Marcia Consumer Products has several divisions, including the Education Division and the Recreation Division. Data on the two divisions are shown here: $\begin{array}{|l|r|r|} \hline & \text { Education Division } & \text { Recreation Division } \\ \hline \text { Current ROI } & 9.2 \% & 10.0 \% \\ \hline \text { Current WACC } & 8.0 \% & 8.0 \% \\ \hline \text { Operating income } & \$ 110,000 & \$ 200,000 \\ \hline \text { Effective tax rate } & 20.0 \% & 20.0 \% \\ \hline \text { Average total assets } & \$ 1,200,00 & \$ 2,000,000 \\ \hline \text { Current liabilities } & \$ 30,000 & \$ 30,000\\\hline \end{array}$ How much is the EVA for the Education Division?

A) $12,890 B) $4,600 C) ($5,600) D) ($12,750) A) $12,890 B) $4,600 C) ($5,600) D) ($12,750)

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 variable expenses?

A) $11,000 F B) $12,000 F C) $12,000 U D) $13,000 F A) $11,000 F B) $12,000 F C) $12,000 U D) $13,000 F

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. \[\begin{array}{l} \text { Revenue Center Performance Report }\\ \begin{array} { | l | r | c | c | c | c | c | c | } \hline & \text { Actual } & \text { Flexible Budget } & & \text { Flexible } & \text { Sales Volume } && \text { Static } \\ \hline \text { Product type: } & \text { Sales Revenue } & \text { Variance } & \text { U/F } & \text { Budget } & \text { Variance } & \text { U/F } & \text { Budget } \\ \hline 40 \text { inch } & \$ 31,500 & & & \$ 30,000 & & & \$ 40,000 \\ \hline 36 \text { inch long } & \$ 40,150 & & & \$ 42,000 && & \$ 33,000 \\ \hline 36 \text { inch short } & \$ 36,200 & & & \$ 33,000 && & \$ 30,000 \\ \hline 32 \text { inch } & \$ 19,000 & & & \$ 20,000 & & & \$ 28,000 \\ \hline \end{array} \end{array}\] - How much is the sales volume variance for the 32 inch pipe?

A) $1,000 F B) $1,000 U C) $8,000 U D) $8,000 F A) $1,000 F B) $1,000 U C) $8,000 U D) $8,000 F

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. \[\begin{array}{l} \text { Revenue Center Performance Report }\\ \begin{array} { | l | r | c | c | c | c | c | c | } \hline & \text { Actual } & \text { Flexible Budget } & & \text { Flexible } & \text { Sales Volume } && \text { Static } \\ \hline \text { Product type: } & \text { Sales Revenue } & \text { Variance } & \text { U/F } & \text { Budget } & \text { Variance } & \text { U/F } & \text { Budget } \\ \hline 40 \text { inch } & \$ 31,500 & & & \$ 30,000 & & & \$ 40,000 \\ \hline 36 \text { inch long } & \$ 40,150 & & & \$ 42,000 && & \$ 33,000 \\ \hline 36 \text { inch short } & \$ 36,200 & & & \$ 33,000 & && \$ 30,000 \\ \hline 32 \text { inch } & \$ 19,000 & & & \$ 20,000 & & & \$ 28,000 \\ \hline \end{array} \end{array}\] - How much is the sales volume variance for the 40 inch pipe?

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

Huntswell Corporation has two major divisions: Agricultural Products and Industrial Products. Data for the year just finished is as follows: $\begin{array}{|l|r|r|} \hline& \text { Agriculture Division } & \text { Industrial Division } \\ \hline \text { Sales revenue } & \$ 140,000 & \$ 1,040,000 \\ \hline \text { Operating income } & \$ 16,400 & \$ 220,000 \\ \hline \text { Average assets } & \$ 300,000 & \$ 5,540,000 \\ \hline \text { Target rate of return } & 4.0 \% & 4.0 \% \\ \hline \end{array}$ - For the Agricultural Division, how much is the profit margin?

