Question 1

How can return on investment result in sub-optimization when it is used as a performance measure?

Accepted Answer

Because performance measures are used to

Question 2

Employee stock ownership in the employees' firm

Accepted Answer

A)  will encourage short term earnings growth patterns. 
B)  will encourage employees to take a longer term perspective regarding their performance in the company. 
C)  is not suitable for hourly or salaried employees. 
D)  is common for management in American firms. 
A)  will encourage short term earnings growth patterns. 
B)  will encourage employees to take a longer term perspective regarding their performance in the company. 
C)  is not suitable for hourly or salaried employees. 
D)  is common for management in American firms.

Question 3

Internal performance measures focus on the efficiency and effectiveness of an organization's production process.

Accepted Answer

A) True 
 B)False

Question 4

Customer measures on the balanced scorecard should be

Accepted Answer

A)  yes no no yes 
B)  no yes yes no 
C)  no yes no yes 
D)  yes yes yes yes 
A)  yes no no yes 
B)  no yes yes no 
C)  no yes no yes 
D)  yes yes yes yes

Question 5

The Software Division of Entertainment Corporation has the following segment information:   What was Cheesecake Division's return on investment?

Accepted Answer

A)  12% 
B)  10% 
C)  24% 
D)  20% 
A)  12% 
B)  10% 
C)  24% 
D)  20%

Question 6

Performance measures that provide a focus on the efficiency and effectiveness of production processes are referred to as ____________________ measures.

Accepted Answer

The answer of Performance measures that provide a focus on...

Question 7

What distinct advantage does a return on investment measure have over a residual income measure? Explain.

Accepted Answer

The advantage of ROI measure over RI is

Question 8

Managers should be paid

Accepted Answer

A)  on a periodic basis. 
B)  based on results achieved. 
C)  using ESOPs. 
D)  on a piece rate basis. 
A)  on a periodic basis. 
B)  based on results achieved. 
C)  using ESOPs. 
D)  on a piece rate basis.

Question 9

Residual income is determined as

Accepted Answer

A)  income times the asset turnover rate. 
B)  income times the inventory turnover rate. 
C)  income minus (asset base times target rate of return). 
D)  sales minus (asset base times target rate of return). 
A)  income times the asset turnover rate. 
B)  income times the inventory turnover rate. 
C)  income minus (asset base times target rate of return). 
D)  sales minus (asset base times target rate of return).

Question 10

Moore Company One of the products manufactured by Moore Company is a plastic tray. The information below relates to the Tray Production Department:
  Refer to Moore Company. What is the process productivity in the Tray Production Department?

Accepted Answer

A)  588 
B)  625 
C)  667 
D)  833 
A)  588 
B)  625 
C)  667 
D)  833

Question 11

Productive capacity is a measure used in computing

Accepted Answer

A)  residual income. 
B)  net cash flow. 
C)  return on investment. 
D)  throughput. 
A)  residual income. 
B)  net cash flow. 
C)  return on investment. 
D)  throughput.

Question 12

Houston Company Freeport Division of the Houston Company has the following statistics for its most recent operations:
  Refer to Houston Company. If Houston Company evaluates its managers on the basis of return on investment, the manager of Freeport Division would invest in a project costing $100,000 only if it increased net segment income by at least

Accepted Answer

A)  $10,000. 
B)  $15,000. 
C)  $20,000. 
D)  $25,000. 
A)  $10,000. 
B)  $15,000. 
C)  $20,000. 
D)  $25,000.

Question 13

Oil Division
The Oil Division is one of the operating units of Automotive Solutions, Inc. The following operating data of the division is presented below:
   Refer to Oil Division. What was the return on investment for the Oil Division?

Accepted Answer

ROI = Segment Income/Assets
Se

Question 14

Residual income is the

Accepted Answer

A)  contribution margin of an investment center, less the imputed interest on the invested capital used by the center. 
B)  contribution margin of an investment center, plus the imputed interest on the invested capital used by the center. 
C)  income of an investment center, less the imputed interest on the invested capital used by the center. 
D)  income of an investment center, plus the imputed interest on the invested capital used by the center. 
A)  contribution margin of an investment center, less the imputed interest on the invested capital used by the center. 
B)  contribution margin of an investment center, plus the imputed interest on the invested capital used by the center. 
C)  income of an investment center, less the imputed interest on the invested capital used by the center. 
D)  income of an investment center, plus the imputed interest on the invested capital used by the center.

Question 15

Asset turnover measures the effective use of assets relative to revenue production.

Accepted Answer

A) True 
 B)False

Question 16

If a division generates a positive residual income then the division's

Accepted Answer

A)  asset turnover was very high. 
B)  profitability was greater than that of other divisions in the company. 
C)  performance was above expectations. 
D)  actual return on investment exceeds the division's target return. 
A)  asset turnover was very high. 
B)  profitability was greater than that of other divisions in the company. 
C)  performance was above expectations. 
D)  actual return on investment exceeds the division's target return.

Question 17

Process quality yield is used in the measurement of

Accepted Answer

A)  throughput. 
B)  cash flows. 
C)  asset turnover. 
D)  profit margin. 
A)  throughput. 
B)  cash flows. 
C)  asset turnover. 
D)  profit margin.

