Exam 12: Performance Evaluation and Decentralization

Noble Company has two divisions, the Domestic Division and the International Division. Last year, the Domestic Division earned $360,000 using average operating assets of $1,440,000. Sales for the Domestic Division were $3,600,000. Last year, the International Division earned $560,000 using average operating assets of $2,800,000. Sales for the International Division were $7,000,000.

If the margin of 0.3 stayed the same and the turnover ratio of 5.0 increased by 10%, the ROI would

A responsibility center in which a manager is responsible only for sales is a(n)

Each month, the vacuum cleaner manufacturing cell has 800 hours of time available. During that time, the cell could have manufactured up to 2,400 vacuums; but only 1,600 vacuums were actually manufactured. Calculate the following:

In a decentralized company, overall profit margins can mask inefficiencies within the various subdivisions.

-Refer to Figure 12-5. What is the turnover for Division C?

A responsibility center in which a manager is responsible only for costs is a(n)

Which of the following is an absolute dollar measure rather than a percentage?

The Balanced Scorecard perspective that defines the capabilities than an organization needs to create long-term growth and improvement is the ____ perspective.

_______________ indicate the minimum ROI necessary to accept an investment.

The Dear Division of Zimmer Company sells all of its output to the Finishing Division of the company. The only product of the Dear Division is chair legs that are used by the Finishing Division. The retail price of the legs is $20 per leg. Each chair completed by the Finishing Division requires four legs. Production quantity and cost data for 2011 are as follows: Required: Compute the transfer price for a chair leg using:

The strategic management system that translates an organization's mission and strategy into operational objectives and performance measures is

In negotiated transfer pricing, the selling division sets the ceiling (maximum possible transfer price) for the bargaining range.

_________________ emphasizes only effectiveness of implementation.

Residual income is sometimes used to overcome the tendency of ROI to discourage investments that are profitable for the company, but that lower the division's ROI.

The ________________ is a strategic management system that defines a strategic-based responsibility accounting system.

The Southern Division of Jenkins Company had income of $48,300, average assets of $345,000 and sales of $241,500. The minimum rate of return for Jenkins Company is 12%.

Figure 12-8 Bostonian Inc. has a number of divisions, including Delta Division and ListenNow Division. The ListenNow Division owns and operates a line of MP3 players. Each year the ListenNow Division purchases component AZ in order to manufacture the MP3 players. Currently it purchases this component from an outside supplier for $6.50 per component. The manager of the Delta Division has approached the manager of the ListenNow Division about selling component AZ to the ListenNow Division. The full product cost of component AZ is $3.10. The Delta Division can sell all of the components AZ it makes to outside companies for $6.50. The ListenNow Division needs 18,000 component AZs per year; the Delta Division can make up to 60,000 components per year. -Refer to Figure 12-8.

Select the appropriate definition for each of the items listed below. -The ratio of sales to average operating assets.

-Refer to Figure 12-1. Calculate Dempsey's margin for last year, rounding to two decimal places.