Question 1

The Hum Division of the Ho Company reported the following data for last year:
  
-What was the West Division's residual income in August?

Accepted Answer

A)  $(8,018) 
B)  $3,400 
C)  $(3,400) 
D)  $8,018 
A)  $(8,018) 
B)  $3,400 
C)  $(3,400) 
D)  $8,018

Question 2

Which of the following would be an argument for using the gross cost of plant and equipment as part of operating assets in return on investment computations?

Accepted Answer

A)  It is consistent with the computation of net operating income, which includes depreciation as an operating expense. 
B)  It is consistent with the balance sheet presentation of plant and equipment. 
C)  It eliminates the age of equipment as a factor in ROI computations. 
D)  It discourages the replacement of old, worn-out equipment because of the dramatic, adverse effect on ROI. 
A)  It is consistent with the computation of net operating income, which includes depreciation as an operating expense. 
B)  It is consistent with the balance sheet presentation of plant and equipment. 
C)  It eliminates the age of equipment as a factor in ROI computations. 
D)  It discourages the replacement of old, worn-out equipment because of the dramatic, adverse effect on ROI.

Question 3

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

Accepted Answer

A)  40.0% 
B)  33.0% 
C)  67.0% 
D)  7.0% 
A)  40.0% 
B)  33.0% 
C)  67.0% 
D)  7.0%

Question 4

The Tipton Division of Dudley Company reported the following data last year:
  
-Tipton Division's average operating assets last year were:

Accepted Answer

A)  $625,000 
B)  $250,000 
C)  $416,677 
D)  $333,333 
A)  $625,000 
B)  $250,000 
C)  $416,677 
D)  $333,333

Question 5

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%.
-The ROI for this year's investment opportunity considered alone is closest to:

Accepted Answer

A)  51.0% 
B)  50.0% 
C)  10.0% 
D)  17.0% 
A)  51.0% 
B)  50.0% 
C)  10.0% 
D)  17.0%

Question 6

A segment of a business responsible for both revenues and expenses would be called:

Accepted Answer

A)  a cost center. 
B)  an investment center. 
C)  a profit center. 
D)  residual income. 
A)  a cost center. 
B)  an investment center. 
C)  a profit center. 
D)  residual income.

Question 7

Agustin Industries is a division of a major corporation. Data concerning the most recent year appears below:
  
-The division's return on investment (ROI)is closest to:

Accepted Answer

A)  24.0% 
B)  31.62% 
C)  3.0% 
D)  7.2% 
A)  24.0% 
B)  31.62% 
C)  3.0% 
D)  7.2%

Question 8

Chiodini Inc.has a $900,000 investment opportunity that involves sales of $2,430,000,fixed expenses of $1,044,900,and a contribution margin ratio of 50% of sales.The ROI for this year's investment opportunity considered alone is closest to:

Accepted Answer

A)  16.3% 
B)  18.9% 
C)  7.0% 
D)  135.0% 
A)  16.3% 
B)  18.9% 
C)  7.0% 
D)  135.0%

Question 9

Kingcade Corporation keeps careful track of the time required to fill orders. Data concerning a particular order appear below:
  
-The throughput time was:

Accepted Answer

A)  30.6 hours 
B)  3.2 hours 
C)  27.4 hours 
D)  12.3 hours 
A)  30.6 hours 
B)  3.2 hours 
C)  27.4 hours 
D)  12.3 hours

Question 10

Kingcade Corporation keeps careful track of the time required to fill orders. Data concerning a particular order appear below:
  
-The delivery cycle time was:

Accepted Answer

A)  30.6 hours 
B)  2 hours 
C)  29.4 hours 
D)  11.1 hours 
A)  30.6 hours 
B)  2 hours 
C)  29.4 hours 
D)  11.1 hours

Question 11

Simkin Corporation keeps careful track of the time required to fill orders.Data concerning a particular order appear below:
  The manufacturing cycle efficiency (MCE)was closest to:

Accepted Answer

A)  0.46 
B)  0.06 
C)  0.20 
D)  0.19 
A)  0.46 
B)  0.06 
C)  0.20 
D)  0.19

Question 12

Anguiano Inc.reported the following results from last year's operations:
  The company's average operating assets were $5,000,000.
Last year's return on investment (ROI)was closest to:

Accepted Answer

A)  7.0% 
B)  14.7% 
C)  45.8% 
D)  47.6% 
A)  7.0% 
B)  14.7% 
C)  45.8% 
D)  47.6%

Question 13

Bungert Inc.reported the following results from last year's operations:
  The company's minimum required rate of return is 12% and its average operating assets were $8,000,000.Last year's residual income was closest to:

Accepted Answer

A)  $912,000 
B)  ($48,000) 
C)  $992,000 
D)  ($972,800) 
A)  $912,000 
B)  ($48,000) 
C)  $992,000 
D)  ($972,800)

Question 14

Criner Inc.reported the following results from last year's operations:
   At the beginning of this year,the company has a $1,800,000 investment opportunity with the following characteristics:
   Required:
1.What was last year's return on investment (ROI)? (Round to the nearest 0.1%.)
2.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%.)

Accepted Answer

1.Last year's ROI = Net operating income

Question 15

Largo Company recorded for the past year sales of $750,000 and average operating assets of $375,000.What is the margin that Largo Company needed to earn in order to achieve an ROI of 15%?

