Exam 11: Performance Measurement in Decentralized Organizations

Minar Inc. reported the following results from last year's operations: At the beginning of this year, the company has a $900,000 investment opportunity with the following characteristics: -If the company pursues the investment opportunity and otherwise performs the same as last year,the combined turnover for the entire company will be closest to:

Pankey Inc.has a $700,000 investment opportunity that would involve sales of $1,050,000,a contribution margin ratio of 40% of sales,and fixed expenses of $325,500.The company's minimum required rate of return is 18%.The residual income for this year's investment opportunity is closest to:

The following data pertains to Timmins Company's operations last year: Required: a.Compute the company's average operating assets. b.Compute the company's residual income for the year.

Worsell Inc.reported the following results from last year's operations: The company's minimum required rate of return is 10%.Last year's residual income was closest to:

Which of the following would be considered an operating asset in return on investment computations?

If the MCE is equal to 0.6,then 60% of the time a unit is in process is spent on activities that add value to the product.

If the balanced scorecard is correctly constructed,the performance measures should be independent of each other so that bad performance on one measure will not result in bad performance on another performance measure.

Nasser Inc.reported the following results from last year's operations: Last year's return on investment (ROI)was closest to:

Residual income is the difference between net operating income and the product of average operating assets and the minimum rate of return.

Suppose a company evaluates divisional performance using both ROI and residual income.The company's minimum required rate of return for the purposes of residual income calculations is 12%.If a division has a residual income of $6,000,then its ROI is less than 12%.

Hunt Company has the following production data: The manufacturing cycle efficiency (MCE)for Hunt Company is:

A manufacturing cycle efficiency (MCE)of less than one is impossible.

Land held for possible plant expansion would be included as an operating asset when computing return on investment (ROI).

The following data pertain to Turk Company's operations last year: -Turk's return on investment for the year was:

The Millard Division's operating data for the past two years are provided below: Millard Division's margin in Year 2 was 150% of the margin in Year 1. -The average operating assets for Year 2 were:

Youns Inc.reported the following results from last year's operations: The company's average operating assets were $5,000,000. At the beginning of this year,the company has a $1,400,000 investment opportunity that involves sales of $2,800,000,fixed expenses of $616,000,and a contribution margin ratio of 30% of sales. If the company pursues the investment opportunity and otherwise performs the same as last year,the combined turnover for the entire company will be closest to:

Minar Inc. reported the following results from last year's operations: At the beginning of this year, the company has a $900,000 investment opportunity with the following characteristics: -If the company pursues the investment opportunity and otherwise performs the same as last year,the combined margin for the entire company will be closest to:

In essence,a balanced scorecard lays out a theory of how the company can take concrete actions to attain its desired outcomes.The strategy should seem plausible,but it should be regarded as only a theory.

Incentive compensation for employees,such as bonuses,should be tied to balanced scorecard performance measures only if managers are confident that the performance measures are easily manipulated by those being evaluated.

Pinkton Corporation keeps careful track of the time required to fill orders.The times recorded for a particular order appear below: The delivery cycle time was: