Question 1

Waffles, Inc. is evaluating their annual bonus allocations for restaurant division managers. This is the segmented income statement data for the three individual restaurant locations of Waffles, Inc. What does this information tell us about the performance of each division manager?

AWith a net income of $668,800, the southern location manager had the worst performance.

BWith a net income nearly 4x higher than the other two locations, the western location manager had the best performance.

CWith the lowest costs of goods sold and operating expenses, the eastern location manager had the best performance.

DBecause the western location is larger, it would be unfair to use segmented net income as a measure for comparing each manager's performance.

Answer : D

Question 2

You are the newly hired manager of an individual restaurant chain. Which of the following responsibilities for your responsibility center would you be evaluated on?

AMeeting cost budgets

BInvestments in assets decisions

CRevenues, costs, and resulting profits

DReturn on investment for shareholders

Answer : C

Question 3

What is the formula to calculate working capital?

ATotal assets - Total liabilities

BCurrent assets - Current liabilities

CTotal assets - Current liabilities

DCurrent assets + Current liabilities

Answer : B

Question 4

Which row correctly identifies the calculation to establish standard costs for direct materials, direct labor, and factory overhead?

ARow 1

BRow 2

CRow 3

DRow 4

Answer : D

Question 5

Diamonds and More produced a new line of necklaces that sell for $350 each. Management requires a profit equal to 40 percent of the selling price. What is the target cost of this product?

A$140

B$175

C$210

D$350