Question 1

Required rate of return multiplied by the investment is the imputed cost of the investment.

Accepted Answer

A) True 
 B)False

Question 2

Return on investment can be increased by:

Accepted Answer

A) increasing operating assets 
B) decreasing operating assets 
C) decreasing revenues 
D) Both B and C are correct. 
A) increasing operating assets 
B) decreasing operating assets 
C) decreasing revenues 
D) Both B and C are correct.

Question 3

An interactive control system is a formal information system that managers use to focus organization attention and learning on key strategic issues.

Accepted Answer

A) True 
 B)False

Question 4

Answer the following questions using the information below:
Carriage Incorporated manufactures horse carriages. The company has two divisions, Wheels and Assembly. Because of different accounting methods and inflation rates, the company is considering multiple evaluation measures. The following information is provided for 2009:
   The company is currently using a 12% required rate of return.
-What are Wheels's and Assembly's residual incomes based on book values, respectively?

Accepted Answer

A) $74,000; $28,500 
B) $61,800; $70,000 
C) $63,500; $59.500 
D) $28,500; $74,000 
A) $74,000; $28,500 
B) $61,800; $70,000 
C) $63,500; $59.500 
D) $28,500; $74,000

Question 5

Springfield Corporation, whose tax rate is 40%, has two sources of funds: long-term debt with a market value of $8,000,000 and an interest rate of 8%, and equity capital with a market value of $12,000,000 and a cost of equity of 12%. What is Springfield's weighted average cost of capital (WACC)?

Accepted Answer

A) .0480 
B) .0800 
C) .0912 
D) .1000 
A) .0480 
B) .0800 
C) .0912 
D) .1000

Question 6

The cost today of purchasing an asset identical to the one currently held is called a(n):

Accepted Answer

A) actual cost 
B) current cost 
C) dual cost 
D) fixed cost 
A) actual cost 
B) current cost 
C) dual cost 
D) fixed cost

Question 7

Examples of "cooking the books" are understated assets and overstated liabilities.

Accepted Answer

A) True 
 B)False

Question 8

Does operating income best measure a subunit's financial performance? This question is considered part of which step in designing an accounting-based performance measure?

Accepted Answer

A) Choose performance measures that align with top management's financial goals. 
B) Choose the time horizon of each performance measure. 
C) Choose a definition for each performance measure. 
D) Choose a measurement alternative for each performance measure. 
A) Choose performance measures that align with top management's financial goals. 
B) Choose the time horizon of each performance measure. 
C) Choose a definition for each performance measure. 
D) Choose a measurement alternative for each performance measure.

Question 9

Answer the following questions using the information below:
The Cybertronics Corporation reported the following information for its Cyclotron Division:
   Income is defined as operating income.
-What is the Cyclotron Division's investment turnover ratio?

Accepted Answer

A) 2.00 
B) 3.33 
C) 2.50 
D) 0.80 
A) 2.00 
B) 3.33 
C) 2.50 
D) 0.80

Question 10

Provide the missing data for the following situations:

Accepted Answer

Red Division:
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Question 11

Evaluating an executive's performance using the annual return on investment would sharpen an executive's long-run focus.

Accepted Answer

A) True 
 B)False

Question 12

Imputed costs are costs recognized in particular situations that are NOT usually recognized by accrual accounting procedures.

Accepted Answer

A) True 
 B)False

Question 13

A report that measures financial and nonfinancial performance measures for various organization units in a single report is called a(n):

Accepted Answer

A) balanced scorecard 
B) financial report scorecard 
C) imbalanced scorecard 
D) unbalanced scorecard 
A) balanced scorecard 
B) financial report scorecard 
C) imbalanced scorecard 
D) unbalanced scorecard

Question 14

Relative performance evaluation:

Accepted Answer

A) is called benchmarking 
B) filters out the effect of common noncontrollable factors 
C) results in managers having no incentive to help one another 
D) All of these answers are correct. 
A) is called benchmarking 
B) filters out the effect of common noncontrollable factors 
C) results in managers having no incentive to help one another 
D) All of these answers are correct.

Question 15

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 Digger Division's return on investment?

Accepted Answer

A) .25 
B) .30 
C) .45 
D) .60 
A) .25 
B) .30 
C) .45 
D) .60

Question 16

The only criticism of team-based compensation is that the incentives for individual employees to excel are diminished, harming overall performance.

