Parkinson Company provides the following financial data: $\begin{array}{|l|r|} \hline\text { Income from operations } & \$ 200,000 \\ \hline\text { Interest expense } & \$ 45,000 \\ \hline \text { Gains/(losses) on sale of equipment } & \$ 2,500 \\ \hline \text { Net income } & \$ 152,500 \\ \hline \text { Total assets at Jan 1 } & \$ 2,600,000 \\ \hline \text { Total assets at Dec } 31 & \$ 3,200,000\\\hline \end{array}$ How much is the return on investment?

A) 6.3% B) 5.3% C) 6.9% D) 7.2% A) 6.3% B) 5.3% C) 6.9% D) 7.2%

Johnson Construction Materials Company has a sales office which sells concrete culvert pipe to property developers. The sales office is a revenue center and must prepare a monthly performance report. It has provided the data below. \[\begin{array}{l} \text { Revenue Center Performance Report }\\ \begin{array} { | l | r | c | c | c | c | c | c | } \hline & \text { Actual } & \text { Flexible Budget } & & \text { Flexible } & \text { Sales Volume } & &\text { Static } \\ \hline \text { Product type: } & \text { Sales Revenue } & \text { Variance } & \text { U/F } & \text { Budget } & \text { Variance } & \text { U/F } & \text { Budget } \\ \hline 40 \text { inch } & \$ 31,500 & & & \$ 30,000 & & & \$ 40,000 \\ \hline 36 \text { inch long } & \$ 40,150 & & & \$ 42,000 && & \$ 33,000 \\ \hline 36 \text { inch short } & \$ 36,200 & & & \$ 33,000 && & \$ 30,000 \\ \hline 32 \text { inch } & \$ 19,000 & & & \$ 20,000 & & & \$ 28,000 \\ \hline \end{array} \end{array}\]

A) $10,000 U B) $1,500 F C) $1,850 U D) $9,000 F A) $10,000 U B) $1,500 F C) $1,850 U D) $9,000 F

Assume the Apple division of the Gala Company had the following results last year. $\begin{array}{|l|r|} \hline\text { Sales } & \$ 3,000,000 \\ \hline \text { Operating income } & 500,000 \\ \hline \text { Total as sets (average) } & 4,500,000 \\ \hline \text { Current liabilities } & 300,000\\\hline \end{array}$ Management's required rate of return is 10% and the weighted average cost of capital is 8%. Its effective tax rate is 30%. -What is Apple division's return on investment?

A) 11.11% B) 16.67% C) 66.67% D) 60.00% A) 11.11% B) 16.67% C) 66.67% D) 60.00%

Zhongfang Consumer Products has a small car division that operates as a profit center. Below is a partially completed performance report for the first quarter. \[\begin{array} { | l | r | r | r | r | r | l | } \hline & & & \text { Flexible Budget } & & & \\ \hline &{ \text { Actual } } & \text { Flexible Budget } & \text { Variance } & \text { U/F } & \text { \% variance } & \text { U/F } \\ \hline \text { Sales Revenue } & \$ 688,000 & \$ 700,000 & & & & \\ \hline \text { Variable expenses } & 309,000 & 320,000 & & & & \\ \hline \text { Contribution margin } & 379,000 & 380,000 & & & & \\ \hline \text { Traceable fixed expenses } & 371,000 & 368,000 & & & & \\ \hline \text { Division margin } & \$ 8,000 & \$ 12,000 & & & & \\ \hline \end{array}\] - How much is the variance for division profit margin?

A) $4,000 F B) $6,000 F C) $4,000 U D) $1,000 U A) $4,000 F B) $6,000 F C) $4,000 U D) $1,000 U

Tavares Manufactured Homes Company has a sales division which submits a monthly performance report as a revenue center. A partially completed performance report appears below: Revenue Center Performance Report -SK $\begin{array}{|c|c|c|c|c|c|c|c|} \hline & \text { Actual } & \text { Flexible Budget } & & \text { Flexible } & \text { Sales Volume } & & \text { Static } \\ \hline \text { Product type: } & \text { Sales Revenue } & \text { Variance } & \text { U/F } & \text { Budget } & \text { Variance } & \text { U/F } & \text { Budget } \\ \hline \text { Model A } & \$ 11,200 & & & \$ 12,000 & & & \$ 10,000 \\ \hline \text { Model B1 } & \$ 3,300 & & & \$ 3,000 & & & \$ 5,000 \\ \hline \text { Model B2 } & \$ 3,960 & & & \$ 4,000 & & & \$ 4,000 \\ \hline \text { Model B3 } & \$ 5,100 & & & \$ 5,000 & & & \$ 4,000 \\ \hline \end{array}$

A) $1,000 U B) $1,000 F C) $100 U D) $100 F A) $1,000 U B) $1,000 F C) $100 U D) $100 F

Exam 24: Performance Evaluation and the Balanced Scorecard

Parkinson Company provides the following financial data: Income from operations \ 200,000 Interest expense \ 45,000 Gains/(losses) on sale of equipment \ 2,500 Net income \ 152,500 Total assets at Jan 1 \ 2,600,000 Total assets at Dec 31 \ 3,200,000 How much is the return on investment?

(Multiple Choice)

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Question 121

Which of the following statements MOST accurately describes the profit margin?

(Multiple Choice)

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Question 122

Which of the following is a cost center?

