Exam 10: Performance Evaluation

The following data relates to Logan Electric and its Light Bulb Division. What is the Light Bulb Division's Return on Investment (ROI)?

Assume the Air Conditioning division of the General Appliance Corporation had the following results last year (in thousands).Management's target rate of return is 15% and the weighted average cost of capital is 10%.Its effective tax rate is 35%. What is the division's Residual Income (RI)?

The reservations department that has self-contained sales operations at a car rental chain may be classified as a(n)

All favorable variances are investigated when using management by exception.

Eagle Company has a sales margin of 15%,a target rate of return of 14%,and capital turnover of 2.5.Its operating income is $87,000.The sales in dollars for Eagle Company may be closest to

Southern Instruments makes calculators for business applications.The budgeted selling price is $120 per calculator,the variable rate is $98 per calculator and budgeted fixed costs are $150,000 per month.What is the budgeted operating income for 15,000 calculators sold in a month?

Peddlin' Pete's Cycles sells its entry-level bicycles for $400 each.Its variable cost is $250 per bicycle.Fixed costs are $35,000 per month for volumes up to 1,200 bicycles.Above 1,200 bicycles,monthly fixed costs are $55,000.What is the budgeted operating income at a level of 900 bicycles per month?

The production line at Morningstar Farms may be classified as a(n)

Residual income is defined as the difference between revenues and expenses.

All of the following are potential advantages of decentralization except

Elaina Company had the following financial results for last month.What type of responsibility center do these results reflect?

The Box Manufacturing Division of the Allied Paper Company reported the following results from the past year.Shareholders require a return of 7%.Management calculated a weighted-average cost of capital (WACC)of 5%.Allied's corporate tax rate is 30%. What is the division's sales margin?

The maintenance department that focuses on efficiency at Continental Airlines may be classified as a(n)

Pendant Publishing reported the following results for its Textbook Division: Pendant's target rate of return is 15% and the weighted average cost of capital is 10%.Its effective tax rate is 35%. What is the Textbook Division's capital turnover?

The local Burger King restaurant is likely classified as a revenue center.

The following data relates to Logan Electric and its Light Bulb Division. What is the Light Bulb Division's sales margin?

Sound Design sells its computer speakers for $115 per set.Its variable cost is $75 per set of speakers.Fixed costs are $80,000 per month for volumes up to 2,400 sets of speakers.Above 2,400 sets,monthly fixed costs are $115,000.What is the budgeted operating income (loss)at a sales level of 2,300 sets of speakers per month?

Selected financial data for the Photocopies Division of Elizabeth's Business Machines is as follows: What is the Photocopier Division's sales margin?

Assume the Air Conditioning division of the General Appliance Corporation had the following results last year (in thousands).Management's target rate of return is 15% and the weighted average cost of capital is 10%.Its effective tax rate is 35%. What is the division's sales margin?

Platz Company makes chairs.The budgeted selling price is $45 per chair,the variable rate is $15 per chair and budgeted fixed costs are $40,000 per month.What is the budgeted operating income for 3,200 chairs sold in a month?