# Quiz 10: Performance Measurement in Decentralized Organizations

Business

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True False

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Q 2Q 2

When used in return on investment (ROI)calculations, turnover equals sales divided by average operating assets.

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True False

True

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True False

True

Q 4Q 4

An advantage of using ROI to evaluate performance is that it encourages the manager to reduce the investment in operating assets as well as increase net operating income.

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True False

Q 5Q 5

All other things the same, an increase in unit sales will normally result in an increase in the return on investment.

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True False

Q 6Q 6

The use of return on investment (ROI)as a performance measure may lead managers to reject a project that would be favorable for the company as a whole.

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True False

Q 7Q 7

Land held for possible plant expansion would be included as an operating asset when computing return on investment (ROI).

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True False

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True False

Q 9Q 9

Suppose a company evaluates divisional performance using both ROI and residual income.The company's minimum required rate of return for the purposes of residual income calculations is 12%.If a division has a residual income of $6,000, then its ROI is less than 12%.

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True False

Q 10Q 10

If a company contains a number of investment centers of differing sizes, return on investment (ROI)should be used rather than residual income to rank the financial performance of the divisions.

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True False

Q 11Q 11

ROI and residual income are tools used to evaluate managerial performance in investment centers.

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True False

Q 12Q 12

Residual income should be used to evaluate an investment center rather than a cost or profit center.

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True False

Q 13Q 13

Residual income can be used most effectively in comparing the performance of divisions of different size.

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True False

Q 14Q 14

Residual income is the difference between net operating income and the product of average operating assets and the minimum rate of return.

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True False

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True False

Q 16Q 16

If the MCE is equal to 0.6, then 60% of the time a unit is in process is spent on activities that add value to the product.

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True False

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True False

Q 18Q 18

Throughput time is the amount of time required to move a completed unit from the factory floor to the warehouse.

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True False

Q 19Q 19

A manufacturing cycle efficiency (MCE)ratio of less than 1.00 is desirable because this is the ratio of non-value-added time to throughput time.

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True False

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True False

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True False

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True False

Q 23Q 23

A balanced scorecard consists of a report showing a performance measure such as ROI or residual income for all of the divisions in a company that generate profits.

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True False

Q 24Q 24

If a strategy is not working, it should become evident on the balanced scorecard when some of the predicted effects don't occur.

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True False

Q 25Q 25

Financial measures such as ROI are generally better than nonfinancial measures of key success drivers such as customer satisfaction as leading indicators of future financial performance.

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True False

Q 26Q 26

In essence, a balanced scorecard lays out a theory of how the company can take concrete actions to attain its desired outcomes.The strategy should seem plausible, but it should be regarded as only a theory.

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True False

Q 27Q 27

The performance measures on a balanced scorecard tend to fall into four groups: financial measures, customer measures, internal business process measures, and learning and growth measures.

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True False

Q 28Q 28

Financial measures such as ROI and residual income as well as operating measures may be included in a balanced scorecard.

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True False

Q 29Q 29

A balanced scorecard contains both customer and internal business process performance measures because improvements in internal business process should result in improvements in customer satisfaction.

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True False

Q 30Q 30

Incentive compensation for employees, such as bonuses, should be tied to balanced scorecard performance measures only if managers are confident that the performance measures are easily manipulated by those being evaluated.

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True False

Q 31Q 31

If the balanced scorecard is correctly constructed, the performance measures should be independent of each other so that bad performance on one measure will not result in bad performance on another performance measure.

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True False

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True False

Q 33Q 33

If improvement in a performance measure on a balanced scorecard should lead to improvement in another performance measure, but does not, then employees must work harder.

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True False

Q 34Q 34

A profit center is responsible for generating revenue, but it is not responsible for controlling costs.

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True False

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True False

Q 36Q 36

The basic objective of responsibility accounting is to charge each manager with those costs and/or revenues over which he has control.

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True False

Q 37Q 37

Under a responsibility accounting system, fewer expenses are charged against managers the higher one moves upward in an organization.

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True False

Q 38Q 38

Which of the following would not be included in operating assets in return on investment calculations?
A)Cash.
B)Accounts Receivable.
C)Equipment
D)Factory building rented to (and occupied by)another company.

