Exam 23: Performance Measurement, Compensation, and Multinational Considerations

Answer the following questions using the information below: Ruth Cleaning Products manufactures home cleaning products. The company has two divisions, Bleach and Cleanser. Because of different accounting methods and inflation rates, the company is considering multiple evaluation measures. The following information is provided for 20X5: The company is currently using a 15% required rate of return. -What are Bleach's and Cleanser's residual incomes based on book values, respectively?

A negative feature of defining investment by EXCLUDING the portion of total assets employed that are financed by short-term creditors is that:

During the past twelve months, the Aaron Corporation had a net income of $25,000. What is the amount of the investment if the return on investment is 20%?

Team incentives encourage cooperation by:

A part of a control system that focuses on meeting expectations is known as a(n):

Answer the following questions using the information below: The Bandage Medical Supply Company has two divisions that operate independently of one another. The financial data for the year 2012 reported the following results: The company's desired rate of return is 10%. Income is defined as operating income. -What are the respective return-on-investment ratios for the North and South Divisions?

During the past twelve months, the Zenith Corporation had a net income of $78,400 What is the return on investment if the amount of the investment is $560,000?

Answer the following questions using the information below: The top management at Munchie Company, a manufacturer of computer games, is attempting to recover from a flood that destroyed some of their accounting records. The main computer system was also severely damaged. The following information was salvaged: -What is the value of the operating assets belonging to the Beta Division?

Answer the following questions using the information below: Ruth Cleaning Products manufactures home cleaning products. The company has two divisions, Bleach and Cleanser. Because of different accounting methods and inflation rates, the company is considering multiple evaluation measures. The following information is provided for 20X5: The company is currently using a 15% required rate of return. -What are Bleach's and Cleanser's return on investment based on current values, respectively?

After-tax operating income minus the after-tax weighted-average cost of capital multiplied by total assets minus current liabilities equals:

When managers set and measure target levels of performance

Costs recognized in particular situations that are NOT recognized by accrual accounting procedures are:

Museum Corporation uses the investment center concept for the museums that it manages. Select operating data for three of its museums for 2012 are as follows: Required: a. Compute the return on investment for each division. b. Which museum manager is doing best based only on ROI? Why? c. What other factors should be included when evaluating the managers?

The Alpha Beta Corporation had the following information for 20X5: What is the return on investment?

A part of a control system that articulates the mission, purpose, and core values of a company is known as a(n):

The Coffee Division of American Products is planning the 20X5 operating budget. Average operating assets of $1,500,000 will be used during the year and unit selling prices are expected to average $100 each. Variable costs of the division are budgeted at $400,000, while fixed costs are set at $250,000. The company's required rate of return is 18%. Required: a. Compute the sales volume necessary to achieve a 20% ROI. b. The division manager receives a bonus of 50% of residual income. What is his anticipated bonus for 20X5, assuming he achieves the 20% ROI from part (a)?

Answer the following questions using the information below: The top management at Groundsource Company, a manufacturer of lawn and garden equipment, is attempting to recover from a fire that destroyed some of their accounting records. The main computer system was also severely damaged. The following information was salvaged: -What is the Tractor Division's return on sales?

A company which favors the residual income approach wants managers to:

Tying performance measures more closely to a manager's efforts:

Should assets be measured at historical cost or current cost? This question is considered part of which step in designing an accounting-based performance measure?