Linda joined ABC Corporation upon graduating college and worked as a clerk in a

Question

Linda joined ABC Corporation upon graduating college and worked as a clerk in a manufacturing plant. She later became manager of the plant. Linda then progressed to a product division as manager. In this role, she influenced most of the resources needed for her to be successful, but did not have authority to make investment decisions. She later was promoted to vice-president of a corporate group where she had the authority to not only generate a profit, but also to make investment decision. Which of the following best describes the chronology of her career at ABC? managed a cost center, worked in a cost center, managed an investment center, managed a revenue center., managed an investment center, worked in a cost center, managed a cost center, worked in a revenue center. managed a profit center, managed a cost center, worked in an investment center, managed a cost center. worked in a cost center, managed a cost center, managed a profit center, managed an investment center. managed a profit center, worked in a cost center, worked in a profit center, worked in a revenue center. Delzam Company has two divisions, Zil and Zat. The company's overall contribution margin ratio is 40% when combined sales in the two divisions total $900,000. If variable expenses are $200,000 in Division Zil and if Division Zat's contribution margin ratio is 20%, the sales in Division Zat must be: $200,000. $425,000. $700,000. $340,000. $475,000. Decentralized firms can delegate authority by structuring an organization into responsibility centers. Which of the following organizational segments is most like a totally independent, standalone business where managers are expected to "make it on their own" and can raise their own capital? Cost center. Revenue center. Profit center. Investment center. Contribution center.

Explanation / Answer

1. D. worked in a cost centre, managed a cost centre, managed a profit centre, managed an investment centre is the option which best describes the chronology of her career at ABC.

2. B. $425,000 is the answer. Total sales = $900,000, Variable cost = 60% of $900,000 = $540,000

Variable cost of Zil = $200,000.

Hence, variable cost of Zat = $540,000 - $200,000 = $340,000

Contribution margin of Zat = 20%

Therefore, Sales of Zat = $340,000/0.80 = $425,000

3. Decentralised firms can delegate authority by structuring an organisation into responsibility centres.

Organisation segment that is most likely a total dependent, standalone business where managers are expected to make it their own and can raise their own capital is Investment center.

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