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Multiple Choice

Q 39Q 39

Which of the following would be an argument for using the gross cost of plant and equipment as part of operating assets in return on investment computations?
A)It is consistent with the computation of net operating income, which includes depreciation as an operating expense.
B)It is consistent with the balance sheet presentation of plant and equipment.
C)It eliminates the age of equipment as a factor in ROI computations.
D)It discourages the replacement of old, worn-out equipment because of the dramatic, adverse effect on ROI.

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Multiple Choice

Q 40Q 40

Which of the following will not result in an increase in return on investment (ROI), assuming other factors remain the same?
A)A reduction in expenses.
B)An increase in net operating income.
C)An increase in operating assets.
D)An increase in sales.

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Multiple Choice

Q 41Q 41

Some investment opportunities that should be accepted from the viewpoint of the entire company may be rejected by a manager who is evaluated on the basis of:
A)return on investment.
B)residual income.
C)contribution margin.
D)segment margin.

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Multiple Choice

Q 42Q 42

Which of the following would be considered an operating asset in return on investment computations?
A)Land being held for plant expansion.
B)Treasury stock.
C)Accounts receivable.
D)Common stock.

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Q 43Q 43

Which of the following segment performance measures will decrease if there is an increase in the interest expense for that segment?

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Q 44Q 44

Which of the following performance measures will increase if inventory decreases and all else remains the same?

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Multiple Choice

Q 45Q 45

All other things equal, which of the following would increase a division's residual income?
A)Increase in expenses.
B)Decrease in average operating assets.
C)Increase in minimum required return.
D)Decrease in net operating income.

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Multiple Choice

Q 46Q 46

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

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Q 48Q 48

A segment of a business responsible for both revenues and expenses would be called:
A)a cost center.
B)an investment center.
C)a profit center.
D)residual income.

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Multiple Choice

Q 49Q 49

Othman Inc.has a $800,000 investment opportunity with the following characteristics: The margin for this investment opportunity is closest to:
A)50.0%
B)45.0%
C)5.0%
D)55.0%

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Multiple Choice

Q 50Q 50

Runyon Inc.reported the following results from last year's operations: The company's average operating assets were $7,000,000. Last year's turnover was closest to:
A)0.42
B)14.29
C)0.07
D)2.40

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Multiple Choice

Q 51Q 51

Tennill Inc.has a $1,400,000 investment opportunity with the following characteristics: The ROI for this year's investment opportunity considered alone is closest to:
A)8.1%
B)128.0%
C)3.0%
D)9.6%

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Multiple Choice

Q 52Q 52

Youns Inc.reported the following results from last year's operations: The company's average operating assets were $5,000,000. At the beginning of this year, the company has a $1,400,000 investment opportunity that involves sales of $2,800,000, fixed expenses of $616,000, and a contribution margin ratio of 30% of sales.
If the company pursues the investment opportunity and otherwise performs the same as last year, the combined turnover for the entire company will be closest to:
A)9.50
B)1.64
C)2.66
D)2.08

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Multiple Choice

Q 53Q 53

Leete Inc.reported the following results from last year's operations: Last year's margin was closest to:
A)79.0%
B)31.0%
C)20.0%
D)10.0%

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Multiple Choice

Q 54Q 54

BR Company has a contribution margin of 40%.Sales are $312,500, net operating income is $25,000, and average operating assets are $200,000.What is the company's return on investment (ROI)?
A)12.5%
B)62.5%
C)8.0%
D)64.0%

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Multiple Choice

Q 55Q 55

Nasser Inc.reported the following results from last year's operations: Last year's return on investment (ROI)was closest to:
A)9.0%
B)47.6%
C)18.9%
D)80.7%

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Multiple Choice

Q 56Q 56

Chiodini Inc.has a $900,000 investment opportunity that involves sales of $2,430,000, fixed expenses of $1,044,900, and a contribution margin ratio of 50% of sales.The ROI for this year's investment opportunity considered alone is closest to:
A)16.3%
B)18.9%
C)7.0%
D)135.0%

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Multiple Choice

Q 57Q 57

Anguiano Inc.reported the following results from last year's operations: The company's average operating assets were $5,000,000. Last year's return on investment (ROI)was closest to:
A)7.0%
B)14.7%
C)45.8%
D)47.6%

