Exam 10: Management Control in Decentralized Organizations

Yoon Company reports the following information: The adjusted figures reflect adjustments used by Stern Stewart & Company. What is the EVA for Yoon Company?

The increasing sophistication of telecommunications facilitates decentralization in organizations.

Capital turnover can be increased by decreasing investment.

Capital turnover equals revenue divided by invested capital.

Sweater Division manufactures sweaters.The buttons used in production are purchased from an outside supplier at a cost of $4.50 per sweater.The buttons can also be purchased in house from Supply Division for $4.00 per sweater.The cost data for the buttons produced by Supply Division are as follows: Variable selling expenses are not incurred on inside transfers.Assume Supply Division has excess capacity. Required: A)What is the minimum transfer price that Supply Division should charge Sweater Division for the transferred buttons? B)What is the maximum transfer price that Sweater Division should pay Supply Division for the transferred buttons?

Increasing capital turnover is one of the advantages of implementing the JIT philosophy.

The following information is available for Timber Company: Invested capital is defined as total assets less current liabilities.What is invested capital?

Steven Company's records reveal the following: Variable costs: The variable costs of Division B will be incurred whether it buys from Division A or from an outside supplier.Division A wants to transfer the parts to Division B for $81 each.Division B can buy the parts for $75 per unit from an outside supplier.Division A has no excess capacity.The manager of Division B should ________.

The following information is available for the Trompeter Company: What is the capital turnover ratio?

Why do some companies prefer the use of economic profit over return on investment in decision-making?

The rate of return on net book value decreases as equipment ages.

Assuming a company uses a cost-based pricing system for transfer pricing,which of the following items would NOT be used?

Companies will not suffer negative consequences if they overemphasize meeting a budget when evaluating managers.

Managers' incentives for performance are defined as the ________.

In cases of constrained capacity,the opportunity cost of transferring a product internally is zero.

Return on investment equals income divided by investment.

An ideal performance metric would measure and reward the manager for ________ factors and neither reward nor punish the manager for ________ factors.

________ is the original cost of a long-term asset less accumulated depreciation.

Yun Company reports the following information: The adjusted figures reflect adjustments used by Stern Stewart & Company.What is the EVA for Yun Company?

The variable cost of Part X is $50 per unit and the full cost of the part is $80 per unit.The part is produced in Country Z and transferred to a plant in Country B.Country Z has a 30% income tax rate.Country B has a 50% income tax rate and an import duty equal to 10% of the price of the item.Part X can be transferred at full cost or variable cost.Assume Part X is transferred at full cost.By using full cost instead of variable cost for the transfer price,the income tax effect per unit in Country Z is ________.