Exam 11: Reporting for Control

Which of the following statements provide(s)an argument in favour of including only a plant's net book value rather than gross book value as part of operating assets in the ROI computation? I.Net book value is consistent with how plant and equipment items are reported on a balance sheet. II.Net book value is consistent with the computation of operating income,which includes amortization as an operating expense. III.Net book value allows ROI to decrease over time as assets get older.

Division A makes a part with the following characteristics: Production Capacity in Units 15,000 units Selling Price to Outside Customers \ 25 Variable Cost per Unit \ 18 Total Fixed Costs \ 60,000 Division B, another division of the same company, would like to purchase 5,000 units of the part each period from Division A. Division B is now purchasing these parts from an outside supplier at a price of \$24 each. - Suppose that Division A has ample idle capacity to handle all of Division B's needs without any increase in fixed costs and without cutting into sales to outside customers.If Division B continues to purchase parts from an outside supplier rather than from Division A,what will be the effect on the operating income of the company as a whole?

Which of the following statements about quality costs is correct?

Fabri Company's quality cost report is to be based on the following data: Liability arising from defective products \ 56,000 Lost sales due to poor quality \ 51,000 Test and inspection of in-process goods \ 47,000 Quality circles \ 17,000 Net cost of spoilage \ 93,000 Debugging software errors \ 29,000 Rework labour and overhead \ 95,000 Final product testing and inspection \ 32,000 Statistical process control activities \ 61,000 - What will be the total prevention cost appearing on the quality cost report?

Last year,a company had shareholders' equity of $160,000,operating income of $16,000,and sales of $100,000.The turnover was 0.5.What was the return on investment (ROI)?

Which of the following would be classified as an external failure cost on a quality cost report?

$\text { Harstin Corporation has provided the following data for the past year: }$ Sales \ 625,000 Gross Margin \ 70,000 Operating Income \ 50,000 Shareholders' Equity \ 90,000 Average Operating Assets \ 250,000 Residual Income \ 20,000 $\text { Harstin Corporation has provided the following data for the past year: }$ Sales \ 625,000 Gross Margin \ 70,000 Operating Income \ 50,000 Shareholders' Equity \ 90,000 Average Operating Assets \ 250,000 Residual Income \ 20,000 -What was the margin for the past year?

Eade Company's quality cost report is to be based on the following data: Systems development \ 32,000 Final product testing and inspection \ 13,000 Quality data gathering, analysis, and reporting \ 11,000 Net cost of scrap \ 62,000 Returns arising from quality problems \ 59,000 Amortization of test equipment \ 57,000 Rework labour and overhead \ 18,000 Test and inspection of incoming materials \ 40,000 Product recalls \ 36,000 - What will be the total internal failure cost appearing on the quality cost report?

Assuming that sales and operating income remain the same,which of the following statements about a company's return on investment is correct?

Which of the following would be classified as an internal failure cost on a quality cost report?

Segmented statements for internal use should be prepared in the contribution format.

Harwood Company's quality cost report is to be based on the following data: Amortization of test equipment \ 94,000 Quality circles \ 54,000 Product recalls \ 20,000 Test and inspection of incoming materials \ 82,000 Debugging software errors \ 11,000 Rework labour and overhead \ 48,000 Technical support provided to suppliers \ 12,000 Net cost of scrap \ 29,000 Lost sales due to poor quality \ 74,000 Required: Prepare a quality cost report in good form with separate sections for prevention costs,appraisal costs,internal failure costs,and external failure costs.

Thais Company's quality cost report is to be based on the following data: Liability arising from defective products \ 65,000 Lost sales due to poor quality \ 61,000 Test and inspection of in-process goods \ 57,000 Quality circles \ 27,000 Net cost of spoilage \ 103,000 Debugging software errors \ 39,000 Rework labour and overhead \ 105,000 Final product testing and inspection \ 42,000 Statistical process control activities \ 71,000 - What will be the total appraisal cost appearing on the quality cost report?

Ieso Company has two stores: J and K. During November, Ieso Company reported operating income of $30,000 and sales of $450,000. The contribution margin in Store J was $100,000, or 40% of sales. The segment margin in Store K was $30,000, or 15% of sales. Traceable fixed expenses were $60,000 in Store J, and $40,000 in Store K. -What were the total sales in Store J?

During April,Division D of Carney Company had a segment margin ratio of 15%,a variable expense ratio of 60% of sales,and traceable fixed expenses of $15,000.Division D's sales were closest to which of the following?

$\text { Harstin Corporation has provided the following data for the past year: }$ Sales \ 625,000 Gross Margin \ 70,000 Operating Income \ 50,000 Shareholders' Equity \ 90,000 Average Operating Assets \ 250,000 Residual Income \ 20,000 -What was the return on investment for the past year?

Which of the following statements about the step-down method of allocating service department is correct?

The performance of the manager of Division A is evaluated by residual income.Which of the following would improve the manager's performance?

Galati Company's quality cost report is to be based on the following data: Lost sales due to poor quality \ 22,000 Test and inspection of incoming materials \ 91,000 Rework labour and overhead \ 55,000 Test and inspection of in-process goods \ 29,000 Product recalls \ 46,000 Quality data gathering, analysis, and reporting \ 10,000 Disposal of defective products \ 83,000 Maintenance of test equipment \ 57,000 Quality engineering \ 97,000 Required: Prepare a quality cost report in good form with separate sections for prevention costs,appraisal costs,internal failure costs,and external failure costs.

In computing the margin in a ROI analysis,which of the following is used?