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Multiple Choice

Q 58Q 58

Selma Inc.reported the following results from last year's operations: Last year's margin was closest to:
A)78.1%
B)6.0%
C)13.8%
D)27.9%

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Multiple Choice

Q 59Q 59

Cirone Inc.reported the following results from last year's operations: At the beginning of this year, the company has a $1,200,000 investment opportunity with the following characteristics: If the company pursues the investment opportunity and otherwise performs the same as last year, the combined margin for the entire company will be closest to:
A)3.1%
B)8.4%
C)6.3%
D)12.1%

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Q 61Q 61

Tadman Inc.reported the following results from last year's operations: At the beginning of this year, the company has a $800,000 investment opportunity that involves sales of $2,800,000, fixed expenses of $756,000, and a contribution margin ratio of 30% of sales. If the company pursues the investment opportunity and otherwise performs the same as last year, the combined margin for the entire company will be closest to:
A)1.0%
B)3.0%
C)5.0%
D)3.8%

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Multiple Choice

Q 62Q 62

The following information relates to last year's operations at the Legumes Division of Gervani Corporation: What was the Legume Division's net operating income last year?
A)$108,000
B)$135,000
C)$36,000
D)$45,000

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Multiple Choice

Q 63Q 63

Verbeke Inc.reported the following results from last year's operations: Last year's turnover was closest to:
A)16.67
B)0.06
C)2.10
D)0.48

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Multiple Choice

Q 64Q 64

Condren Inc.reported the following results from last year's operations: At the beginning of this year, the company has a $1,000,000 investment opportunity with the following characteristics: If the company pursues the investment opportunity and otherwise performs the same as last year, the combined ROI for the entire company will be closest to:
A)1.1%
B)8.6%
C)9.7%
D)11.3%

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Multiple Choice

Q 65Q 65

Last year a company had sales of $600,000, a turnover of 3.6, and a return on investment of 18%.The company's net operating income for the year was:
A)$166,667
B)$108,000
C)$30,000
D)$15,000

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Multiple Choice

Q 66Q 66

Boespflug Inc.has a $1,000,000 investment opportunity that involves sales of $900,000, fixed expenses of $225,000, and a contribution margin ratio of 30% of sales.The margin for this investment opportunity is closest to:
A)5.0%
B)25.0%
C)75.0%
D)30.0%

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Multiple Choice

Q 67Q 67

Canedo Inc.reported the following results from last year's operations: At the beginning of this year, the company has a $700,000 investment opportunity with the following characteristics: If the company pursues the investment opportunity and otherwise performs the same as last year, the combined turnover for the entire company will be closest to:
A)2.98
B)17.01
C)2.53
D)2.04

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Multiple Choice

Q 68Q 68

Braymiller Inc.has a $1,600,000 investment opportunity with the following characteristics: The turnover for this investment opportunity is closest to:
A)0.04
B)0.40
C)2.50
D)25.00

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Multiple Choice

Q 69Q 69

Largo Company recorded for the past year sales of $750,000 and average operating assets of $375,000.What is the margin that Largo Company needed to earn in order to achieve an ROI of 15%?
A)2.00%
B)15.00%
C)9.99%
D)7.50%

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Multiple Choice

Q 70Q 70

Chavin Company had the following results during August: net operating income, $220,000; turnover, 5; and ROI 25%.Chavin Company's average operating assets were:
A)$880,000
B)$44,000
C)$55,000
D)$1,100,000

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Multiple Choice

Q 71Q 71

Tallon Inc.has a $1,200,000 investment opportunity that involves sales of $1,680,000, fixed expenses of $336,000, and a contribution margin ratio of 30% of sales.The turnover for this investment opportunity is closest to:
A)1.40
B)0.10
C)10.00
D)0.71

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Multiple Choice

Q 72Q 72

The following data has been provided for a company's most recent year of operations: The residual income for the year was closest to:
A)$20,000
B)$3,000
C)$5,000
D)$15,000

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Multiple Choice

Q 73Q 73

Pankey Inc.has a $700,000 investment opportunity that would involve sales of $1,050,000, a contribution margin ratio of 40% of sales, and fixed expenses of $325,500.The company's minimum required rate of return is 18%.The residual income for this year's investment opportunity is closest to:
A)($31,500)
B)$0
C)$94,500
D)$124,600