A) 10.5% B) 11.1% C) 11.4% D) 11.7% A) 10.5% B) 11.1% C) 11.4% D) 11.7%

Recreation Equipment Company has several divisions which are investment centers. Data for the Boat Division and the Trailer Division are shown here: $\begin{array}{|l|r|r|} \hline & \text { Boat Division } &{\text { Trailer Division }} \\ \hline \text { Operating income } & \$ 90,000 & \$ 36,000 \\ \hline \text { Total assets at Jan 1 } & \$ 670,000 & \$ 230,000 \\ \hline \text { Total assets at Dec } 31 & \$ 710,000 & \$ 220,000 \\ \hline \end{array}$ - Which of the following statements would be the MOST meaningful interpretation of this data?

A) The performance of the Boat Division is better than the Trailer Division because the Boat Division has higher assets. B) The Trailer Division shows a more efficient use of assets than the Boat Division because it has a higher ROI. C) The Boat Division shows a more efficient use of assets than the Trailer Division because it has a higher operating income. D) The Boat Division was more successful financially than the Trailer Division because it shows an increase in assets as contrasted to a reduction of assets in the Trailer Division. A) The performance of the Boat Division is better than the Trailer Division because the Boat Division has higher assets. B) The Trailer Division shows a more efficient use of assets than the Boat Division because it has a higher ROI. C) The Boat Division shows a more efficient use of assets than the Trailer Division because it has a higher operating income. D) The Boat Division was more successful financially than the Trailer Division because it shows an increase in assets as contrasted to a reduction of assets in the Trailer Division.

Union Company's corporate payroll department is a cost center, and submits monthly performance reports. In the report below, there are both budgeted and actual data. Please use the format below and complete the report. The percentage amounts should be rounded to the nearest one-tenth of a percent. \[\begin{array} { | l | r | r | c | l | l | l | } \hline{ \text { Cost Center } } & & { \text { Flexible } } & \text { Flexible Budget } & & & \\ \hline { \text { Performance Report } } & { \text { Actual } } & { \text { Budget } } & \text { Variance } & \text { U/F } & \text { \% variance } & \text { U/F } \\ \hline \text { Salary \& benefits } & \$ 46,000 & \$ 44,500 & & & & \\ \hline \text { Rent expense } & 12,750 & 11,900 & & & & \\ \hline \text { Depreciation expense } & 8,900 & 9,080 & & & & \\ \hline \text { Supply expense } & 1,890 & 2,200 & & & & \\ \hline \text { Miscellaneous expense } & 4,320 & 4,120 & & & & \\ \hline & \$ 73,860 & \$ 71,800 & & & & \\ \hline \end{array}\]

\[\begin{array} { | l | r | r | r | r |

Exam 24: Performance Evaluation and the Balanced Scorecard

Marcia Consumer Products has several divisions, including the Education Division and the Recreation Division. Data on the two divisions are shown here: Education Division Recreation Division Current ROI 9.2\% 10.0\% Current WACC 8.0\% 8.0\% Operating income \ 110,000 \ 200,000 Effective tax rate 20.0\% 20.0\% Average total assets \ 1,200,00 \ 2,000,000 Current liabilities \ 30,000 \ 30,000 How much is the EVA for the Education Division?

(Multiple Choice)

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Question 141

Corporate divisions, like the media division of Amazon.com, are normally considered:

(Multiple Choice)

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Question 142

The Frito-Lay division of PepsiCo is most likely treated as a(n):

(Multiple Choice)

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Question 143

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 variable expenses?

(Multiple Choice)

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Question 144

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 - How much is the sales volume variance for the 32 inch pipe?

(Multiple Choice)

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Question 145

Employee skills, information system capabilities, and the company's "climate for action" are key factors related to which of the four perspectives of a balanced scorecard?

(Multiple Choice)

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Question 146

Which of the following statements reflects the use of benchmarking in a performance evaluation system?

(Multiple Choice)

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Question 147

Which of the following statements BEST describes the responsibilities of the head of an investment center?

(Multiple Choice)

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Question 148

The EVA is a way of looking at a division's performance from the point of view of the:

(Multiple Choice)

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Question 149

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 - How much is the sales volume variance for the 40 inch pipe?

