Question : Fill in the Blank Questions The downtown branch of Emily’s Bakery : 1229603

Fill in the Blank Questions
 

The downtown branch of Emily’s Bakery is organized as an investment center. The following information is available for the current year.

Compute the following measures for this investment center:

100. Contribution margin: $_____________

101. Contribution margin ratio: _____________% 
 

102. Responsibility margin: $_____________ 
 

103. Return on assets: _____________% 
 

104. Increase in responsibility margin that would be expected to result from a 10% increase in sales volume. $_____________ 
 

Multiple Choice Questions
 

105. Which of the following is a common fixed cost to the sales departments in a department store? 
A. Salaries of store security personnel.
B. Salaries of sales department managers.
C. Cost of goods sold.
D. Depreciation on fixtures used exclusively in a specific sales department.

106. In preparing an income statement that measures contribution margin and responsibility margin for a responsibility center, two concepts are applied in classifying costs. One is whether the costs are variable or fixed. The other is whether the costs are: 
A. Product costs or period costs.
B. Traceable to the responsibility center.
C. Under the control of the manager.
D. Transfer prices.

107. A subtotal used in evaluating the performance of a responsibility center manager, as distinct from the performance of the center, is: 
A. Contribution margin, less traceable fixed costs.
B. Sales, less committed costs.
C. Contribution margin, plus fixed costs deferred into inventory.
D. Contribution margin, less controllable fixed costs.

108. The Knuckles and Brackets Division transfers a component product to the Assembly Division. Both Divisions are part of Automakers Inc. and are organized as profit centers. Automakers has a general policy of using a 10 percent mark-up for cost-based transfer prices. Knuckles and Brackets also can sell the component product in the open market to other automobile companies for $75. The cost to make the component is $55. By transferring the component internally, the Knuckles and Brackets Division wants the transfer price to be $75 and the manager of the Assembly Division wants the transfer price to be $70. Which of the following are not true? 
A. If the transfer price is $75, then the divisions are using a market-based transfer price.
B. If the transfer price is $40, then the divisions are using a cost-based transfer price.
C. If the transfer price is $70, then the divisions are using a negotiated transfer price.
D. If the transfer price is $70, then both divisions are sharing the profits.
E. If the transfer price is $55, then the Knuckles and Brackets Division is keeping all the profits.

109. Assume the U.S. corporate income tax rate is 40 percent and the Mexican corporate income tax rate is 30 percent. Jacques International Apparel Company has subsidiaries in both the U.S. and Mexico. Jacques is trying to decide what transfer price to use for its famous French frock, which is being transferred from the U.S. subsidiary to the Mexican subsidiary. It could ship the frock at the market price of $75 or at cost plus 20 percent. The cost of the frock is $40. Which transfer price would minimize Jacques’s tax burden? 
A. $75.
B. $48.
C. $90.
D. $75-$40 = $35.