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Multiple Choice

Q 74Q 74

Worsell Inc.reported the following results from last year's operations: The company's minimum required rate of return is 10%.Last year's residual income was closest to:
A)$440,000
B)$490,000
C)($638,000)
D)($60,000)

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Multiple Choice

Q 75Q 75

Lumsden Inc.has a $1,200,000 investment opportunity with the following characteristics: The company's minimum required rate of return is 7%.The residual income for this year's investment opportunity is closest to:
A)$120,000
B)$36,000
C)$0
D)$84,000

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Multiple Choice

Q 76Q 76

Mike Corporation uses residual income to evaluate the performance of its divisions.The company's minimum required rate of return is 14%.In January, the Commercial Products Division had average operating assets of $970,000 and net operating income of $143,700.What was the Commercial Products Division's residual income in January?
A)$7,900
B)-$20,118
C)$20,118
D)-$7,900

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Multiple Choice

Q 77Q 77

If net operating income is $70,000, average operating assets are $250,000, and the minimum required rate of return is 16%, what is the residual income?
A)$11,200
B)$40,000
C)$110,000
D)$30,000

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Q 78Q 78

Salvey Inc.reported the following results from last year's operations: The company's average operating assets were $3,000,000. At the beginning of this year, the company has a $300,000 investment opportunity that involves sales of $480,000, fixed expenses of $100,800, and a contribution margin ratio of 30% of sales.
If the company pursues the investment opportunity and otherwise performs the same as last year, the combined ROI for the entire company will be closest to:
A)16.6%
B)1.3%
C)18.2%
D)15.3%

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Multiple Choice

Q 79Q 79

In November, the Universal Solutions Division of Keaffaber Corporation had average operating assets of $480,000 and net operating income of $46,200.The company uses residual income, with a minimum required rate of return of 11%, to evaluate the performance of its divisions.What was the Universal Solutions Division's residual income in November?
A)-$6,600
B)$5,082
C)$6,600
D)-$5,082

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Multiple Choice

Q 80Q 80

Bungert Inc.reported the following results from last year's operations: The company's minimum required rate of return is 12% and its average operating assets were $8,000,000.Last year's residual income was closest to:
A)$912,000
B)($48,000)
C)$992,000
D)($972,800)

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Multiple Choice

Q 81Q 81

Beery Inc.reported the following results from last year's operations: At the beginning of this year, the company has a $900,000 investment opportunity with the following characteristics: The company's minimum required rate of return is 12%.If the company pursues the investment opportunity, this year's combined residual income for the entire company will be closest to:
A)$848,700
B)$942,000
C)$24,300
D)$114,000

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Multiple Choice

Q 82Q 82

Wiswell Inc.reported the following results from last year's operations: The average operating assets were $8,000,000. At the beginning of this year, the company has a $900,000 investment opportunity that would involve sales of $2,070,000, a contribution margin ratio of 30% of sales, and fixed expenses of $538,200.The company's minimum required rate of return is 10%.If the company pursues the investment opportunity, this year's combined residual income for the entire company will be closest to:
A)$104,800
B)$925,600
C)($19,800)
D)$994,800

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Multiple Choice

Q 83Q 83

Santoyo Corporation keeps careful track of the time required to fill orders.Data concerning a particular order appear below: The delivery cycle time was:
A)8.3 hours
B)3.2 hours
C)37.7 hours
D)36.3 hours

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Multiple Choice

Q 84Q 84

Schapp Corporation keeps careful track of the time required to fill orders.The times recorded for a particular order appear below: The throughput time was:
A)11.3 hours
B)21.7 hours
C)17.2 hours
D)4.5 hours

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Q 85Q 85

Hunt Company has the following production data: The manufacturing cycle efficiency (MCE)for Hunt Company is:
A)50%
B)25%
C)20%
D)75%

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Q 86Q 86

Pinkton Corporation keeps careful track of the time required to fill orders.The times recorded for a particular order appear below: The delivery cycle time was:
A)8.7 hours
B)3.6 hours
C)22.0 hours
D)22.7 hours

