing. B)  Purchasing. C)  Engineering. D)  Production. E)  None of the above. 9.         A major weakness of flexible budgets is that: A)  they are geared only to a single level of activity. B)  they give subordinates too much flexibility. C)  they force the manager to compare actual costs at one level of activity to budgeted costs at a different level of activity. D)  none of these. 10.       In a job order cost system, the amount of overhead cost that has been applied to a job that remains incomplete at the end of a period: A.  is deducted on the Income Statement as overapplied overhead. B)  is closed to Cost of Goods Sold. C)  is transferred to Finished Goods at the end of the period. D)  is part of the ending balance of the Work in Process inventory account. E)  none of the above. 11.       Which one of the following costs would not be considered an indirect cost of serving a particular customer at a Pizza Hut franchise? A)  The salary of the franchise’s manager. B)        The cost of the tables and chairs used to furnish the restaurant. C)        The cost of the dough used to make the pizza that is ordered. D)        The cost of light…

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