Exam 11: Performance Measurement in Decentralized Organizations

The Hum Division of the Ho Company reported the following data for last year: -The return on investment (ROI)last year for the Hum Division was:

Gauntlett Inc. reported the following results from last year's operations: At the beginning of this year, the company has a $1,300,000 investment opportunity with the following characteristics: -Last year's turnover was closest to:

Residual income should be used to evaluate an investment center rather than a cost or profit center.

Which of the following will not result in an increase in return on investment (ROI),assuming other factors remain the same?

Vandenheuvel Corporation keeps careful track of the time required to fill orders.The times recorded for a particular order appear below: The manufacturing cycle efficiency (MCE)was closest to:

Financial measures such as ROI and residual income as well as operating measures may be included in a balanced scorecard.

The performance measures on a balanced scorecard tend to fall into four groups: financial measures,customer measures,internal business process measures,and learning and growth measures.

Salvey Inc.reported the following results from last year's operations: The company's average operating assets were $3,000,000. At the beginning of this year,the company has a $300,000 investment opportunity that involves sales of $480,000,fixed expenses of $100,800,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 ROI for the entire company will be closest to:

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 turnover for Year 1 was:

If net operating income is $70,000,average operating assets are $250,000,and the minimum required rate of return is 16%,what is the residual income?

Braymiller Inc.has a $1,600,000 investment opportunity with the following characteristics: The turnover for this investment opportunity is closest to:

Craycraft Inc.reported the following results from last year's operations: At the beginning of this year,the company has a $800,000 investment opportunity with the following characteristics: Required: 1.What was last year's margin? (Round to the nearest 0.1%.) 2.What was last year's turnover? (Round to the nearest 0.01.) 3.What was last year's return on investment (ROI)? (Round to the nearest 0.1%.) 4.If the company pursues the investment opportunity and otherwise performs the same as last year,what will be the overall margin this year? (Round to the nearest 0.1%.) 5.If the company pursues the investment opportunity and otherwise performs the same as last year,what will be the overall turnover this year? (Round to the nearest 0.01.) 6.If the company pursues the investment opportunity and otherwise performs the same as last year,what will be the overall ROI will this year? (Round to the nearest 0.1%.)

Bonilla Inc. has a $700,000 investment opportunity with the following characteristics: -The turnover for the investment opportunity is closest to:

Given the following data: Return on investment (ROI)is:

BR Company has a contribution margin of 40%.Sales are $312,500,net operating income is $25,000,and average operating assets are $200,000.What is the company's return on investment (ROI)?

Mike Corporation uses residual income to evaluate the performance of its divisions.The company's minimum required rate of return is 14%.In January,the Commercial Products Division had average operating assets of $970,000 and net operating income of $143,700.What was the Commercial Products Division's residual income in January?

Wiswell Inc.reported the following results from last year's operations: The average operating assets were $8,000,000. At the beginning of this year,the company has a $900,000 investment opportunity that would involve sales of $2,070,000,a contribution margin ratio of 30% of sales,and fixed expenses of $538,200.The company's minimum required rate of return is 10%.If the company pursues the investment opportunity,this year's combined residual income for the entire company will be closest to:

Robichau 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: The company's minimum required rate of return is 20%. -If the company pursues the investment opportunity,this year's combined residual income for the entire company will be closest to:

Runyon Inc.reported the following results from last year's operations: The company's average operating assets were $7,000,000. Last year's turnover was 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 ROI for the entire company will be closest to: