The following data relates to the Miracle Corporation and its Toy Division. \[\begin{array} { | l | r | } \hline \text { Toy Division sales } & \$ 8,000,000 \\ \hline \text { Toy Division aperating income } & \$ 480,000 \\ \hline \text { Toy Division total assets } & \$ 2,000,000 \\ \hline \text { Toy Division current liabilities } & \$ \text { 600,000 } \\ \hline \text { Corporate target rate of return } & 14 \% \\ \hline \text { Corporate weighted average cost of capital } & 10 \% \\ \hline \text { Corporate effective tax rate } & 30 \% \\ \hline \end{array}\] - What is the Toy Division's capital turnover?

A) 3.3 B) 4.0 C) 4.2 D) 16.7 A) 3.3 B) 4.0 C) 4.2 D) 16.7 B

The Tandem division of the Great Adventures Cycles Company had the following results last year (in thousands). \[\begin{array} { | l | r r | } \hline \text { Sales } & \$ & 4,000,000 \\ \hline \text { Operating incare } & \$ & 480,000 \\ \hline \text { Total assets } & \$ & 2,000,000 \\ \hline \text { Current liabilities } & \$ & 300,000 \\ \hline \end{array}\] Management's target rate of return is 10% and the weighted average cost of capital is 8%.Its effective tax rate is 40%. - What is the Tandem division's Economic Value Added (EVA)?

A) $136,000 B) $152,000 C) $280,000 D) $288,000 A) $136,000 B) $152,000 C) $280,000 D) $288,000 B

The following data relates to the Miracle Corporation and its Toy Division. \[\begin{array} { | l | r | } \hline \text { Toy Division sales } & \$ 8,000,000 \\ \hline \text { Toy Division aperating income } & \$ 480,000 \\ \hline \text { Toy Division total assets } & \$ 2,000,000 \\ \hline \text { Toy Division current liabilities } & \$ \text { 600,000 } \\ \hline \text { Corporate target rate of return } & 14 \% \\ \hline \text { Corporate weighted average cost of capital } & 10 \% \\ \hline \text { Corporate effective tax rate } & 30 \% \\ \hline \end{array}\] -What is the Toy Division's Residual Income (RI)?

A) $(640,000) B) $196,000 C) $200,000 D) $280,000 A) $(640,000) B) $196,000 C) $200,000 D) $280,000

The Tandem division of the Great Adventures Cycles Company had the following results last year (in thousands). \[\begin{array} { | l | r r | } \hline \text { Sales } & \$ & 4,000,000 \\ \hline \text { Operating incare } & \$ & 480,000 \\ \hline \text { Total assets } & \$ & 2,000,000 \\ \hline \text { Current liabilities } & \$ & 300,000 \\ \hline \end{array}\] Management's target rate of return is 10% and the weighted average cost of capital is 8%.Its effective tax rate is 40%. - What is the Tandem division's sales margin?

A) 7.50% B) 24.00% C) 12.00% D) 200.00% A) 7.50% B) 24.00% C) 12.00% D) 200.00%

Assume the Cell Phone Division of the First Electronics Corporation had the following results last year (in thousands).Management's target rate of return is 10% and the weighted average cost of capital is 7%.Its effective tax rate is 30%. \[\begin{array} { | l | r | } \hline \text { Sales } & \$ 6,000,000 \\ \hline \text { Operating income } & 900,000 \\ \hline \text { Total assets } & 3,000,000 \\ \hline \text { Current liabilities } & 750,000 \\ \hline \end{array}\] - What is the division's capital turnover?

A) 2.0 B) 3.3 C) 4.0 D) 6.7 A) 2.0 B) 3.3 C) 4.0 D) 6.7

Exam 11: Performance Evaluation and the Balanced Scorecard

The following data relates to the Miracle Corporation and its Toy Division. Toy Division sales \ 8,000,000 Toy Division aperating income \ 480,000 Toy Division total assets \ 2,000,000 Toy Division current liabilities \ 600,000 Corporate target rate of return 14\% Corporate weighted average cost of capital 10\% Corporate effective tax rate 30\% - What is the Toy Division's capital turnover?

Free

(Multiple Choice)

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Question 1

Correct Answer:

Verified

B

The Tandem division of the Great Adventures Cycles Company had the following results last year (in thousands). Sales \ 4,000,000 Operating incare \ 480,000 Total assets \ 2,000,000 Current liabilities \ 300,000 Management's target rate of return is 10% and the weighted average cost of capital is 8%.Its effective tax rate is 40%. - What is the Tandem division's Economic Value Added (EVA)?

