ACC 241 Exam 3 Study Guide
1. Forces managers to plan
2. Facilitates coordination and communication within the
business
3. Helps motivate personnel throughout organization to
meet planned objectives
4. Provides a standard for performance evaluation - ️️ Correct-Benefits of Budgeting
Budg...
-service/support departments: human resources, accounting departments
Revenue Center - ✔️✔️Correct-a division that generates revenues
Ex: internet sales department
Profit Center - ✔️✔️Correct-a division that generates revenues and incurs costs.
-Managers are evaluated on profitability of divisions
-Profit center managers often supervise both cost and revenue center managers
Ex: Tempe Walmart, Deli department of Fry's
Investment Center - ✔️✔️Correct-a division that generates revenues, incurs costs, and
controls the investment of available funds.
-managers are evaluated on profitability of divisions and efficient use of assets.
Ex: subsidiary companies, Stand-alone divisions of a company
Return on Investment (ROI) - ✔️✔️Correct-measures the amount of income an
investment center earns relative to the size of its assets.
Operating Income / Total assets - ✔️✔️Correct-ROI Formula
Operating Income / Sales - ✔️✔️Correct-Sales Margin Formula
Sales / Total Assets - ✔️✔️Correct-Capital Turnover Formula
Residual Income (RI) - ✔️✔️Correct-the difference between operating income and the
minimum return required on a company's assets.
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