(Multiple Choice)

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Question 123

Johnson Construction Materials Company has a sales office which sells concrete culvert pipe to property developers. The sales office is a revenue center and must prepare a monthly performance report. It has provided the data below. Revenue Center Performance Report Actual Flexible Budget Flexible Sales Volume Static Product type: Sales Revenue Variance U/F Budget Variance U/F Budget 40 inch \ 31,500 \ 30,000 \ 40,000 36 inch long \ 40,150 \ 42,000 \ 33,000 36 inch short \ 36,200 \ 33,000 \ 30,000 32 inch \ 19,000 \ 20,000 \ 28,000

(Multiple Choice)

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Question 124

For the calculation of EVA, current liabilities are deducted from total average assets for what reason?

(Multiple Choice)

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Question 125

Assume the Apple division of the Gala Company had the following results last year. Sales \ 3,000,000 Operating income 500,000 Total as sets (average) 4,500,000 Current liabilities 300,000 Management's required rate of return is 10% and the weighted average cost of capital is 8%. Its effective tax rate is 30%. -What is Apple division's return on investment?

(Multiple Choice)

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Question 126

Managers of profit centers are responsible for generating revenue and controlling costs, so their performance reports include both revenues and expenses.

(True/False)

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Question 127

Zhongfang Consumer Products has a small car division that operates as a profit center. Below is a partially completed performance report for the first quarter. Flexible Budget Actual Flexible Budget Variance U/F \% variance U/F Sales Revenue \ 688,000 \ 700,000 Variable expenses 309,000 320,000 Contribution margin 379,000 380,000 Traceable fixed expenses 371,000 368,000 Division margin \ 8,000 \ 12,000 - How much is the variance for division profit margin?

(Multiple Choice)

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Question 128

Which of the following goals of a performance evaluation system is accomplished when targets are compared to actual results?

(Multiple Choice)

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Question 129

The human resources department would most likely be considered a(n):

(Multiple Choice)

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Question 130

Which of the following statements most accurately describes the company's "climate for action?"

(Multiple Choice)

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Question 131

Tavares Manufactured Homes Company has a sales division which submits a monthly performance report as a revenue center. A partially completed performance report appears below: Revenue Center Performance Report -SK Actual Flexible Budget Flexible Sales Volume Static Product type: Sales Revenue Variance U/F Budget Variance U/F Budget Model A \ 11,200 \ 12,000 \ 10,000 Model B1 \ 3,300 \ 3,000 \ 5,000 Model B2 \ 3,960 \ 4,000 \ 4,000 Model B3 \ 5,100 \ 5,000 \ 4,000

(Multiple Choice)

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Question 132

New product development time is a measure pertaining to the balanced scorecard's:

(Multiple Choice)

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Question 133

When companies use the management by exception approach, ONLY unfavorable variances are investigated.

(True/False)

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Question 134

The performance measurement system lets upper management know whether the subunits are achieving their goals and targets or not. This statement reflects which of the following performance measurement goals?

(Multiple Choice)

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Question 135

Which of the following BEST describes the term goal congruence?

(Multiple Choice)

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Question 136

Small companies tend to use centralized decision-making because of the smaller scope of their operations.

(True/False)

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Question 137

One of the key drawbacks of using financial KPIs like ROI and EVA is that:

(Multiple Choice)

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Question 138

One perspective of the balanced scorecard focuses on revenue growth and productivity. Which of the four perspectives is this?

(Multiple Choice)

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Question 139

Which of the following is a relevant performance indicator for the balanced scorecard's learning and growth perspective?

(Multiple Choice)

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Question 140

Parkinson Company provides the following financial data: Income from operations \ 200,000 Interest expense \ 45,000 Gains/(losses) on sale of equipment \ 2,500 Net income \ 152,500 Total assets at Jan 1 \ 2,600,000 Total assets at Dec 31 \ 3,200,000 How much is the return on investment?

Which of the following statements MOST accurately describes the profit margin?

Which of the following is a cost center?

For the calculation of EVA, current liabilities are deducted from total average assets for what reason?

Managers of profit centers are responsible for generating revenue and controlling costs, so their performance reports include both revenues and expenses.

Which of the following goals of a performance evaluation system is accomplished when targets are compared to actual results?

The human resources department would most likely be considered a(n):

Which of the following statements most accurately describes the company's "climate for action?"

New product development time is a measure pertaining to the balanced scorecard's:

When companies use the management by exception approach, ONLY unfavorable variances are investigated.

The performance measurement system lets upper management know whether the subunits are achieving their goals and targets or not. This statement reflects which of the following performance measurement goals?

Which of the following BEST describes the term goal congruence?

Small companies tend to use centralized decision-making because of the smaller scope of their operations.

One of the key drawbacks of using financial KPIs like ROI and EVA is that:

One perspective of the balanced scorecard focuses on revenue growth and productivity. Which of the four perspectives is this?

Which of the following is a relevant performance indicator for the balanced scorecard's learning and growth perspective?

Corporations: Paid-In Capital and the Balance Sheet

Corporations: Effects on Retained Earnings and the Income Statement

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Management Accounting

Job Order and Process Costing

Activity-Based Costing and Other Cost Management Tools

Cost-Volume-Profit Analysis

Short-Term Business Decisions

Capital Investment Decisions and the Time Value of Money

The Master Budget and Responsibility Accounting

Flexible Budgets and Standard Costs

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