Question 1. In order to properly report segment margin as a guide to long-run segment profitability and performance, fixed costs must be separated into two broad categories. One category is common fixed costs. What is the other category?
a. discretionary fixed costs
b. committed fixed costs
c. traceable fixed costs
d. specialized fixed costs specialized fixed costs
Question 2. Which of the following measures of performance encourages continued expansion by an investment center so long as it is able to earn a return in excess of the minimum required return on average operating assets?
a. return on investment
b. transfer pricing
c. the contribution approach
d. residual income
Question 3. Which of the following is NOT a common approach used to set transfer prices?
a. market price
b. variable cost
c. negotiation
d. suboptimization
Question 4. Dukelow Corporation has two divisions: the Governmental Products Division and the Export Products Division. The Governmental Products Division's divisional segment margin is $255,000 and the Export Products Division's divisional segment margin is $59,800. The total amount of common fixed expenses not traceable to the individual divisions is $163,700. What is the company's net operating income?
a. $314,800
b. ($314,800)
c. $151,100
d. $478,500
Question 5. J Corporation has two divisions. Division A has a contribution margin of $79,300 and Division B has a contribution margin of $126,200. If total traceable fixed costs are $72,400 and total common fixed costs are $34,900, what is J Corporation's net operating income?
a. $168,000
b. $98,200
c. $170,600
d. $133,100