Accepted Answer

A)  2.00% 
B)  15.00% 
C)  9.99% 
D)  7.50% 
A)  2.00% 
B)  15.00% 
C)  9.99% 
D)  7.50%

Question 16

Willing Inc.reported the following results from last year's operations:
   At the beginning of this year,the company has a $1,200,000 investment opportunity with the following characteristics:
   The company's minimum required rate of return is 14%.
Required:
1.What was last year's residual income?
2.What is the residual income of this year's investment opportunity?
3.If the company pursues the investment opportunity and otherwise performs the same as last year,what will be the overall residual income this year?
4.If Westerville's CEO earns a bonus only if residual income for this year exceeds residual income for last year,would the CEO pursue the investment opportunity?

Accepted Answer

1.Last year's residual income was:
 @#IMG-DLM& 
2.

Question 17

Tadman Inc.reported the following results from last year's operations:
  At the beginning of this year,the company has a $800,000 investment opportunity that involves sales of $2,800,000,fixed expenses of $756,000,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 margin for the entire company will be closest to:

Accepted Answer

A)  1.0% 
B)  3.0% 
C)  5.0% 
D)  3.8% 
A)  1.0% 
B)  3.0% 
C)  5.0% 
D)  3.8%

Question 18

Which of the following segment performance measures will decrease if there is an increase in the interest expense for that segment?

Accepted Answer

The answer of Which of the following segment performance measures...

Question 19

Wolley Inc.reported the following results from last year's operations:
   At the beginning of this year,the company has a $1,200,000 investment opportunity with the following characteristics:
   The company's minimum required rate of return is 14%.
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.What is the margin related to this year's investment opportunity? (Round to the nearest 0.1%.)
5.What is the turnover related to this year's investment opportunity? (Round to the nearest 0.01.)
6.What is the ROI related to this year's investment opportunity? (Round to the nearest 0.1%.)
7.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%.)
8.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.)
9.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%.)
10.If Westerville's chief executive officer earns a bonus only if the ROI for this year exceeds the ROI for last year,would the CEO pursue the investment opportunity? Would the owners of the company want the CEO to pursue the investment opportunity?

Accepted Answer

1.Last year's Margin = Net operating inc

Question 20

Alghamdi Corporation keeps careful track of the time required to fill orders.The times required for a particular order appear below:
   Required:
a.Determine the throughput time.Show your work!
b.Determine the manufacturing cycle efficiency (MCE),Show your work!
c.Determine the delivery cycle time.Show your work!

Accepted Answer

a.Throughput time
= Process time + Inspe

Exam 11: Performance Measurement in Decentralized Organizations

The Hum Division of the Ho Company reported the following data for last year: -What was the West Division's residual income in August?

Which of the following would be an argument for using the gross cost of plant and equipment as part of operating assets in return on investment computations?

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

The Tipton Division of Dudley Company reported the following data last year: -Tipton Division's average operating assets last year were:

A segment of a business responsible for both revenues and expenses would be called:

Agustin Industries is a division of a major corporation. Data concerning the most recent year appears below: -The division's return on investment (ROI)is closest to:

Chiodini Inc.has a $900,000 investment opportunity that involves sales of $2,430,000,fixed expenses of $1,044,900,and a contribution margin ratio of 50% of sales.The ROI for this year's investment opportunity considered alone is closest to:

Kingcade Corporation keeps careful track of the time required to fill orders. Data concerning a particular order appear below: -The throughput time was:

Kingcade Corporation keeps careful track of the time required to fill orders. Data concerning a particular order appear below: -The delivery cycle time was:

Simkin Corporation keeps careful track of the time required to fill orders.Data concerning a particular order appear below: The manufacturing cycle efficiency (MCE)was closest to:

Anguiano Inc.reported the following results from last year's operations: The company's average operating assets were $5,000,000. Last year's return on investment (ROI)was closest to:

Bungert Inc.reported the following results from last year's operations: The company's minimum required rate of return is 12% and its average operating assets were $8,000,000.Last year's residual income was closest to:

Largo Company recorded for the past year sales of $750,000 and average operating assets of $375,000.What is the margin that Largo Company needed to earn in order to achieve an ROI of 15%?

Which of the following segment performance measures will decrease if there is an increase in the interest expense for that segment?

Managerial Accounting and Cost Concepts

Job-Order Costing: Calculating Unit Production Costs

Job-Order Costing: Cost Flows and External Reporting

Process Costing

Cost-Volume-Profit Relationships

Variable Costing and Segment Reporting: Tools for Management

Super-Variable Costing

Master Budgeting

Flexible Budgets and Performance Analysis

Standard Costs and Variances

Differential Analysis: The Key to Decision Making

Capital Budgeting Decisions

Statement of Cash Flows

Financial Statement Analysis

Cost of Quality

Activity-Based Absorption Costing

The Predetermined Overhead Rate and Capacity

Job-Order Costing: a Microsoft Excel-Based Approach

Fifo Method

Service Department Allocations

Analyzing Mixed Costs

Time-Driven Activity-Based Costing: a Microsoft Excel-Based Approach

Predetermined Overhead Rates and Overhead Analysis in a Standard Costing System

Standard Cost Systems: a Financial Reporting Perspective Using Microsoft Excel

Transfer Pricing

Service Department Charges

Pricing Decisions

The Concept of Present Value

Income Taxes and the Present Value Method

the Direct Method of Determining the Net Cash Provided by Operating Activities

Filters