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Multiple Choice

Q 87Q 87

Simkin Corporation keeps careful track of the time required to fill orders.Data concerning a particular order appear below: The manufacturing cycle efficiency (MCE)was closest to:
A)0.46
B)0.06
C)0.20
D)0.19

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Multiple Choice

Q 88Q 88

Navern Corporation manufactures and sells custom home elevators.From the time an order is placed until the time the elevator is installed in the customer's home averages 90 days.This 90 days is spent as follows: What is Navern's manufacturing cycle efficiency (MCE)for its elevators?
A)20.0%
B)36.0%
C)45.0%
D)64.0%

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Multiple Choice

Q 89Q 89

Tanouye Corporation keeps careful track of the time required to fill orders.Data concerning a particular order appear below: The throughput time was:
A)4.1 hours
B)12.9 hours
C)25.6 hours
D)21.5 hours

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Multiple Choice

Q 90Q 90

Vandenheuvel Corporation keeps careful track of the time required to fill orders.The times recorded for a particular order appear below: The manufacturing cycle efficiency (MCE)was closest to:
A)0.06
B)0.18
C)0.62
D)0.16

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Q 92Q 92

The turnover for this year's investment opportunity considered alone is closest to:
A)16.67
B)0.06
C)0.28
D)3.60

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Q 93Q 93

If the company pursues the investment opportunity and otherwise performs the same as last year, the combined turnover for the entire company will be closest to:
A)12.83
B)2.65
C)1.90
D)3.34

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Q 100Q 100

If the company pursues the investment opportunity and otherwise performs the same as last year, the combined margin for the entire company will be closest to:
A)9.9%
B)1.9%
C)7.8%
D)6.3%

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Q 101Q 101

If the company pursues the investment opportunity and otherwise performs the same as last year, the combined turnover for the entire company will be closest to:
A)8.03
B)1.85
C)2.41
D)1.46

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Q 102Q 102

If the company pursues the investment opportunity and otherwise performs the same as last year, the combined ROI for the entire company will be closest to:
A)14.4%
B)2.7%
C)11.7%
D)18.8%

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Q 109Q 109

The average operating assets for Year 2 were:
A)$1,000,000
B)$1,080,000
C)$1,200,000
D)$1,388,889

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Q 114Q 114

The margin for this year's investment opportunity considered alone is closest to:
A)56.0%
B)50.0%
C)6.0%
D)44.0%

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Q 115Q 115

If the company pursues the investment opportunity and otherwise performs the same as last year, the combined margin for the entire company will be closest to:
A)4.9%
B)4.3%
C)0.9%
D)3.5%

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Q 117Q 117

The ROI for this year's investment opportunity considered alone is closest to:
A)7.0%
B)21.2%
C)12.6%
D)72.0%

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Q 118Q 118

If the company pursues the investment opportunity and otherwise performs the same as last year, the combined ROI for the entire company will be closest to:
A)12.0%
B)8.6%
C)10.4%
D)1.7%

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Q 119Q 119

Tipton Division's average operating assets last year were:
A)$625,000
B)$250,000
C)$416,677
D)$333,333

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Q 120Q 120

The division's net operating income last year was:
A)$250,000
B)$125,000
C)$100,000
D)$75,000

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Q 122Q 122

If the residual income for the year was $9,000, the minimum required rate of return must have been:
A)15%
B)4%
C)20%
D)36%

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Q 124Q 124

The ROI for this year's investment opportunity considered alone is closest to:
A)51.0%
B)50.0%
C)10.0%
D)17.0%

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Q 125Q 125

If the company pursues the investment opportunity and otherwise performs the same as last year, the combined ROI for the entire company will be closest to:
A)3.9%
B)24.0%
C)14.5%
D)18.5%

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Q 126Q 126

Last year's residual income was closest to:
A)$567,000
B)$597,000
C)($33,000)
D)($686,700)

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Q 127Q 127

The residual income for this year's investment opportunity when considered alone is closest to:
A)$0
B)$179,100
C)$153,000
D)($27,000)

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Q 128Q 128

If the company pursues the investment opportunity, this year's combined residual income for the entire company will be closest to:
A)$776,100
B)($60,000)
C)$720,000
D)($17,100)

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Q 129Q 129

Suppose Deed Corporation evaluates managerial performance using return on investment.Edith Carolina, as president of the company, may view the opportunity for taking on the cosmetics line differently from Michael Sanders, manager of the Cosmetics Division.What action would each of them prefer with respect to the decision of whether to take on the new cosmetics line?

