Assume division 1 of the XYZ Company had the following results last year (in thousands). Management's required rate of return is 8% and the weighted average cost of capital is 6%. Its effective tax rate is 30%. \[\begin{array} { | l | r | } \hline \text { Sales } & \$ 5,000,000 \\ \hline \text { Operating income } & \$ 1,000,000 \\ \hline \text { Total assets } & \$ 10,000,000 \\ \hline \text { Current liabilities } & \$ 500,000 \\ \hline \end{array}\] What is the division's capital turnover?

A) 5% B) 10% C) 20% D) 50% A) 5% B) 10% C) 20% D) 50%

Assume the Apple division of the Gala Company had the following results last year (in thousands). Managements required rate of return is 10% and the weighted average cost of capital is 8%. Its effective tax rate is 30%. \[\begin{array} { | l | r | } \hline \text { Sales } & \$ 3,000,000 \\ \hline \text { Operating income } & \$ 500,000 \\ \hline \text { Total assets } & \$ 4,500,000 \\ \hline \text { Current liabilities } & \$ 300,000 \\ \hline \end{array}\] What is Apple division's profit margin?

A) 11.11% B) 16.67% C) 66.67% D) 60% A) 11.11% B) 16.67% C) 66.67% D) 60%

Exam 23: Performance Evaluation and the Balanced Scorecard

Waddington Corporation currently has a return on investment of 12%. The Madrid division is reporting residual income of $1,000,000 and a 14% return on investment. The Madrid division is contemplating an investment opportunity which has an 11% return on investment and a positive residual income. Should Madrid division's management make the investment if goal congruence is important to the Waddington Corporation?

(Multiple Choice)

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(40)

Question 21

Which of the following will not change a company's return on investment?

(Multiple Choice)

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Question 22

Which of the following does not accurately describe the balanced scorecard approach?

(Multiple Choice)

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Question 23

Which of the following transactions will result in an increase in economic value added?

(Multiple Choice)

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Question 24

Which of the following is not taken into consideration when calculating residual income?

(Multiple Choice)

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Question 25

Return on investment is calculated by:

(Multiple Choice)

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Question 26

Selling property, plant, and equipment at a loss will result in an increase in return on investment.

(True/False)

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(38)

Question 27

Which of the following is not taken into consideration when calculating return on investment?

(Multiple Choice)

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Question 28

Which of the following is irrelevant with respect to calculating economic value added?

(Multiple Choice)

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Question 29

The management of Mullen Division has provided the following information: Operating assets: $600,000 Operating income: $90,000 Sales: $300,000 Management is considering investing in an additional project costing $60,000; it is estimated that the project will create operating income of $7,200. Mullen's minimum desired rate of return is 10%. Should Mullen's management invest in the project if management is evaluated using residual income?

(Multiple Choice)

4.8/5

(36)

Question 30

The management of Mullen Division has provided the following information: Total assets: $600,000 Operating income: $90,000 Sales: $300,000 Management is considering investing in an additional project costing $60,000; it is estimated that the project will create operating income of $7,200. Mullen's minimum acceptable rate of return is 10%. How much is Mullen's overall residual income if the investment is made?

(Multiple Choice)

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(41)

Question 31

Assume division 1 of the XYZ Company had the following results last year (in thousands). Management's required rate of return is 8% and the weighted average cost of capital is 6%. Its effective tax rate is 30%. Sales \ 5,000,000 Operating income \ 1,000,000 Total assets \ 10,000,000 Current liabilities \ 500,000 What is the division's capital turnover?

(Multiple Choice)

4.9/5

(38)

Question 32

One disadvantage of the economic value added approach is its short-run focus which can lead to a lack of long-term goal congruence.

(True/False)

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Question 33

The management of Mullen Division has provided the following information: Total assets: $600,000 Operating income: $90,000 Sales: $300,000 Management is considering investing in an additional project costing $60,000; it is estimated that the project will create operating income of $7,200. Mullen's minimum acceptable rate of return is 10%. Which of the following statements is incorrect?

(Multiple Choice)

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Question 34

Which of the following will not result in an increase in both return on investment and residual Income?

(Multiple Choice)

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(33)

Question 35

Assume the Apple division of the Gala Company had the following results last year (in thousands). Managements required rate of return is 10% and the weighted average cost of capital is 8%. Its effective tax rate is 30%. Sales \ 3,000,000 Operating income \ 500,000 Total assets \ 4,500,000 Current liabilities \ 300,000 What is Apple division's profit margin?

(Multiple Choice)

4.8/5

(34)

Question 36

A decrease in the income tax rate will:

(Multiple Choice)

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Question 37

Which of the following statements regarding the weighted average cost of capital is incorrect?

(Multiple Choice)

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Question 38

Hancock Corporation has a capital turnover of 2, sales of $500,000, and a return on investment of 4%. What was Hancock's operating income??

(Multiple Choice)

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(34)

Question 39

Norwood Company has a return on investment of 10%, operating income of $200,000, and a capital turnover of 4.0. How much were Norwood's total assets?

(Multiple Choice)

4.8/5

(32)

Question 40

Showing 21 - 40 of 58

Which of the following will not change a company's return on investment?

Which of the following does not accurately describe the balanced scorecard approach?

Which of the following transactions will result in an increase in economic value added?

Which of the following is not taken into consideration when calculating residual income?

Return on investment is calculated by:

Selling property, plant, and equipment at a loss will result in an increase in return on investment.

Which of the following is not taken into consideration when calculating return on investment?

Which of the following is irrelevant with respect to calculating economic value added?

One disadvantage of the economic value added approach is its short-run focus which can lead to a lack of long-term goal congruence.

Which of the following will not result in an increase in both return on investment and residual Income?

A decrease in the income tax rate will:

Which of the following statements regarding the weighted average cost of capital is incorrect?

Hancock Corporation has a capital turnover of 2, sales of $500,000, and a return on investment of 4%. What was Hancock's operating income??

Norwood Company has a return on investment of 10%, operating income of $200,000, and a capital turnover of 4.0. How much were Norwood's total assets?

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandising Inventory

Internal Control and Cash

Receivables

Plant Assets and Intangibles

Current Liabilities, Payroll, and Long-Term Liabilities

Corporations: Paid-In Capital and the Balance Sheet

Corporations: Effects on Retained Earnings and the Income Statement

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Management Accounting

Job Order and Process Costing

Appendix: Process Costing

Activity-Based Costing and Other Cost Management Tools

Cost-Volume-Profit Analysis

Short-Term Business Decisions

Capital Investment Decisions and the Time Value of Money

The Master Budget and Responsibility Accounting

Flexible Budgets and Standard Costs

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