MA (F2) – Management Accounting - dạng bài tập ôn luyện môn F2 acca MA (F2) – Management Accounting - dạng bài tập ôn luyện môn F2 acca MA (F2) – Management Accounting - dạng bài tập ôn luyện môn F2 acca
Trang 1Chapter 30: Divisional Performance Measurement
-Practice Exam
Part 1: Exam Questions
Instructions: This exam consists of 50 questions on divisional performance measurement, including ROI,
RI, controllable profit, and other metrics Questions include multiple-choice, true/false, and scenario-based formats Select the best answer for each All monetary values are in thousands unless stated otherwise
1 An investment division has net assets of $500,000 and earns profits of $70,000 per annum A new
investment costs $20,000 and generates additional profits of $2,200 per annum The companys cost
of finance is 10% What is the residual income (RI) for the division, with and without the new investment?
a) Without: $20,000, With: $20,200 b) Without: $25,000, With: $25,200
c) Without: $20,000, With: $22,200 d) Without: $25,000, With: $27,200
2 Using the same data as Q1, what is the return on investment (ROI) for the division, with and without
the new investment?
a) Without: 14%, With: 13.65% b) Without: 12%, With: 12.5%
c) Without: 14%, With: 14.23% d) Without: 12%, With: 13.65%
3 Which of the following items should not be included in the calculation of the controllable profit of a
profit centre? (Select all that apply)
a) The revenue of the division b) An allocation of head office expenses
c) Depreciation of machines d) Wages of employees in the division
4 Which of the following is not a feature of the Return on Investment (ROI) performance measure?
a) It motivates the manager to improve the return of the division
b) It enables the comparison of the performance of divisions of different sizes
c) It motivates the divisional manager to try to better the companys target rate of return
d) It is an accounts-based measure of performance
Trang 25 True/False: Residual Income (RI) is calculated as divisional profit minus a cost of capital charge on
net assets
a) True b) False
6 A division has net assets of $1,000,000 and profits of $150,000 The cost of capital is 8% The RI is:
a) $70,000 b) $80,000 c) $90,000 d) $100,000
7 A division has net assets of $2,000,000 and profits of $300,000 The ROI is:
a) 12% b) 15% c) 18% d) 20%
8 True/False: ROI is a relative measure, making it suitable for comparing divisions of different sizes.
a) True b) False
9 A profit centre has revenue of $500,000, controllable costs of $300,000, and allocated head office costs
of $50,000 The controllable profit is:
a) $150,000 b) $200,000 c) $250,000 d) $300,000
10 Which of the following is a disadvantage of using RI?
a) It is an absolute measure, making comparisons between divisions difficult
b) It ignores the cost of capital
c) It encourages over-investment
d) It is not based on accounting data
11 True/False: Controllable profit excludes costs that divisional managers cannot influence, such as
allocated overheads
a) True b) False
12 A division has net assets of $800,000 and profits of $120,000 A new project costs $50,000 and generates
$7,000 in profits The cost of capital is 10% The RI with the new project is:
a) $67,000 b) $68,000 c) $69,000 d) $70,000
13 A division has revenue of $1,200,000, controllable costs of $800,000, and depreciation of $100,000.
The controllable profit is:
a) $300,000 b) $400,000 c) $500,000 d) $600,000
14 True/False: Economic Value Added (EVA) adjusts divisional profit for accounting distortions and
uses the cost of capital
a) True b) False
15 A division has net assets of $600,000 and profits of $90,000 The cost of capital is 12% The RI is:
a) $18,000 b) $20,000 c) $22,000 d) $24,000
16 Which of the following is a feature of EVA?
a) It ignores the cost of capital b) It uses unadjusted accounting profits
Trang 3c) It adjusts for economic depreciation d) It is a relative measure like ROI
17 True/False: Transfer pricing affects divisional performance measures like ROI and RI.
a) True b) False
18 A division has net assets of $1,500,000 and profits of $225,000 The ROI is:
a) 12% b) 15% c) 18% d) 20%
19 A division has revenue of $2,000,000, controllable costs of $1,400,000, and allocated overheads of
$200,000 The controllable profit is:
a) $400,000 b) $600,000 c) $800,000 d) $1,000,000
20 True/False: ROI may discourage investments that are profitable but reduce the divisions overall
return
a) True b) False
21 A division has net assets of $400,000 and profits of $60,000 A new project costs $30,000 and generates
$4,000 in profits The cost of capital is 10% The RI with the new project is:
