Question 1

Which of the following would not normally affect the compensation strategy of a firm?

Accepted Answer

A) organizational goals 
B) location of firm 
C) competition 
D) number of subsidiaries 
A) organizational goals 
B) location of firm 
C) competition 
D) number of subsidiaries

Question 2

When assessing performance,one way to compensate for differences among divisions of a multinational organization would be for the parent company to

Accepted Answer

A) use different target rates of return to compute residual incomes. 
B) modify the return on investment calculation so that foreign currency fluctuations are removed from all financial statement figures. 
C) classify all domestic divisions as investment centers and all foreign divisions as profit centers. 
D) use financial performance measures for units whose records are kept in the domestic currency and non-financial measures for units whose records are kept in a foreign currency. 
A) use different target rates of return to compute residual incomes. 
B) modify the return on investment calculation so that foreign currency fluctuations are removed from all financial statement figures. 
C) classify all domestic divisions as investment centers and all foreign divisions as profit centers. 
D) use financial performance measures for units whose records are kept in the domestic currency and non-financial measures for units whose records are kept in a foreign currency.

Question 3

Holding total production in units constant,as the proportion of defective units to total units declines,all of the following measures will be affected,except

Accepted Answer

A) total unit sales. 
B) throughput. 
C) process quality yield. 
D) process productivity. 
A) total unit sales. 
B) throughput. 
C) process quality yield. 
D) process productivity.

Question 4

The balanced scorecard approach complements measures of past performance with measures of the drivers of future performance.

Accepted Answer

A) True 
 B)False

Question 5

Economic value added (EVA)is a more appropriate performance measure when there is a large difference between the market value of invested capital and the book value of assets.

Accepted Answer

A) True 
 B)False

Question 6

Michigan Company
Ann Arbor Division of the Michigan Company has the following statistics for its most recent operations:
$\begin{array}{ll}
\text { Assets available for use (Market Value) } & \$ 3,600,00 \
\text { Assets available for use (Book Value) } & \$ 2,000,00 \
\text { Am Arbor Division's return on investment } & 25 \% \
\text { Am Arbor Division's residual income } & 200,000 \
\text { Return on investment (entire Michigan Company) } & 20 \%
\end{array}$

Refer to Michigan Company.If Michigan Company evaluates its managers on the basis of return on investment,the manager of Ann Arbor 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 7

In evaluating the performance of a profit center manager,the manager

Accepted Answer

A) and the sub-unit should be evaluated on the basis of the same costs and revenues. 
B) should only be evaluated on the basis of variable costs and revenues of the sub-unit. 
C) should be evaluated on all costs and revenues that are controllable by the manager 
D) should be evaluated on all costs and revenues that can be directly traced to the sub-unit. 
A) and the sub-unit should be evaluated on the basis of the same costs and revenues. 
B) should only be evaluated on the basis of variable costs and revenues of the sub-unit. 
C) should be evaluated on all costs and revenues that are controllable by the manager 
D) should be evaluated on all costs and revenues that can be directly traced to the sub-unit.

Question 8

Information for two divisions of Superb Entertainment Company is given below:
 $\begin{array}{ll}
&\underline{\text { Compact Disc } } &\underline{\text {  DVD  }} \
\text { Net income } & \$ 60,00 &\$100,000 \
\text {Capital investment } &  \$400,000& \$500,000\\

\end{array}$
a. If Superb Entertaiment Company charges each division $ 12 \% $ for capital employed, compute resudual income for the Compact Disc and DVD divisions.

b. Compute the ROI for each division.

Accepted Answer

a. If Superb Entertaiment Company charge

Question 9

Buxton Company
One of the products manufactured by Buxton Company is a plastic tray.The information below relates to the Tray Production Department:
$\begin{array}{ll}
\text {Good units produced } &200,000 \
\text {Units started in production } &  2500,000\\
\text {Processing time (budgeted hours) } &425\
\text { Processing time (total hours)} &400\
\text { Value-added proce ssing time } &300\
\end{array}$

Refer to Buxton Company.What is the throughput per hour in the Tray Production Department?

Accepted Answer

A) 470 units 
B) 500 units 
C) 625 units 
D) 667 units 
A) 470 units 
B) 500 units 
C) 625 units 
D) 667 units

Question 10

Variance analysis would be appropriate to measure performance in

Accepted Answer

A) profit centers. 
B) investment centers. 
C) cost centers. 
D) all of the above. 
A) profit centers. 
B) investment centers. 
C) cost centers. 
D) all of the above.

Question 11

A measure of profit produced above the cost of capital is referred to as ___________________________________.
or

Accepted Answer

economic v

Question 12

Mobile Company
Mobile Company is a manufacturer of electronic components.The following manufacturing information is available for the month of May:
$\begin{array}{ll}
\text {Good unins manufactured } & 40,000 \
\text {V alue-added hours of manufacturing time } &  20,000\\
\text {Total units manufactured. } &50.000\
\text { Total hours of manufacturing time } &30.000\
\end{array}$

Refer to Mobile Company.What is the process quality yield?

Accepted Answer

A) 50% 
B) 75% 
C) 80% 
D) 125% 
A) 50% 
B) 75% 
C) 80% 
D) 125%

Question 13

A company's return on investment is affected by a change in
                                         Profit Margin
$\text {\underline{Asset Turnover } }$       $\text {\underline{on Sales } }$

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 14

On a balanced scorecard,which of the following would be most appropriate to measure financial performance?