Free

(Multiple Choice)

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Question 2

Correct Answer:

Verified

B

How can a manager increase return on investment (ROI)?

Free

(Multiple Choice)

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Question 3

Correct Answer:

Verified

A

The difference in dollars between amounts in the static budget and the flexible budget is called the:

(Multiple Choice)

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Question 4

The following data relates to the Miracle Corporation and its Toy Division. Toy Division sales \ 8,000,000 Toy Division aperating income \ 480,000 Toy Division total assets \ 2,000,000 Toy Division current liabilities \ 600,000 Corporate target rate of return 14\% Corporate weighted average cost of capital 10\% Corporate effective tax rate 30\% -What is the Toy Division's Residual Income (RI)?

(Multiple Choice)

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Question 5

List the four areas of a balanced scorecard.Describe each area.Define "key performance indicator" (KPI).Give an example of a KPI for each balanced scorecard area

(Essay)

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Question 6

Corrective actions are sometimes taken as a result of which of the following goals of a performance evaluation system?

(Multiple Choice)

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Question 7

Which of the following goals of a performance evaluation system is accomplished when a company's actual results are compared to the results of competitors?

(Multiple Choice)

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Question 8

Decentralization allows top management to concentrate on long-term strategic planning.

(True/False)

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Question 9

A product line at Coca-Cola (such as the Diet Coke product line)is most likely treated as a(n):

(Multiple Choice)

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Question 10

The Tandem division of the Great Adventures Cycles Company had the following results last year (in thousands). Sales \ 4,000,000 Operating incare \ 480,000 Total assets \ 2,000,000 Current liabilities \ 300,000 Management's target rate of return is 10% and the weighted average cost of capital is 8%.Its effective tax rate is 40%. - What is the Tandem division's sales margin?

(Multiple Choice)

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Question 11

The balanced scorecard considers both financial and operational performance measures.

(True/False)

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Question 12

Assume the Cell Phone Division of the First Electronics Corporation had the following results last year (in thousands).Management's target rate of return is 10% and the weighted average cost of capital is 7%.Its effective tax rate is 30%. Sales \ 6,000,000 Operating income 900,000 Total assets 3,000,000 Current liabilities 750,000 - What is the division's capital turnover?

(Multiple Choice)

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Question 13

The manager of a local Wal-Mart would be in charge of a(n):

(Multiple Choice)

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Question 14

Performance evaluation systems have all of the following goals EXCEPT:

(Multiple Choice)

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Question 15

Performance evaluation systems provide top management with a framework for maintaining control over the organization.

(True/False)

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Question 16

Return on Investment (ROI)is defined as operating income divided by total assets.

(True/False)

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Question 17

Comparing company results against industry benchmarks is often less useful than comparing actual results against budget amount.

(True/False)

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Question 18

Customer satisfaction,operational efficiency,and employee excellence are often measured as part of the balanced scorecard approach.

(True/False)

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Question 19

Variances which exceed a certain dollar amount or a certain percentage are the variances which are investigated when using management by exception.

(True/False)

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Question 20

How can a manager increase return on investment (ROI)?

The difference in dollars between amounts in the static budget and the flexible budget is called the:

List the four areas of a balanced scorecard.Describe each area.Define "key performance indicator" (KPI).Give an example of a KPI for each balanced scorecard area

Corrective actions are sometimes taken as a result of which of the following goals of a performance evaluation system?

Which of the following goals of a performance evaluation system is accomplished when a company's actual results are compared to the results of competitors?

Decentralization allows top management to concentrate on long-term strategic planning.

A product line at Coca-Cola (such as the Diet Coke product line)is most likely treated as a(n):

The balanced scorecard considers both financial and operational performance measures.

The manager of a local Wal-Mart would be in charge of a(n):

Performance evaluation systems have all of the following goals EXCEPT:

Performance evaluation systems provide top management with a framework for maintaining control over the organization.

Return on Investment (ROI)is defined as operating income divided by total assets.

Comparing company results against industry benchmarks is often less useful than comparing actual results against budget amount.

Customer satisfaction,operational efficiency,and employee excellence are often measured as part of the balanced scorecard approach.

Variances which exceed a certain dollar amount or a certain percentage are the variances which are investigated when using management by exception.

Introduction to Managerial Accounting

Building Blocks of Managerial Accounting

Job Costing

Activity-Based Costing, lean Production, and the Costs of Quality

Process Costing

Cost Behavior

Cost-Volume-Profit Analysis

Short Term Business Decisions

The Master Budget and Responsibility Accounting

Flexible Budgets and Standard Costs

Capital Investment Decisions and the Time Value of Money

Statement of Cash Flows

Financial Statement Analysis

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