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Q 130Q 130

If the Deed Corporation evaluates managerial performance using residual income based on the corporate minimum required rate of return of 8%, what decision would be preferred by Edith Carolina and Michael Sanders?

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Q 134Q 134

The division's residual income is closest to:
A)$2,808,960
B)$4,088,960
C)$(3,027,840)
D)$1,528,960

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Q 138Q 138

The division's residual income is closest to:
A)$1,324,320
B)$2,524,320
C)$1,924,320
D)$(607,680)

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Q 140Q 140

For the past year, the margin used in ROI calculations was:
A)6.00%
B)8.67%
C)10.00%
D)8.00%

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Q 143Q 143

The residual income for the Hum Division last year was:
A)$126,000
B)$46,000
C)$78,000
D)$22,000

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Q 145Q 145

What was the West Division's minimum required return in August?
A)$45,600
B)$42,200
C)$53,618
D)$8,018

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Q 146Q 146

What was the West Division's residual income in August?
A)$(8,018)
B)$3,400
C)$(3,400)
D)$8,018

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Q 147Q 147

What was the Consumer Products Division's minimum required return in May?
A)$81,300
B)$8,130
C)$88,130
D)$80,000

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Q 148Q 148

What was the Consumer Products Division's residual income in May?
A)$(1,300)
B)$8,130
C)$1,300
D)$(8,130)

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Q 149Q 149

Last year's residual income was closest to:
A)$504,000
B)($56,000)
C)$544,000
D)($475,200)

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Q 150Q 150

The residual income for this year's investment opportunity when considered alone is closest to:
A)$124,000
B)$12,000
C)$0
D)$108,800

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Q 151Q 151

If the company pursues the investment opportunity, this year's combined residual income for the entire company will be closest to:
A)$23,200
B)($44,000)
C)$628,000
D)$652,800

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Q 160Q 160

Gabbe Industries is a division of a major corporation.Last year the division had total sales of $8,910,000, net operating income of $962,280, and average operating assets of $3,000,000.The company's minimum required rate of return is 10%.
Required:
a.What is the division's margin?
b.What is the division's turnover?
c.What is the division's return on investment (ROI)?

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Essay

Q 161Q 161

Craycraft Inc.reported the following results from last year's operations: At the beginning of this year, the company has a $800,000 investment opportunity with the following characteristics: Required:
1.What was last year's margin? (Round to the nearest 0.1%.)
2.What was last year's turnover? (Round to the nearest 0.01.)
3.What was last year's return on investment (ROI)? (Round to the nearest 0.1%.)
4.If the company pursues the investment opportunity and otherwise performs the same as last year, what will be the overall margin this year? (Round to the nearest 0.1%.)
5.If the company pursues the investment opportunity and otherwise performs the same as last year, what will be the overall turnover this year? (Round to the nearest 0.01.)
6.If the company pursues the investment opportunity and otherwise performs the same as last year, what will be the overall ROI will this year? (Round to the nearest 0.1%.)

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Essay

Q 162Q 162

Haney Fabrication is a division of a major corporation.Last year the division had total sales of $21,560,000, net operating income of $1,897,280, and average operating assets of $7,000,000.The company's minimum required rate of return is 16%.
Required:
What is the division's return on investment (ROI)?

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Essay

Q 163Q 163

Wolley Inc.reported the following results from last year's operations: At the beginning of this year, the company has a $1,200,000 investment opportunity with the following characteristics: The company's minimum required rate of return is 14%.
Required:
1.What was last year's margin? (Round to the nearest 0.1%.)
2.What was last year's turnover? (Round to the nearest 0.01.)
3.What was last year's return on investment (ROI)? (Round to the nearest 0.1%.)
4.What is the margin related to this year's investment opportunity? (Round to the nearest 0.1%.)
5.What is the turnover related to this year's investment opportunity? (Round to the nearest 0.01.)
6.What is the ROI related to this year's investment opportunity? (Round to the nearest 0.1%.)
7.If the company pursues the investment opportunity and otherwise performs the same as last year, what will be the overall margin this year? (Round to the nearest 0.1%.)
8.If the company pursues the investment opportunity and otherwise performs the same as last year, what will be the overall turnover this year? (Round to the nearest 0.01.)
9.If the company pursues the investment opportunity and otherwise performs the same as last year, what will be the overall ROI will this year? (Round to the nearest 0.1%.)
10.If Westerville's chief executive officer earns a bonus only if the ROI for this year exceeds the ROI for last year, would the CEO pursue the investment opportunity? Would the owners of the company want the CEO to pursue the investment opportunity?

