Sample Quiz #5 Questions – based on Chapter 12
1. Two autonomous divisions of a company have these
characteristics. Division Uno makes a component which can be
sold for $15 per unit. Variable cost to make the unit is $7. The
external demand for the component is 50 units. The production
capacity is 80 units. The Dos Division uses a component in its
product of the type made by the Uno Division. The Dos Division
needs 50 units from a single supplier. The best outside cost is
$12 per unit to buy the component. What is the minimum
transfer price for Division Uno?
A.
B.
C.
D.
$13.50
$11.80
$10.20
$ 8.00
2. Two autonomous divisions of a company have these
characteristics. Division Uno makes a component which can be
sold for $15 per unit. Variable cost to make the unit is $7. The
external demand for the component is 50 units. The production
capacity is 80 units. The Dos Division uses a component in its
product of the type made by the Uno Division. Division Dos
needs 50 units from a single supplier. The best outside price is
$12 per unit to buy the component. What is the value to the
company of internal sourcing of the component compared to
external sourcing?
A.
B.
C.
D.
$250
$10
$90
$450
3. Two autonomous divisions of a company have these
characteristics. Division Uno makes a component which can be
sold for $47 per unit to outside customers. Variable cost to make
the unit is $32. The external demand for the component is 350
units. The production capacity is 490 units. The Dos Division
uses a component in its product of the type made by the Uno
Division. Division Dos needs to acquire units from a single
supplier. The best outside price is $40 per unit to buy the
component. If the value to the company of internal sourcing of
the component compared to external sourcing is $630, what is
the internal demand quantity?
A.
B.
C.
D.
210
350
150
490
4. Two autonomous divisions of a company have these
characteristics. Division Uno makes a component which can be
sold for $21 per unit to outside customers. The external demand
for the component is 1,800 units. The production capacity is
2,000 units. The Dos Division uses a component in its product of
the type made by the Uno Division. The Dos Division needs 300
units from a single supplier. The best outside cost is $18 per unit
to buy the component. Uno’s minimum acceptable transfer price
is $16 per unit. What is the variable cost per unit?
A.
B.
C.
D.
$13.50
$9.25
$16.00
$12.75
5/29/2016
page 1 of 2
Sample Quiz #5 Questions – based on Chapter 12
5. A company has a division which has operations described as
follows: assets, $800; and income, $250. The asset turnover
ratio is .5. What is the revenue?
A.
B.
C.
D.
$500
$250
$400
$100
6. A company has a division which has assets of $800. The
asset turnover is .5 and the margin ratio is .625. What is the
income?
A.
B.
C.
D.
$500
$250
$400
$100
7. A company has a division which has existing operations
described as follows: assets, $1,000; income, $200; opportunity
earnings rate 8%. A proposed expansion of the business requires
additional assets of $400 and yields additional income of $40.
The ROI of the existing business, residual income of the
expansion and the decision about the expansion of a ROI
evaluated manager are?
Q#
Answer
5/29/2016
1.
C
2.
C
3.
A
4.
A
5.
C
6.
B
A.
B.
C.
D.
20%, $8, accept
10%, $10, accept
20%, $8, reject
10%, $8, reject
7.
C
page 2 of 2