(Multiple Choice)

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Question 150

In a balanced scorecard system, if employee excellence was one of the critical factors, which of the following would be a relevant KPI?

(Multiple Choice)

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Question 151

Huntswell Corporation has two major divisions: Agricultural Products and Industrial Products. Data for the year just finished is as follows: Agriculture Division Industrial Division Sales revenue \ 140,000 \ 1,040,000 Operating income \ 16,400 \ 220,000 Average assets \ 300,000 \ 5,540,000 Target rate of return 4.0\% 4.0\% - For the Agricultural Division, how much is the profit margin?

(Multiple Choice)

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Question 152

Recreation Equipment Company has several divisions which are investment centers. Data for the Boat Division and the Trailer Division are shown here: Boat Division Trailer Division Operating income \ 90,000 \ 36,000 Total assets at Jan 1 \ 670,000 \ 230,000 Total assets at Dec 31 \ 710,000 \ 220,000 - Which of the following statements would be the MOST meaningful interpretation of this data?

(Multiple Choice)

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Question 153

The EVA calculation and the ROI calculation both use operating income before income tax because the income tax expense is NOT relevant to either the EVA or the ROI measures.

(True/False)

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Question 154

In designing a balanced scorecard, the company begins with company goals, then develops KPIs, and finally, based on the KPIs that are established, the company identifies the company's critical factors.

(True/False)

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Question 155

If upper management is NOT satisfied with a division's asset turnover ratio, which of the following strategies would they most likely recommend?

(Multiple Choice)

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Question 156

Which of the following statements is TRUE about the weighted average cost of capital (WACC)?

(Multiple Choice)

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Question 157

The formula for RI (residual income) is:

(Multiple Choice)

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Question 158

Union Company's corporate payroll department is a cost center, and submits monthly performance reports. In the report below, there are both budgeted and actual data. Please use the format below and complete the report. The percentage amounts should be rounded to the nearest one-tenth of a percent. Cost Center Flexible Flexible Budget Performance Report Actual Budget Variance U/F \% variance U/F Salary \& benefits \ 46,000 \ 44,500 Rent expense 12,750 11,900 Depreciation expense 8,900 9,080 Supply expense 1,890 2,200 Miscellaneous expense 4,320 4,120 \ 73,860 \ 71,800

(Essay)

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Question 159

Westhaven Company has a warehousing unit which operates as a cost center. They prepare monthly performance reports. Actual and budget data for February are shown here: Cost Center Flexible Performance Report Actual Budget Salary \& benefits \ 119,000 \ 120,000 Rent expense 94,500 90,000 Depreciation expense 23,200 24,000 Supply expense 11,890 12,000 Miscellaneous expense 8,120 8,000 \ 256,710 \ 254,000 Using the report format below, please complete the performance report. Cost Center Flexible Flexible Budget Performance Report Actual Budget Variance U/F \% variable U/F Salary \& benefits \ 119,000 \ 120,000 Rent expense 94,500 90,000 Depreciation expense 23,200 24,000 Supply expense 11,890 12,000 Other expense 8,120 8,000 \ 256,710 \ 254,000

(Essay)

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Question 160

Corporate divisions, like the media division of Amazon.com, are normally considered:

The Frito-Lay division of PepsiCo is most likely treated as a(n):

Employee skills, information system capabilities, and the company's "climate for action" are key factors related to which of the four perspectives of a balanced scorecard?

Which of the following statements reflects the use of benchmarking in a performance evaluation system?

Which of the following statements BEST describes the responsibilities of the head of an investment center?

The EVA is a way of looking at a division's performance from the point of view of the:

In a balanced scorecard system, if employee excellence was one of the critical factors, which of the following would be a relevant KPI?

The EVA calculation and the ROI calculation both use operating income before income tax because the income tax expense is NOT relevant to either the EVA or the ROI measures.

In designing a balanced scorecard, the company begins with company goals, then develops KPIs, and finally, based on the KPIs that are established, the company identifies the company's critical factors.

If upper management is NOT satisfied with a division's asset turnover ratio, which of the following strategies would they most likely recommend?

Which of the following statements is TRUE about the weighted average cost of capital (WACC)?

The formula for RI (residual income) is:

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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