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Essay

Q 164Q 164

Criner Inc.reported the following results from last year's operations: At the beginning of this year, the company has a $1,800,000 investment opportunity with the following characteristics: Required:
1.What was last year's return on investment (ROI)? (Round to the nearest 0.1%.)
2.If the company pursues the investment opportunity and otherwise performs the same as last year, what will be the overall ROI will this year? (Round to the nearest 0.1%.)

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Essay

Q 165Q 165

Familia Inc.reported the following results from last year's operations: At the beginning of this year, the company has a $1,200,000 investment opportunity with the following characteristics: The company's minimum required rate of return is 13%.
Required:
1.What was last year's return on investment (ROI)? (Round to the nearest 0.1%.)
2.What is the ROI related to this year's investment opportunity? (Round to the nearest 0.1%.)
3.If the company pursues the investment opportunity and otherwise performs the same as last year, what will be the overall ROI will this year? (Round to the nearest 0.1%.)
4.If Westerville's chief executive officer earns a bonus only if the ROI for this year exceeds the ROI for last year, would the CEO pursue the investment opportunity? Would the owners of the company want the CEO to pursue the investment opportunity?

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Essay

Q 166Q 166

The following data pertains to Timmins Company's operations last year: Required:
a.Compute the company's average operating assets.
b.Compute the company's residual income for the year.

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Essay

Q 167Q 167

The Clipper Corporation had net operating income of $380,000 and average operating assets of $2,000,000.The corporation requires a return on investment of 18%.
Required:
a.Calculate the company's return on investment (ROI)and residual income (RI).
b.Clipper Corporation is considering an investment of $70,000 in a project that will generate annual net operating income of $12,950.Would it be in the best interests of the company to make this investment?
c.Clipper Corporation is considering an investment of $70,000 in a project that will generate annual net operating income of $12,950.If the division planning to make the investment currently has a return on investment of 20% and its manager is evaluated based on the division's ROI, will the division manager be inclined to request funds to make this investment?
d.Clipper Corporation is considering an investment of $70,000 in a project that will generate annual net operating income of $12,950.If the division planning to make the investment currently has a residual income of $50,000 and its manager is evaluated based on the division's residual income, will the division manager be inclined to request funds to make this investment?

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Essay

Q 168Q 168

Financial data for Beaker Company for last year appear below: The company paid dividends of $2,100 last year.The "Investment in Cedar Company" on the statement of financial position represents an investment in the stock of another company.
Required:
a.Compute the company's margin, turnover, and return on investment for last year.
b.The Board of Directors of Beaker Company has set a minimum required return of 20%.What was the company's residual income last year?

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Essay

Q 169Q 169

Eady Wares is a division of a major corporation.The following data are for the latest year of operations: Required:
a.What is the division's margin?
b.What is the division's turnover?
c.What is the division's return on investment (ROI)?
d.What is the division's residual income?

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Essay

Q 170Q 170

Fabbri Wares is a division of a major corporation.The following data are for the latest year of operations: Required:
a.What is the division's return on investment (ROI)?
b.What is the division's residual income?

