Exam 10: Performance Evalulation

A performance report compares expected revenues and expenses against budgeted figures for each responsibility center that the manager evaluates in an organization.

The following data relates to Logan Electric and its Light Bulb Division. What is the Light Bulb Division's capital turnover?

Harvest Company has a sales margin of 20%, operating income of $574,000, and capital turnover of 2.0. The sales in dollars for Harvest Company may be closest to

The use of return on investment (ROI)as a short-term performance measure may lead managers to reject projects that may be profitable for the company as a whole.

The Rainy Division of Seattle Corporation reported the following results from the past year. Shareholders require a return of 5%. Management calculated a weighted-average cost of capital (WACC)of 3%. Rainy's corporate tax rate is 25%. What is the division's Residual Income (RI)?

The balanced scorecard considers only financial performance measures.

Both the static budget and the flexible budget used for performance evaluation are developed before the period of actual production.

A manager can increase return on investment (ROI)by doing which of the following?

The ________ of the balanced scorecard focuses on continuing to improve and create value.

The ________ of the balanced scorecard focuses on determining if customers are satisfied.

With regard to flexible budgets, which of the following statements is true?

List and describe reasons why a company might choose to decentralize its operations.

The Box Manufacturing Division of the Allied Paper Company reported the following results from the past year. Shareholders require a return of 9%. Management calculated a weighted-average cost of capital (WACC)of 7%. Allied's corporate tax rate is 30%. What is the division's Return on Investment (ROI)?

Using ________ may cause a manager to reject a project that may be profitable to the company as a whole.

Summer Nights sells bottles of bug spray for $8.00 each. Variable costs are $2.00 per bottle, while fixed costs are $40,000 per month for volumes up to 40,000 bottles of spray and $58,000 per month for volumes above 40,000 bottles of spray. The flexible budget would reflect monthly operating income for 10,000 bottles of lotion and 22,000 bottles of lotion of what dollar amounts?

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.

The ________ perspective of the balanced scorecard helps managers answer the question, "How do we look to shareholders?"

The production line at Morningstar Farms may be classified as a(n)

The volume variance is the difference between actual results and the flexible budget.

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