Exam 11: Performance Measurement in Decentralized Organizations

Chavin Company had the following results during August: net operating income,$220,000; turnover,5; and ROI 25%.Chavin Company's average operating assets were:

Shrewsbury 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: The company's minimum required rate of return is 14%. -The residual income for this year's investment opportunity when considered alone is 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 and otherwise performs the same as last year,the combined ROI for the entire company will be closest to:

Othman Inc.has a $800,000 investment opportunity with the following characteristics: The margin for this investment opportunity is closest to:

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

Which of the following would not be included in operating assets in return on investment calculations?

Babak Industries is a division of a major corporation. Last year the division had total sales of $19,560,000, net operating income of $1,877,760, and average operating assets of $6,000,000. -The division's margin is closest to:

The following information relates to last year's operations at the Legumes Division of Gervani Corporation: What was the Legume Division's net operating income last year?

The basic objective of responsibility accounting is to charge each manager with those costs and/or revenues over which he has control.

The following data are for the Akron Division of Consolidated Rubber, Inc.: -For the past year,the return on investment was:

The Consumer Products Division of Goich Corporation had average operating assets of $800,000 and net operating income of $81,300 in May. The minimum required rate of return for performance evaluation purposes is 10%. -What was the Consumer Products Division's minimum required return in May?

Financial data for Beaker Company for last year appear below: The company paid dividends of $2,100 last year.The "Investment in Cedar Company" on the statement of financial position represents an investment in the stock of another company. Required: a.Compute the company's margin,turnover,and return on investment for last year. b.The Board of Directors of Beaker Company has set a minimum required return of 20%.What was the company's residual income last year?

Dacker Products is a division of a major corporation. The following data are for the most recent year of operations: -The division's residual income is closest to:

Last year a company had sales of $600,000,a turnover of 3.6,and a return on investment of 18%.The company's net operating income for the year was:

The following data are for the Akron Division of Consolidated Rubber, Inc.: -For the past year,the turnover used in ROI calculations was:

Edith Carolina is president of the Deed Corporation. The company is decentralized, and leaves investment decisions up to the discretion of the division managers. Michael Sanders, manager of the Cosmetics Division, has had a return on investment of 14% for his division for the past three years and expects the division to have the same return in the coming year. Sanders has the opportunity to invest in a new line of cosmetics which is expected to have a return on investment of 12%. The company's minimum required rate of return is 8%. -Suppose Deed Corporation evaluates managerial performance using return on investment.Edith Carolina,as president of the company,may view the opportunity for taking on the cosmetics line differently from Michael Sanders,manager of the Cosmetics Division.What action would each of them prefer with respect to the decision of whether to take on the new cosmetics line?

Kingcade 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:

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

All other things the same,an increase in unit sales will normally result in an increase in the return on investment.

Schlarbaum Corporation's management keeps track of the time it takes to process orders.During the most recent month,the following average times were recorded per order: Required: a.Compute the throughput time. b.Compute the manufacturing cycle efficiency (MCE). c.What percentage of the production time is spent in non-value-added activities? d.Compute the delivery cycle time.