Question 1

Improved effectiveness and efficiency of a product is considered a ____ performance measurement?

Accepted Answer

A) subjective 
B) financial 
C) quantitative 
D) qualitative 
A) subjective 
B) financial 
C) quantitative 
D) qualitative

Question 2

Which of the following would be considered a non-financial performance measurement?

Accepted Answer

A) increase in market share 
B) variances from standards 
C) number of customer complaints 
D) cost of engineering changes 
A) increase in market share 
B) variances from standards 
C) number of customer complaints 
D) cost of engineering changes

Question 3

Deferred compensation techniques are currently used in the American work place.What are they and how do they benefit the employer and the employee?

Accepted Answer

Deferred compensation is pay that was ea

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.If expenses increased by $15,000 in the Basketball Division,

Accepted Answer

A) return on investment would decrease. 
B) residual income would increase. 
C) the target rate of return would decrease. 
D) asset turnover would decrease. 
A) return on investment would decrease. 
B) residual income would increase. 
C) the target rate of return would decrease. 
D) asset turnover would decrease.

Question 5

The information below relates to costs,revenues,and assets anticipated in the Shoe Division of DKY Footwear Corporation:
$\begin{array}{ll}
\text { Sales } & \$ 4,000,000 \
\text { Variable costs } & 75 \% \text { of sales } \
\text { Average assets employed } & \$ 12,000,000\
\text { Fiverl cocte: } &0
\end{array}$

How would each of the following measures be affected if sales rise by $5,000 in the Shoe Division?
$\text {\underline{ROI } }$              $\text {\underline{Assert turnover } }$          $\text {\underline{ Profit margin} }$

Accepted Answer

A) increase increase increase 
B) increase no change increase 
C) increase increase no change 
D) no change no change increase 
A) increase increase increase 
B) increase no change increase 
C) increase increase no change 
D) no change no change increase

Question 6

A sub-unit of an organization is evaluated on the basis of its ROI.If this sub-unit's sales and expenses both increase by $30,000,how will the following measures be affected?
$\text {\underline{ROI } }$              $\text {\underline{Assert turnover } }$          $\text {\underline{ Profit margin} }$

Accepted Answer

A) increase increase increase 
B) indeterminate increase decrease 
C) no change increase decrease 
D) no change decrease no change 
A) increase increase increase 
B) indeterminate increase decrease 
C) no change increase decrease 
D) no change decrease no change

Question 7

Non-financial measures are generally more indicative of productive activity than are financial performance measures.

Accepted Answer

A) True 
 B)False

Question 8

The traditional compensation package provides

Accepted Answer

A) fixed monthly or weekly salaries plus performance bonuses. 
B) the same salary structure for all groups of employees. 
C) no incentive for non-top management to improve performance. 
D) no need to include incentive compensation. 
A) fixed monthly or weekly salaries plus performance bonuses. 
B) the same salary structure for all groups of employees. 
C) no incentive for non-top management to improve performance. 
D) no need to include incentive compensation.

Question 9

Economic value added (EVA)applies the target rate of return to the book value of the assets invested in a division.

Accepted Answer

A) True 
 B)False

Question 10

Which type of financial measure better predicts the direction of future cash flows?
$\text {\underline{Not-financial Measures
 } }$                       $\text {\underline{Financial Measures } }$

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 11

All other things being equal,an increase in sales price would increase

Accepted Answer

A) asset turnover. 
B) profit margin. 
C) residual income. 
D) all of the above. 
A) asset turnover. 
B) profit margin. 
C) residual income. 
D) all of the above.

Question 12

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 13

The Statement of Cash Flows indicates the cash inflows and outflows from

Accepted Answer

A) investing,financing,and borrowing activities. 
B) operating,investing,and sending activities. 
C) merchandising,financing,and investing activities. 
D) operating,investing,and financing activities. 
A) investing,financing,and borrowing activities. 
B) operating,investing,and sending activities. 
C) merchandising,financing,and investing activities. 
D) operating,investing,and financing activities.

Question 14

Office Systems Center (OSC),a division of Edwards Corporation buys and installs modular office components.For the most recent year,the division had the following performance targets:
 $\begin{array}{ll}
\text { Asset turnover } & 2.5 \
\text {Profit margin } &  6\%\\
\text { Target rate of return on investments for RI } &13\%\\
\text { Cost of capital } &10\%\\
\text { Income tax rate } &40\%\\
\end{array}$
Actual information concerning the company's performance for last year follows:
 $\begin{array}{l}
\begin{array}{l}
\text { Total assets at beginning of year } & \$ 3,600,00 \
\text { Total assets at end of year }&5,300,000  \
\text { Total invested capital (annual ave } &8,000,000\
\text { Sales } &9,000,000\
\text { Variable operating costs }&3,650,000 \
\text { Direct fixed costs }&4,770,000  \
\text { Allocated fixed costs }&675,000
\end{array}\

