Exam 15: Performance Evaluation

In the current year, the New Products Division of Testar Company had operating income of $8,000,000 and operating assets of $44,800,000. Testar has set a target return on investment (ROI) of 16% for each of its divisions. Which of the following statements is correct?

Which of the following income statement formats is most commonly used with flexible budgeting?

White Company budgeted fixed overhead costs of $200,000 and volume of 40,000 units. During the year, the company produced and sold 39,000 units and spent $210,000 on fixed overhead. The spending variance relating to the fixed overhead cost is:

Which of the following is a characteristic that is needed for decentralization to work well in an organization?

For performance evaluation, the amount of costs actually incurred should be compared to the costs that would have been incurred at the actual volume of activity rather than at the planned volume of activity.

Campbell Candy Corporation desires a 16% return on investment (ROI) on all operations. The following information was available for the company for the current year: What is the corporation's ROI? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Investment centers are often evaluated on the basis of return on investment.

Huang Company reported the following information for the current year: The company's return on investment was: (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

The Boyle Company estimated that April sales would be 150,000 units with an average selling price of $6.00. Actual sales for April were 149,000 units and average selling price was $6.12. The sales revenue flexible budget variance was:

A difference between the static budget based on planned volume and a flexible budget prepared at actual volume is called a:

Which of the following would increase residual income? (Assume all other things are equal)

Packrall Company makes computer chips. Curtis is manager of the company's maintenance department. Because his maintenance technicians are so well trained in maintaining expensive and sensitive circuit board stamping equipment, Curtis has been authorized to contract to perform maintenance for outside customers. In this company, the maintenance department is likely organized as:

The differences between the standard and actual amounts are called variances.

Select the incorrect statement concerning the application of the controllability concept to responsibility accounting.

Payne Company reported the following information for the current year: The company's residual income was:

Joseph Company reported the following information for the current year: The company's operating income was:

Jared expects to charge $60 per hour for his industrial maintenance business during the following year. He expects to reach 50,000 hours at that price. Jared's partner disagrees with the estimate and expects closer to 40,000 hours. What should Jared do when preparing the budget for the year?

Which of the following statements regarding cost centers is incorrect?

Which of the following applications is most suited for developing flexible budgets?

When would a cost variance be listed as unfavorable?