Question 18

Jacksonville Company Jacksonville Company has established a target rate of return of 15% for all divisions. For the most recent year, Mandarin Division generated sales of $12,000,000 and expenses of $9,000,000. Total assets at the beginning of the year were $7,000,000 and total assets at the end of the year were $9,000,000.
Refer to Jacksonville Company. In the most recent year, what was Mandarin Division's residual income?

Accepted Answer

A)  $1,200,000 
B)  $1,650,000 
C)  $1,800,000 
D)  $1,950,000 
A)  $1,200,000 
B)  $1,650,000 
C)  $1,800,000 
D)  $1,950,000

Question 19

Which type of financial measure better predicts the direction of future cash flows?

Accepted Answer

A)  yes yes 
B)  yes no 
C)  no no 
D)  no yes 
A)  yes yes 
B)  yes no 
C)  no no 
D)  no yes

Question 20

Expatriate workers should receive a compensation package that reflects cost of living factors and currency fluctuations.

Accepted Answer

A) True 
 B)False

How can return on investment result in sub-optimization when it is used as a performance measure?

Employee stock ownership in the employees' firm

Internal performance measures focus on the efficiency and effectiveness of an organization's production process.

Customer measures on the balanced scorecard should be

The Software Division of Entertainment Corporation has the following segment information: What was Cheesecake Division's return on investment?

Performance measures that provide a focus on the efficiency and effectiveness of production processes are referred to as ____________________ measures.

What distinct advantage does a return on investment measure have over a residual income measure? Explain.

Managers should be paid

Residual income is determined as

Moore Company One of the products manufactured by Moore Company is a plastic tray. The information below relates to the Tray Production Department: Refer to Moore Company. What is the process productivity in the Tray Production Department?

Productive capacity is a measure used in computing

Oil Division The Oil Division is one of the operating units of Automotive Solutions, Inc. The following operating data of the division is presented below: Refer to Oil Division. What was the return on investment for the Oil Division?

Residual income is the

Asset turnover measures the effective use of assets relative to revenue production.

If a division generates a positive residual income then the division's

Process quality yield is used in the measurement of

Which type of financial measure better predicts the direction of future cash flows?

Expatriate workers should receive a compensation package that reflects cost of living factors and currency fluctuations.

Introduction to Cost Accounting

Cost Terminology and Cost Behaviors

Predetermined Overhead Rates, Flexible Budgets, and Absorptionvariable Costing

Activity-Based Management and Activity-Based Costing

Job Order Costing

Process Costing

Standard Costing and Variance Analysis

The Master Budget

Break-Even Point and Cost-Volume-Profit Analysis

Relevant Information for Decision Making

Allocation of Joint Costs and Accounting for By-Products

Introduction to Cost Management Systems

Responsibility Accounting, Support Department Allocations, and Transfer Pricing

Capital Budgeting

Managing Costs and Uncertainty

Implementing Quality Concepts

Inventory and Production Management

Emerging Management Practices

Filters

Exam 14: Performance Measurement, Balanced Scorecards, and Performance Rewards

How can return on investment result in sub-optimization when it is used as a performance measure?

Employee stock ownership in the employees' firm

Internal performance measures focus on the efficiency and effectiveness of an organization's production process.

Customer measures on the balanced scorecard should be

The Software Division of Entertainment Corporation has the following segment information: What was Cheesecake Division's return on investment?

Performance measures that provide a focus on the efficiency and effectiveness of production processes are referred to as ____________________ measures.

What distinct advantage does a return on investment measure have over a residual income measure? Explain.

Managers should be paid

Residual income is determined as

Moore Company One of the products manufactured by Moore Company is a plastic tray. The information below relates to the Tray Production Department: Refer to Moore Company. What is the process productivity in the Tray Production Department?

Productive capacity is a measure used in computing

Oil Division The Oil Division is one of the operating units of Automotive Solutions, Inc. The following operating data of the division is presented below: Refer to Oil Division. What was the return on investment for the Oil Division?

Residual income is the

Asset turnover measures the effective use of assets relative to revenue production.

If a division generates a positive residual income then the division's

Process quality yield is used in the measurement of

Which type of financial measure better predicts the direction of future cash flows?

Expatriate workers should receive a compensation package that reflects cost of living factors and currency fluctuations.

Introduction to Cost Accounting

Cost Terminology and Cost Behaviors

Predetermined Overhead Rates, Flexible Budgets, and Absorptionvariable Costing

Activity-Based Management and Activity-Based Costing

Job Order Costing

Process Costing

Standard Costing and Variance Analysis

The Master Budget

Break-Even Point and Cost-Volume-Profit Analysis

Relevant Information for Decision Making

Allocation of Joint Costs and Accounting for By-Products

Introduction to Cost Management Systems

Responsibility Accounting, Support Department Allocations, and Transfer Pricing

Capital Budgeting

Managing Costs and Uncertainty

Implementing Quality Concepts

Inventory and Production Management

Emerging Management Practices

Filters