\end{array}$
 
Required:
 a. For OSC, compute the segment margen and the average assetsfor the year.
b. Based on segment margin and average assets, compute the profit margin, asset tumover and ROI.
c. Evaluate the ROI performance of OSC.
d. Using you answers from part $ b . $, compute the residual income of OSC.
e. Compute the EVA of OSC. Why are the EVA and RI levels different?
f. Based on the data given in the problem, discusswhy ROI, EVA and RI may be inappropriate measures of performance for OSC

Accepted Answer

Actual information concerning the compan

Question 15

Process quality yield reflects the proportion of

Accepted Answer

A) good units to bad units. 
B) time required to produce a good unit. 
C) total units manufactured that are good. 
D) total time spent to time available. 
A) good units to bad units. 
B) time required to produce a good unit. 
C) total units manufactured that are good. 
D) total time spent to time available.

Question 16

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.If the manager of the Western Division is evaluated on return on investment alone,will the manager invest in the new project? Explain.

Accepted Answer

The manager would not invest in the new

Question 17

The three components of throughput are _____________________________________________,______________________________,and ___________________________________.

Accepted Answer

manufacturing cycle

Question 18

Objectives for a pay plan

Accepted Answer

A) are not needed in a performance-based plan. 
B) must be stated for a performance-based plan to work. 
C) are essential for a periodic compensation plan to be successful. 
D) are unnecessary for a merit pay plan. 
A) are not needed in a performance-based plan. 
B) must be stated for a performance-based plan to work. 
C) are essential for a periodic compensation plan to be successful. 
D) are unnecessary for a merit pay plan.

Question 19

The Statement of Cash Flows may be superior to the cash budget as a performance evaluation measure because

Accepted Answer

A) cash flows are shown on the accrual basis on the cash budget. 
B) the cash budget does not include capital investments. 
C) cash flows are arranged by activity. 
D) of all the above reasons. 
A) cash flows are shown on the accrual basis on the cash budget. 
B) the cash budget does not include capital investments. 
C) cash flows are arranged by activity. 
D) of all the above reasons.

Question 20

A division of Shamrock Corporation reported a return on investment of 20% for a recent period.If the division's asset turnover was 5,its profit margin must have been

Accepted Answer

A) 100% 
B) 4% 
C) 25% 
D) 2% 
A) 100% 
B) 4% 
C) 25% 
D) 2%

Improved effectiveness and efficiency of a product is considered a ____ performance measurement?

Which of the following would be considered a non-financial performance measurement?

Deferred compensation techniques are currently used in the American work place.What are they and how do they benefit the employer and the employee?

A sub-unit of an organization is evaluated on the basis of its ROI.If this sub-unit's sales and expenses both increase by $30,000,how will the following measures be affected? $\text {\underline{ROI } }$ $\text {\underline{Assert turnover } }$ $\text {\underline{ Profit margin} }$

Non-financial measures are generally more indicative of productive activity than are financial performance measures.

The traditional compensation package provides

Economic value added (EVA)applies the target rate of return to the book value of the assets invested in a division.

Which type of financial measure better predicts the direction of future cash flows? $\text {\underline{Not-financial Measures } }$ $\text {\underline{Financial Measures } }$

All other things being equal,an increase in sales price would increase

Residual income is determined as

The Statement of Cash Flows indicates the cash inflows and outflows from

Process quality yield reflects the proportion of

The three components of throughput are _________,,and _.

Objectives for a pay plan

The Statement of Cash Flows may be superior to the cash budget as a performance evaluation measure because

A division of Shamrock Corporation reported a return on investment of 20% for a recent period.If the division's asset turnover was 5,its profit margin must have been

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

Improved effectiveness and efficiency of a product is considered a ____ performance measurement?

Which of the following would be considered a non-financial performance measurement?

Deferred compensation techniques are currently used in the American work place.What are they and how do they benefit the employer and the employee?

Non-financial measures are generally more indicative of productive activity than are financial performance measures.

The traditional compensation package provides

Economic value added (EVA)applies the target rate of return to the book value of the assets invested in a division.

Which type of financial measure better predicts the direction of future cash flows? Not-financial Measures ‾ \text {\underline{Not-financial Measures } }Not-financial Measures ​ Financial Measures ‾ \text {\underline{Financial Measures } }Financial Measures ​

All other things being equal,an increase in sales price would increase

Residual income is determined as

The Statement of Cash Flows indicates the cash inflows and outflows from

Process quality yield reflects the proportion of

The three components of throughput are _____________________________________________,______________________________,and ___________________________________.

Objectives for a pay plan

The Statement of Cash Flows may be superior to the cash budget as a performance evaluation measure because

A division of Shamrock Corporation reported a return on investment of 20% for a recent period.If the division's asset turnover was 5,its profit margin must have been

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

Which type of financial measure better predicts the direction of future cash flows? $\text {\underline{Not-financial Measures } }$ $\text {\underline{Financial Measures } }$

The three components of throughput are _________,,and _.