Exam 10: Performance Evaluation

The Jazz Division of Heights Recording Corporation had the following results last year. Management's target rate of return is 12% and the weighted average cost of capital is 9%.Its effective tax rate is 40%. Required: a.Calculate the return on investment (ROI). b.Calculate the residual income.

The number of rework units may be an example of measuring which perspective of the balanced scorecard?

If selling and administrative expenses decrease while other expenses remain constant,what will happen to return on investment (ROI)?

The percentage of market share may be an example of measuring which perspective of the balanced scorecard?

The ________ is the optimum budget to managers that plan revenues and expenses at different sales volumes.

Discuss potential problems and disadvantages to an organization that decentralizes its operations.

Residual Income (RI)equals operating income less minimum acceptable income.

The Top Hat Division of Blandon's Fine Menswear had the following results last year (in thousands). Management's target rate of return is 12% and the weighted average cost of capital is 9%. What is the Top Hat Division's Return on Investment (ROI)?

The ________reveals whether or not additional sales revenue can offset an increase in costs in the flexible budget performance report.

The human resources department for Kohl's Department Stores may be classified as a(n)

Responsibility accounting performance reports compare plans (budgets)with actual results in each responsibility center.

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 Return on Investment (ROI)?

The Pasta Division of Whole Grain Corporation had sales of $5,500,000 and operating income of $1,375,000 last year.The total assets of the Pasta Division were $2,750,000,while current liabilities were $330,000.Whole Grain Corporation's target rate of return is 12%,while its weighted average cost of capital is 8%.The effective tax rate for the company is 30%. What is the Pasta Division's capital turnover?

Lewis Company has operating income of $336,000.Its return on investment (ROI)is 48%,while its target rate of return is 10%.The total assets of Lewis Company may be closest to

Shining Springs Glass Art manufactures various glass art fixtures,including a dolphin-glass figurine.The dolphin-glass figurine is produced in the Design Department and it uses a glass insert that is produced also in the Production Department.The market price for the glass insert is $900.The plant has excess capacity and the managerial accountant reported the following information: What is the lowest acceptable in-house transfer price to the Production Department? What is the highest acceptable transfer price the Design Department should pay the Production Department to produce the insert in-house?? What should the managerial accountant understand if there was not access capacity at the plant to produce the insert?

The ________ is a budget based on multiple levels of projected sales or production.

A potential disadvantage of decentralization is which of the following?

Total hours of continuing professional education taken by employees may be an example of measuring which perspective of the balanced scorecard?

Which of the following may cause a favorable sales volume variance of the revenues?

Hill Manufacturing is a large manufacturer that produces a part that inserts into diesel engines.The company has several large divisions and the managerial accountant reported the part is currently produced in the assembly department.The managerial accountant reported that the variable selling expenses and manufacturing costs related to the production of this part include the following: Another department at Hill Manufacturing is set up to produce the diesel part and could produce the part internally rather than purchase the part from an outside supplier.The managerial accountant reported that the other department has excess capacity and could produce the part in that department.There is a significant amount of competition in the marketplace and the current price to produce the part at the other internal department and a competitor is $1,500. What is the highest transfer price that the managerial accountant should pay to purchase the part from a competitor? Calculate the lowest acceptable transfer price if the part was produced by the internal operations at the other department at Hill Manufacturing.