Accepted Answer

A) Market share 
B) Customer retention 
C) Percentage of sales from new products 
D) Investment in intellectual capital 
A) Market share 
B) Customer retention 
C) Percentage of sales from new products 
D) Investment in intellectual capital

Question 15

A pay plan that does not encourage the overall company good is

Accepted Answer

A) profit sharing. 
B) an employee stock option plan. 
C) contingent pay. 
D) monthly salary. 
A) profit sharing. 
B) an employee stock option plan. 
C) contingent pay. 
D) monthly salary.

Question 16

The Appliance Division
The Appliance Division of Electrotech Corporation reported the following results for a recent year
$\begin{array}{ll}
\text {Sales } & \$ 9,000,000  \
\text {Expenses } &  7,500,000\\
\text { Total assets(1/1) } &6,000.000\
\text { Total assets(12/31) } & 6,200.000
\end{array}$

Refer to the Appliance Division
What was the profit margin for The Appliance Division?

Accepted Answer

A) 17% 
B) 24% 
C) 25% 
D) 69% 
A) 17% 
B) 24% 
C) 25% 
D) 69%

Question 17

Which of the following would be an appropriate alternative to the use of ROI in evaluating the performance of an investment center?
$\begin{array}{lll}
\text { Residual } & \text { Net cash } & \text { Cost and revenue } \
\underline{\text { income }} &\underline{ \text { flow }} &\underline{ \text { Variance analysis }}
\end{array}$

Accepted Answer

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

Question 18

If performance measures are perfect proxies for organizational goals,

Accepted Answer

A) sub-optimization will be enhanced. 
B) sub-unit managers will strive to achieve organizational goals. 
C) sub-units can all be decentralized. 
D) residual income will rise. 
A) sub-optimization will be enhanced. 
B) sub-unit managers will strive to achieve organizational goals. 
C) sub-units can all be decentralized. 
D) residual income will rise.

Question 19

Tax deferral is the most desirable form of tax treatment for employee compensation elements.

Accepted Answer

A) True 
 B)False

Question 20

Compensation packages for executives of American firms

Accepted Answer

A) are beginning to emphasize the long-term commitment executives should have in the firm. 
B) are considered comparable to packages earned by European and Asian executives. 
C) are shifting towards lower percentages of annual incentives. 
D) are shifting away from long-term awards. 
A) are beginning to emphasize the long-term commitment executives should have in the firm. 
B) are considered comparable to packages earned by European and Asian executives. 
C) are shifting towards lower percentages of annual incentives. 
D) are shifting away from long-term awards.

Which of the following would not normally affect the compensation strategy of a firm?

When assessing performance,one way to compensate for differences among divisions of a multinational organization would be for the parent company to

Holding total production in units constant,as the proportion of defective units to total units declines,all of the following measures will be affected,except

The balanced scorecard approach complements measures of past performance with measures of the drivers of future performance.

Economic value added (EVA)is a more appropriate performance measure when there is a large difference between the market value of invested capital and the book value of assets.

In evaluating the performance of a profit center manager,the manager

Variance analysis would be appropriate to measure performance in

A measure of profit produced above the cost of capital is referred to as ___________________________________. or

A company's return on investment is affected by a change in Profit Margin $\text {\underline{Asset Turnover } }$ $\text {\underline{on Sales } }$

On a balanced scorecard,which of the following would be most appropriate to measure financial performance?

A pay plan that does not encourage the overall company good is

Which of the following would be an appropriate alternative to the use of ROI in evaluating the performance of an investment center? Residual Net cash Cost and revenue

If performance measures are perfect proxies for organizational goals,

Tax deferral is the most desirable form of tax treatment for employee compensation elements.

Compensation packages for executives of American firms

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

Which of the following would not normally affect the compensation strategy of a firm?

When assessing performance,one way to compensate for differences among divisions of a multinational organization would be for the parent company to

Holding total production in units constant,as the proportion of defective units to total units declines,all of the following measures will be affected,except

The balanced scorecard approach complements measures of past performance with measures of the drivers of future performance.

Economic value added (EVA)is a more appropriate performance measure when there is a large difference between the market value of invested capital and the book value of assets.

In evaluating the performance of a profit center manager,the manager

Variance analysis would be appropriate to measure performance in

A measure of profit produced above the cost of capital is referred to as ___________________________________. or

A company's return on investment is affected by a change in Profit Margin Asset Turnover ‾ \text {\underline{Asset Turnover } }Asset Turnover ​ on Sales ‾ \text {\underline{on Sales } }on Sales ​

On a balanced scorecard,which of the following would be most appropriate to measure financial performance?

A pay plan that does not encourage the overall company good is

Which of the following would be an appropriate alternative to the use of ROI in evaluating the performance of an investment center? Residual Net cash Cost and revenue

If performance measures are perfect proxies for organizational goals,

Tax deferral is the most desirable form of tax treatment for employee compensation elements.

Compensation packages for executives of American firms

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

A company's return on investment is affected by a change in Profit Margin $\text {\underline{Asset Turnover } }$ $\text {\underline{on Sales } }$