Exam 15: Performance Evaluation

Timberlake Company planned for a production and sales volume of 12,000 units. However, the company actually made and sold 13,000 units. What was the sales volume variance?

To avoid suboptimization, many companies prefer to evaluate their investment centers using:

Static and flexible budgets are similar in that:

A budget prepared at a single volume of activity is referred to as a:

The New Products Division of Testar Company, had operating income of $8,000,000 and operating assets of $44,800,000 during the current year. The New Products Division has developed a potential new product that would require $8,500,000 in operating assets and would be expected to provide $1,400,000 in operating income each year. Testar has set a target return on investment (ROI) of 16% for each of its divisions. Assuming that the new product is put into production, calculate the residual income for the division.

Which of the following statements regarding investment centers is incorrect?

A disadvantage of decentralization is that it fails to motivate managers to improve the productivity of their division.

A reporting unit of a decentralized business that controls identifiable revenue and/or expense items is known as a(n):

Terra Company has two divisions, the Retail Division and the Wholesale Division. The following information was gathered for the two divisions for the current year: Assuming that these are the only divisions of Terra Company, what is the ROI for the company as a whole?

The following static budget is provided: What will be the overall volume variance if 12,000 units are produced and sold?

The Electronics Division of Anton Company reports the following results for the current year: Anton Company has set a target return on investment (ROI) of 11% for the Electronics Division. The Electronic Division's margin is:

A favorable flexible budget materials variance may indicate that the price per unit of materials was lower than expected and that less material was used than expected or either of these.

The process of evaluating the performance of individual managers is known as:

The following static budget is provided: What will budgeted net income equal if 21,000 units are produced and sold? (Do not round intermediate calculations.)

Vanessa Grant is responsible for controlling expenses, but is not responsible for generating revenues. Vanessa Grant is a manager of a(n):

Which of the following statements about return on investment (ROI) is false?