Accepted Answer

A) True 
 B)False

Question 17

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 Alpha Division's return on sales?

Accepted Answer

A) 0.25 
B) 0.42 
C) 0.60 
D) 0.75 
A) 0.25 
B) 0.42 
C) 0.60 
D) 0.75

Question 18

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 were the sales for the Beta Division?

Accepted Answer

A) $8,666,667 
B) $11,904,760 
C) $13,000,000 
D) $14,303,600 
A) $8,666,667 
B) $11,904,760 
C) $13,000,000 
D) $14,303,600

Question 19

Customer-satisfaction measures are an example of the:

Accepted Answer

A) goal-congruence approach 
B) balanced scorecard approach 
C) financial report scorecard approach 
D) investment success approach 
A) goal-congruence approach 
B) balanced scorecard approach 
C) financial report scorecard approach 
D) investment success approach

Required rate of return multiplied by the investment is the imputed cost of the investment.

Return on investment can be increased by:

An interactive control system is a formal information system that managers use to focus organization attention and learning on key strategic issues.

Springfield Corporation, whose tax rate is 40%, has two sources of funds: long-term debt with a market value of $8,000,000 and an interest rate of 8%, and equity capital with a market value of $12,000,000 and a cost of equity of 12%. What is Springfield's weighted average cost of capital (WACC)?

The cost today of purchasing an asset identical to the one currently held is called a(n):

Examples of "cooking the books" are understated assets and overstated liabilities.

Does operating income best measure a subunit's financial performance? This question is considered part of which step in designing an accounting-based performance measure?

Answer the following questions using the information below: The Cybertronics Corporation reported the following information for its Cyclotron Division: Income is defined as operating income. -What is the Cyclotron Division's investment turnover ratio?

Provide the missing data for the following situations:

Evaluating an executive's performance using the annual return on investment would sharpen an executive's long-run focus.

Imputed costs are costs recognized in particular situations that are NOT usually recognized by accrual accounting procedures.

A report that measures financial and nonfinancial performance measures for various organization units in a single report is called a(n):

Relative performance evaluation:

The only criticism of team-based compensation is that the incentives for individual employees to excel are diminished, harming overall performance.

Customer-satisfaction measures are an example of the:

The Accountants Role in the Organization

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, Direct-Cost Variances, and Management Control

Flexible Budgets, Overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Pricing Decisions and Cost Management

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, Common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, Rework, and Scrap

Balanced Scorecard: Quality, Time, and the Theory of Constraints

Inventory Management, Just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing, and Multinational Considerations

Filters

Exam 23: Performance Measurement, Compensation, and Multinational Considerations

Required rate of return multiplied by the investment is the imputed cost of the investment.

Return on investment can be increased by:

An interactive control system is a formal information system that managers use to focus organization attention and learning on key strategic issues.

Springfield Corporation, whose tax rate is 40%, has two sources of funds: long-term debt with a market value of $8,000,000 and an interest rate of 8%, and equity capital with a market value of $12,000,000 and a cost of equity of 12%. What is Springfield's weighted average cost of capital (WACC)?

The cost today of purchasing an asset identical to the one currently held is called a(n):

Examples of "cooking the books" are understated assets and overstated liabilities.

Does operating income best measure a subunit's financial performance? This question is considered part of which step in designing an accounting-based performance measure?

Answer the following questions using the information below: The Cybertronics Corporation reported the following information for its Cyclotron Division: Income is defined as operating income. -What is the Cyclotron Division's investment turnover ratio?

Provide the missing data for the following situations:

Evaluating an executive's performance using the annual return on investment would sharpen an executive's long-run focus.

Imputed costs are costs recognized in particular situations that are NOT usually recognized by accrual accounting procedures.

A report that measures financial and nonfinancial performance measures for various organization units in a single report is called a(n):

Relative performance evaluation:

The only criticism of team-based compensation is that the incentives for individual employees to excel are diminished, harming overall performance.

Customer-satisfaction measures are an example of the:

The Accountants Role in the Organization

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, Direct-Cost Variances, and Management Control

Flexible Budgets, Overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Pricing Decisions and Cost Management

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, Common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, Rework, and Scrap

Balanced Scorecard: Quality, Time, and the Theory of Constraints

Inventory Management, Just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing, and Multinational Considerations

Filters