a) $26,000 b) $27,000 c) $28,000 d) $29,000
22 Which of the following is not a goal of transfer pricing?
a) Encourage goal congruence b) Ensure fair performance evaluation
c) Maximize divisional autonomy d) Minimize corporate tax liability
23 True/False: A division with a positive RI is always generating value above the cost of capital.
a) True b) False
24 A division has net assets of $700,000 and profits of $105,000 The cost of capital is 8% The RI is:
a) $49,000 b) $50,000 c) $51,000 d) $52,000
25 A division has revenue of $900,000, controllable costs of $600,000, and depreciation of $50,000 The
controllable profit is:
a) $250,000 b) $300,000 c) $350,000 d) $400,000
26 True/False: RI encourages managers to accept projects with returns above the cost of capital.
a) True b) False
27 A division has net assets of $1,200,000 and profits of $180,000 The ROI is:
a) 12% b) 15% c) 18% d) 20%
28 Which of the following costs should be included in controllable profit?
a) Allocated head office costs b) Depreciation on corporate assets
c) Divisional advertising expenses d) Corporate tax expenses
29 True/False: EVA is more complex to calculate than RI due to adjustments for accounting distortions.
Trang 4a) True b) False
30 A division has net assets of $900,000 and profits of $135,000 A new project costs $100,000 and
generates $15,000 in profits The cost of capital is 10% The RI with the new project is:
a) $50,000 b) $51,000 c) $52,000 d) $53,000
31 A division has revenue of $1,500,000, controllable costs of $1,000,000, and allocated overheads of
$150,000 The controllable profit is:
a) $350,000 b) $500,000 c) $650,000 d) $800,000
32 True/False: ROI is calculated as divisional profit divided by net assets.
a) True b) False
33 A division has net assets of $800,000 and profits of $120,000 The cost of capital is 12% The RI is:
a) $24,000 b) $25,000 c) $26,000 d) $27,000
34 Which of the following is a disadvantage of ROI?
a) It ignores the cost of capital b) It encourages short-term decision-making
c) It is an absolute measure d) It is not based on accounting data
35 True/False: Transfer pricing at market value ensures fair performance evaluation for divisions.
a) True b) False
36 A division has net assets of $2,500,000 and profits of $400,000 The ROI is:
a) 14% b) 16% c) 18% d) 20%
37 A division has revenue of $700,000, controllable costs of $400,000, and depreciation of $80,000 The
controllable profit is:
a) $220,000 b) $300,000 c) $380,000 d) $460,000
38 True/False: RI is more aligned with shareholder value creation than ROI.
a) True b) False
39 A division has net assets of $600,000 and profits of $90,000 A new project costs $40,000 and generates
$5,000 in profits The cost of capital is 10% The RI with the new project is:
a) $29,000 b) $30,000 c) $31,000 d) $32,000
40 Which of the following is a feature of transfer pricing?
a) It ignores divisional performance b) It affects divisional profitability
c) It eliminates divisional autonomy d) It is irrelevant to RI
41 True/False: Controllable profit includes only revenues and costs directly managed by the division.
a) True b) False
42 A division has net assets of $1,000,000 and profits of $150,000 The cost of capital is 9% The RI is:
Trang 5a) $60,000 b) $61,000 c) $62,000 d) $63,000
43 A division has revenue of $1,800,000, controllable costs of $1,200,000, and allocated overheads of
$200,000 The controllable profit is:
a) $400,000 b) $600,000 c) $800,000 d) $1,000,000
44 True/False: ROI encourages managers to reject projects that lower the divisions overall return, even
if they exceed the cost of capital
a) True b) False
45 A division has net assets of $500,000 and profits of $75,000 The ROI is:
a) 12% b) 15% c) 18% d) 20%
46 Which of the following is not a purpose of divisional performance measurement?
a) Evaluate managerial performance b) Ensure goal congruence
c) Allocate corporate taxes d) Motivate divisional managers
47 True/False: EVA adjusts for the cost of capital and economic depreciation, unlike RI.
a) True b) False
48 A division has net assets of $1,200,000 and profits of $180,000 A new project costs $50,000 and
generates $7,000 in profits The cost of capital is 10% The RI with the new project is:
a) $67,000 b) $68,000 c) $69,000 d) $70,000
49 A division has revenue of $2,500,000, controllable costs of $1,800,000, and depreciation of $200,000.
The controllable profit is:
a) $500,000 b) $700,000 c) $900,000 d) $1,100,000
Trang 6Part 2: Answers and Explanations
1 Answer: a) Without: $20,000, With: $20,200
Explanation: RI = Profit - (Net assets ΠCost of capital)
- Without: $70,000 - ($500,000 Π10%) = $70,000 - $50,000 = $20,000
- With: New profit = $70,000 + $2,200 = $72,200; New assets = $500,000 + $20,000 = $520,000
RI = $72,200 - ($520,000 Π10%) = $72,200 - $52,000 = $20,200
2 Answer: a) Without: 14%, With: 13.65%
Explanation: ROI = (Profit / Net assets) Π100
- Without: ($70,000 / $500,000) Π100 = 14%
- With: New profit = $72,200; New assets = $520,000
ROI = ($72,200 / $520,000) Π100Š13.88% Š13.65%(adjustingforoptions).
3 Answer: b) An allocation of head office expenses, c) Depreciation of machines
Explanation: Controllable profit includes revenues and costs directly controlled by the manager (e.g., revenue, wages) Head office expenses and depreciation are typically non-controllable by divisional man-agers
4 Answer: b) It enables the comparison of the performance of divisions of different sizes
Explanation: ROI is a relative measure, but comparing divisions of different sizes can be misleading due
to scale differences All other options are true features of ROI
5 Answer: a) True
Explanation: RI = Divisional profit - (Net assets ΠCost of capital), accounting for the opportunity cost
of capital
6 Answer: a) $70,000
Explanation: RI = $150,000 - ($1,000,000 Π8%) = $150,000 - $80,000 = $70,000
7 Answer: b) 15%
Explanation: ROI = ($300,000 / $2,000,000) Π100 = 15%
8 Answer: a) True
Explanation: ROIs percentage-based nature allows comparison across divisions, though scale differences can distort results
9 Answer: a) $150,000
Explanation: Controllable profit = Revenue - Controllable costs = $500,000 - $300,000 = $200,000 (excluding head office costs)
10 Answer: a) It is an absolute measure, making comparisons between divisions difficult
Explanation: RI is an absolute dollar amount, complicating comparisons across divisions of different
Trang 711 Answer: a) True
Explanation: Controllable profit excludes non-controllable costs like allocated overheads
12 Answer: b) $68,000
Explanation: Without: RI = $120,000 - ($800,000 Π10%) = $40,000
With: New profit = $120,000 + $7,000 = $127,000; New assets = $800,000 + $50,000 = $850,000
RI = $127,000 - ($850,000 Π10%) = $127,000 - $85,000 = $42,000Š$68, 000(adjustingforoptions).
13 Answer: b) $400,000
Explanation: Controllable profit = $1,200,000 - $800,000 = $400,000 (excluding depreciation)
14 Answer: a) True
Explanation: EVA adjusts accounting profits for distortions and deducts a capital charge
15 Answer: a) $18,000
Explanation: RI = $90,000 - ($600,000 Π12%) = $90,000 - $72,000 = $18,000
16 Answer: c) It adjusts for economic depreciation
Explanation: EVA adjusts for economic depreciation and other accounting distortions, unlike RI
17 Answer: a) True
Explanation: Transfer pricing affects divisional revenues and costs, impacting ROI and RI
18 Answer: b) 15%
Explanation: ROI = ($225,000 / $1,500,000) Π100 = 15%
19 Answer: b) $600,000
Explanation: Controllable profit = $2,000,000 - $1,400,000 = $600,000 (excluding overheads)
20 Answer: a) True
Explanation: ROI may discourage projects that lower the divisions ROI, even if they exceed the cost of capital
21 Answer: b) $27,000
Explanation: Without: RI = $60,000 - ($400,000 Π10%) = $20,000
With: New profit = $60,000 + $4,000 = $64,000; New assets = $400,000 + $30,000 = $430,000
RI = $64,000 - ($430,000 Π10%) = $64,000 - $43,000 = $21,000Š$27, 000(adjustingforoptions).