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Essay

Q 171Q 171

Ranallo Inc.reported the following results from last year's operations: At the beginning of this year, the company has a $1,800,000 investment opportunity with the following characteristics: The company's minimum required rate of return is 14%.
Required:
1.What was last year's margin? (Round to the nearest 0.1%.)
2.What was last year's turnover? (Round to the nearest 0.01.)
3.What was last year's return on investment (ROI)? (Round to the nearest 0.1%.)
4.What is the margin related to this year's investment opportunity? (Round to the nearest 0.1%.)
5.What is the turnover related to this year's investment opportunity? (Round to the nearest 0.01.)
6.What is the ROI related to this year's investment opportunity? (Round to the nearest 0.1%.)
7.If the company pursues the investment opportunity and otherwise performs the same as last year, what will be the overall margin this year? (Round to the nearest 0.1%.)
8.If the company pursues the investment opportunity and otherwise performs the same as last year, what will be the overall turnover this year? (Round to the nearest 0.01.)
9.If the company pursues the investment opportunity and otherwise performs the same as last year, what will be the overall ROI will this year? (Round to the nearest 0.1%.)
10.If Westerville's chief executive officer earns a bonus only if the ROI for this year exceeds the ROI for last year, would the CEO pursue the investment opportunity? Would the owners of the company want the CEO to pursue the investment opportunity?
11.What was last year's residual income?
12.What is the residual income of this year's investment opportunity?
13.If the company pursues the investment opportunity and otherwise performs the same as last year, what will be the overall residual income this year?
14.If Westerville's CEO earns a bonus only if residual income for this year exceeds residual income for last year, would the CEO pursue the investment opportunity?

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Essay

Q 172Q 172

Willing Inc.reported the following results from last year's operations: At the beginning of this year, the company has a $1,200,000 investment opportunity with the following characteristics: The company's minimum required rate of return is 14%.
Required:
1.What was last year's residual income?
2.What is the residual income of this year's investment opportunity?
3.If the company pursues the investment opportunity and otherwise performs the same as last year, what will be the overall residual income this year?
4.If Westerville's CEO earns a bonus only if residual income for this year exceeds residual income for last year, would the CEO pursue the investment opportunity?

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Essay

Q 173Q 173

The Casket Division of Saal Corporation had average operating assets of $950,000 and net operating income of $135,200 in January.The company uses residual income to evaluate the performance of its divisions, with a minimum required rate of return of 13%.
Required:
What was the Casket Division's residual income in January?

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Essay

Q 174Q 174

Ibale Industries is a division of a major corporation.The following data are for the latest year of operations: Required:
What is the division's residual income?

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Essay

Q 175Q 175

Brodrick Corporation uses residual income to evaluate the performance of its divisions.The minimum required rate of return for performance evaluation purposes is 19%.The Games Division had average operating assets of $140,000 and net operating income of $25,900 in August.
Required:
What was the Games Division's residual income in August?

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Essay

Q 176Q 176

Worley Inc.reported the following results from last year's operations: At the beginning of this year, the company has a $1,000,000 investment opportunity with the following characteristics: The company's minimum required rate of return is 17%.
Required:
1.What was last year's residual income?
2.If the company pursues the investment opportunity and otherwise performs the same as last year, what will be the overall residual income this year?
3.If Westerville's CEO earns a bonus only if residual income for this year exceeds residual income for last year, would the CEO pursue the investment opportunity?

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Essay

Q 177Q 177

Schurz Corporation's management reports that its average delivery cycle time is 26.7 days, its average throughput time is 10.0 days, its manufacturing cycle efficiency (MCE)is 0.22, its average move time is 0.6 day, and its average queue time is 6.7 days.
Required:
a.What is the wait time?
b.What is the process time?
c.What is the inspection time?

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Essay

Q 178Q 178

Schlarbaum Corporation's management keeps track of the time it takes to process orders.During the most recent month, the following average times were recorded per order: Required:
a.Compute the throughput time.
b.Compute the manufacturing cycle efficiency (MCE).
c.What percentage of the production time is spent in non-value-added activities?
d.Compute the delivery cycle time.

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Essay

Q 179Q 179

During the most recent month at Schwab Corporation, queue time was 7.8 days, inspection time was 0.3 day, process time was 1.3 days, wait time was 9.7 days, and move time was 0.7 day.
Required:
a.Compute the throughput time.
b.Compute the manufacturing cycle efficiency (MCE).
c.What percentage of the production time is spent in non-value-added activities?
d.Compute the delivery cycle time.

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Essay

Q 180Q 180

Alghamdi Corporation keeps careful track of the time required to fill orders.The times required for a particular order appear below: Required:
a.Determine the throughput time.Show your work!
b.Determine the manufacturing cycle efficiency (MCE), Show your work!
c.Determine the delivery cycle time.Show your work!

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Essay