Question 1

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 that ROI facilitates a comparison of organizational sub-units of differing sizes.Because ROI is a performance measure that automatically scales for size,large and small sub-units can be compared to each other (subject to all the factors that should be considered when two units in different industries,different geographical areas,etc.are compared).

Question 2

If a new project generates a positive residual income,the

Accepted Answer

A) project's return on investment is less than the target rate. 
B) project's return on investment is greater than the target rate. 
C) project's return on investment is equal to the target rate. 
D) relationship between the project's return on investment and the target rate cannot necessarily be determineD. 
A) project's return on investment is less than the target rate. 
B) project's return on investment is greater than the target rate. 
C) project's return on investment is equal to the target rate. 
D) relationship between the project's return on investment and the target rate cannot necessarily be determineD. B

Question 3

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

Accepted Answer

A) True 
 B)False  True

Question 4

Thunder Sports Enterprises
The Basketball Division of Thunder Sports Enterprises reported the following financial data for the year:
$\begin{array}{ll}
\text { Assets available for use } & \$ 1,200,000 \text { Book Value } \
& \$ 1,500,000 \text { Market } V \text { alu } \
\text { Residual income } & \$ 108,000\
\text { Return on innvestment } & 14\%
\end{array}$

Refer to Thunder Sports Enterprises.What was the target rate of return for Thunder Sports Enterprises?

Accepted Answer

A) 4% 
B) 5% 
C) 7% 
D) 9% 
A) 4% 
B) 5% 
C) 7% 
D) 9%

Question 5

Manipulation of segment expenses may result in the segment margin not being an accurate performance measure.

Accepted Answer

A) True 
 B)False

Question 6

Financial measures are lagging indicators.

Accepted Answer

A) True 
 B)False

Question 7

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 8

Continental Publishing Company
The Magazine Division of Continental Publishing Company had the following financial data for the year:
$\begin{array}{ll}
\text { Assets available for use } & \$ 1,000,000 \text { Book Value } \
& \$ 1,500,000 \text { Market } V \text { alu } \
\text { Residual income } & \$ 100,000\
\text { Return on innvestment } & 15\%
\end{array}$

Refer to Continental Publishing Company.What was the target rate of return for Continental Publishing Company?

Accepted Answer

A) 10% 
B) 15% 
C) 25% 
D) 5% 
A) 10% 
B) 15% 
C) 25% 
D) 5%

Question 9

Western Division
The Western Division of Lansing Chemical Co.produced the following operating results for the previous year:
 $\begin{array}{ll}
\text { Sales } & \$ 10,000,000  \
\text {Segment income } &  1,500,000 \
\text { Assets } & 6,000.000\
\end{array}$

The Western Division is considering a $1,000,000 investment in a new project.The Western Division estimates that its return on investment (for all of its operations)would be at 22% with the new investment.
Refer to Western Division.How much net segment income is the new project expected to produce?

Accepted Answer

the total of the new segment income = .2

Question 10

The ratio of sales to assets is referred to as ______________________________.

Accepted Answer

The answer of The ratio of sales to assets is...

Question 11

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 12

Residual income is used as a performance measure in

Accepted Answer

A) profit centers. 
B) cost centers. 
C) investment centers. 
D) revenue centers. 
A) profit centers. 
B) cost centers. 
C) investment centers. 
D) revenue centers.

Question 13

A primary purpose of a balanced scorecard is to give

Accepted Answer

A) managers a way to judge past performance. 
B) stockholders a way to judge current performance. 
C) managers a way to forecast future performance. 
D) stockholders a way to tie strategy to profitability. 
A) managers a way to judge past performance. 
B) stockholders a way to judge current performance. 
C) managers a way to forecast future performance. 
D) stockholders a way to tie strategy to profitability.

Question 14

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:
 $\begin{array}{ll}
\text { Sales } & \$ 3,000,00 \
\text { Profit margin } & 10 \% \
\text { Target return } & 15 \% \
\text { Residual income } & \$ 60,000
\end{array}$
 
Refer to Oil Division.What was the return on investment for the Oil Division?

Accepted Answer

ROI = Segment Income/Assets
Se

Question 15

Financial incentives are

Accepted Answer

A) different from monetary rewards 
B) the same thing as a salary element 
C) provided to all employee groups. 
D) available to top management whose performance exceeds targeted objectives 
A) different from monetary rewards 
B) the same thing as a salary element 
C) provided to all employee groups. 
D) available to top management whose performance exceeds targeted objectives

Question 16

Process productivity is calculated as

Accepted Answer

A) total units divided by non-value-added processing time. 
B) total units divided by value-added processing time. 
C) value-added processing time divided by total units. 
D) value-added processing divided by total time. 
A) total units divided by non-value-added processing time. 
B) total units divided by value-added processing time. 
C) value-added processing time divided by total units. 
D) value-added processing divided by total time.

Question 17

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 18

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

Accepted Answer

A) True 
 B)False

Question 19

Thunder Sports Enterprises
The Basketball Division of Thunder Sports Enterprises reported the following financial data for the year:
$\begin{array}{ll}
\text { Assets available for use } & \$ 1,200,000 \text { Book Value } \
& \$ 1,500,000 \text { Market } V \text { alu } \
\text { Residual income } & \$ 108,000\
\text { Return on innvestment } & 14\%
\end{array}$

Refer to Thunder Sports Enterprises.What was the Basketball Division's segment income?

Accepted Answer

A) $168,000 
B) $125,000 
C) $269,000 
D) $ 19,000 
A) $168,000 
B) $125,000 
C) $269,000 
D) $ 19,000

Question 20

In order to assure achievement of an organizational goal,performance measures must be established for that goal.

Accepted Answer

A) True 
 B)False

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

If a new project generates a positive residual income,the

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

Manipulation of segment expenses may result in the segment margin not being an accurate performance measure.

Financial measures are lagging indicators.

Process quality yield is used in the measurement of

The ratio of sales to assets is referred to as ______________________________.

Residual income is the

Residual income is used as a performance measure in

A primary purpose of a balanced scorecard is to give

Financial incentives are

Process productivity is calculated as

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

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

In order to assure achievement of an organizational goal,performance measures must be established for that goal.

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

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

If a new project generates a positive residual income,the

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

Manipulation of segment expenses may result in the segment margin not being an accurate performance measure.

Financial measures are lagging indicators.

Process quality yield is used in the measurement of

The ratio of sales to assets is referred to as ______________________________.

Residual income is the

Residual income is used as a performance measure in

A primary purpose of a balanced scorecard is to give

Financial incentives are

Process productivity is calculated as

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

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

In order to assure achievement of an organizational goal,performance measures must be established for that goal.

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