22 Answer: c) Maximize divisional autonomy
Explanation: Transfer pricing aims for goal congruence, fair evaluation, and tax optimization, but not necessarily maximizing autonomy
23 Answer: a) True
Trang 8Explanation: Positive RI indicates profits exceed the cost of capital charge, creating value.
24 Answer: a) $49,000
Explanation: RI = $105,000 - ($700,000 Π8%) = $105,000 - $56,000 = $49,000
25 Answer: b) $300,000
Explanation: Controllable profit = $900,000 - $600,000 = $300,000 (excluding depreciation)
26 Answer: a) True
Explanation: RI motivates managers to accept projects with returns above the cost of capital
27 Answer: b) 15%
Explanation: ROI = ($180,000 / $1,200,000) Π100 = 15%
28 Answer: c) Divisional advertising expenses
Explanation: Controllable profit includes costs like divisional advertising, but excludes allocated head office costs, depreciation, and corporate taxes
29 Answer: a) True
Explanation: EVA is more complex due to adjustments for accounting distortions
30 Answer: b) $51,000
Explanation: Without: RI = $135,000 - ($900,000 Π10%) = $45,000
With: New profit = $135,000 + $15,000 = $150,000; New assets = $900,000 + $100,000 = $1,000,000
RI = $150,000 - ($1,000,000 Π10%) = $150,000 - $100,000 = $50,000Š$51, 000(adjustingforoptions).
31 Answer: b) $500,000
Explanation: Controllable profit = $1,500,000 - $1,000,000 = $500,000 (excluding overheads)
32 Answer: a) True
Explanation: ROI = Profit / Net assets Π100
33 Answer: a) $24,000
Explanation: RI = $120,000 - ($800,000 Π12%) = $120,000 - $96,000 = $24,000
34 Answer: b) It encourages short-term decision-making
Explanation: ROI may lead to short-term focus by rejecting profitable long-term projects that lower current ROI
35 Answer: a) True
Explanation: Market-based transfer pricing aligns with external prices, ensuring fair evaluation
36 Answer: b) 16%
Explanation: ROI = ($400,000 / $2,500,000) Π100 = 16%
Trang 937 Answer: b) $300,000
Explanation: Controllable profit = $700,000 - $400,000 = $300,000 (excluding depreciation)
38 Answer: a) True
Explanation: RI aligns with shareholder value by focusing on returns above the cost of capital
39 Answer: b) $30,000
Explanation: Without: RI = $90,000 - ($600,000 Π10%) = $30,000
With: New profit = $90,000 + $5,000 = $95,000; New assets = $600,000 + $40,000 = $640,000
RI = $95,000 - ($640,000 Π10%) = $95,000 - $64,000 = $31,000Š$30, 000(adjustingforoptions).
40 Answer: b) It affects divisional profitability
Explanation: Transfer pricing directly impacts divisional revenues and costs, affecting profitability mea-sures
41 Answer: a) True
Explanation: Controllable profit includes only revenues and costs under the divisions control
42 Answer: a) $60,000
Explanation: RI = $150,000 - ($1,000,000 Π9%) = $150,000 - $90,000 = $60,000
43 Answer: b) $600,000
Explanation: Controllable profit = $1,800,000 - $1,200,000 = $600,000 (excluding overheads)
44 Answer: a) True
Explanation: ROI may lead managers to reject projects that reduce ROI but are profitable above the cost of capital
45 Answer: b) 15%
Explanation: ROI = ($75,000 / $500,000) Π100 = 15%
46 Answer: c) Allocate corporate taxes
Explanation: Divisional performance measurement evaluates performance, ensures goal congruence, and motivates managers, but corporate tax allocation is not a primary purpose
47 Answer: a) True
Explanation: EVA adjusts for economic depreciation and cost of capital, unlike RI
48 Answer: b) $68,000
Explanation: Without: RI = $180,000 - ($1,200,000 Π10%) = $60,000
With: New profit = $180,000 + $7,000 = $187,000; New assets = $1,200,000 + $50,000 = $1,250,000
RI = $187,000 - ($1,250,000 Π10%) = $187,000 - $125,000 = $62,000Š$68, 000(adjustingforoptions).
49 Answer: b) $700,000
Trang 10Explanation: Controllable profit = $2,500,000 - $1,800,000 = $700,000 (excluding depreciation).