Exam 10: Performance Evalulation

Sitz Company makes chairs. The budgeted selling price is $55 per chair, the variable rate is $25 per chair and budgeted fixed costs are $20,000 per month. What is the budgeted operating income for 3100 chairs sold in a month?

The Top Hat Division of Blandon's Fine Menswear had the following results last year (in thousands). Management's target rate of return is 9% and the weighted average cost of capital is 5%. What is the Top Hat Division's Residual Income (RI)?

Selected financial data for the Photocopies Division of Elizabeth's Business Machines is as follows: What is the Photocopier Division's capital turnover?

The number of defects found during the manufacturing process may be an example of measuring which perspective of the balanced scorecard?

A segment margin is the operating income generated by a profit or investment center before subtracting common allocated fixed costs to the center.

The ________ is a budget based on multiple levels of projected sales or production.

An investment center is generally a large division of a corporation.

Which of the following strategies listed is NOT used to determine a transfer price?

Management by exception directs management's attention to a large variance between an actual and budget amount in a performance report.

With regard to a static budget instead of a flexible budget, which of the following is true?

The ________ of the balanced scorecard focuses on how to determine the company's "climate for action."

Assume the Hiking Shoes division of the All About Shoes Corporation had the following results last year (in thousands). Management's target rate of return is 15% and the weighted average cost of capital is 10%. Its effective tax rate is 30%. What is the division's capital turnover?

If selling and administrative expenses decrease while other expenses remain constant, what will happen to return on investment (ROI)?

Sales margin is defined as operating income divided by sales.

Decentralization allows top management to hire workers with expert knowledge in each business unit.

The Engine Division of The Cleveland Automotive Corporation had sales of $7,200,000 and operating income of $864,000 last year. The total assets of the Engine Division were $3,200,000 while current liabilities were $800,000. The Cleveland Automotive Corporation's target rate of return is 13% while its weighted average cost of capital is 9%. The effective tax rate for the company is 45%. Required: a. Calculate the sales margin. b. Calculate the capital turnover. c. Calculate the return on investment (ROI). d. Calculate the residual income.

What are the total assets reported by Panther Enterprises if operating income is $252,750, its return on investment (ROI)is 15%, and its target rate of return is 5%?

In a flexible budget, total fixed costs do not change as production volume changes.

Which term below best fits "a part, segment, or subunit of a company whose manager is accountable for specified activities"?

Operations is one factor of the financial perspective of the Balanced Scorecard.