Question 1

A part of a control system that attempts to focus an organization's attention and learning on key strategic issues is known as a(n)

Accepted Answer

A)  diagnostic control system. 
B)  boundary system. 
C)  belief system. 
D)  interactive control system. 
E)  isolated system. 
A)  diagnostic control system. 
B)  boundary system. 
C)  belief system. 
D)  interactive control system. 
E)  isolated system.

Question 2

Stratton Industries has two divisions. These divisions reported the following results for the year just ended:
   Required.
a. Calculate the ROI for each division. Which division would you consider to be the most successful? Why?
b. Now assume that the company requires a 14% minimum rate of return. Calculate the residual income for each division. Which division would you consider to be the most successful? Why?

Accepted Answer

a.
ROI Division 1 = $840,000/$4,200,000

Question 3

Answer the following question(s) using the information below:
Carriage Ltd. manufactures baby 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 the year just ended:
   The company is currently using a 12% required rate of return.
-What are Wheels's and Assembly's residual incomes based on current values, respectively?

Accepted Answer

A)  $70,000; $28,500 
B)  $94,000; $28,500 
C)  $94,000; $70,000 
D)  $28,500; $94,000 
E)  $61,800; $70,000 
A)  $70,000; $28,500 
B)  $94,000; $28,500 
C)  $94,000; $70,000 
D)  $28,500; $94,000 
E)  $61,800; $70,000

Question 4

Using gross book value as an investment base will result in a lower ROI than using net book value as an investment base.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is the least typical balanced scorecard measure?

Accepted Answer

A)  customer satisfaction measures. 
B)  direct materials measures. 
C)  innovation measures. 
D)  time measures. 
E)  profitability measures. 
A)  customer satisfaction measures. 
B)  direct materials measures. 
C)  innovation measures. 
D)  time measures. 
E)  profitability measures.

Question 6

Team incentives encourage cooperation by

Accepted Answer

A)  forcing people to work together on difficult tasks. 
B)  changing management style. 
C)  letting individuals help one another as they strive toward a common goal. 
D)  rewarding all teams members by the same amount. 
E)  rewarding team members individually. 
A)  forcing people to work together on difficult tasks. 
B)  changing management style. 
C)  letting individuals help one another as they strive toward a common goal. 
D)  rewarding all teams members by the same amount. 
E)  rewarding team members individually.

Question 7

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 8

Well-designed compensation plans for executives focus on risk and long-term incentives.

Accepted Answer

A) True 
 B)False

Question 9

Measurement of one group's performance against the best possible level of performance exhibited by another group, either inside or outside the organization, is known as

Accepted Answer

A)  teamwork analysis. 
B)  performance-variation analysis. 
C)  comparative analysis. 
D)  benchmarking. 
E)  competition analysis. 
A)  teamwork analysis. 
B)  performance-variation analysis. 
C)  comparative analysis. 
D)  benchmarking. 
E)  competition analysis.

Question 10

Answer the following question(s) using the information below:
Coldbrook Company has two sources of funds: long-term debt with a market and book value of $15 million issued at an interest rate of 10%, and equity capital that has a market value of $9 million (book value of $5 million). Coldbrook Company has profit centres in the following locations with the following operating incomes, total assets, and current liabilities. The cost of equity capital is 15%, while the tax rate is 30%.
  
-Novella Ltd. reported a return on investment of 16%, an asset turnover of 6, and income of $190,000. On the basis of this information, the company's invested capital was:

Accepted Answer

A)  $1,187,500 
B)  $7,125,000 
C)  $1,140,000 
D)  $197,917 
E)  $182,400 
A)  $1,187,500 
B)  $7,125,000 
C)  $1,140,000 
D)  $197,917 
E)  $182,400

Question 11

ROI, residual income, and economic value-added, can be used as performance measures.

Accepted Answer

A) True 
 B)False

Question 12

Use the information below to answer the following question(s).
The top management at Munchie Company, a manufacturer of computer games, is attempting to recover from a flood, which destroyed some of its 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 
E)  0.80 
A)  0.25 
B)  0.42 
C)  0.60 
D)  0.75 
E)  0.80

Question 13

Use the information below to answer the following question(s).
Brandorf Company has two sources of funds: long term debt with a market and book value of $9 million issued at an interest rate of 10 percent; and, equity capital that has a market value of $6 million (book value of $2 million). The cost of equity capital is 5 percent, while the tax rate is 30 percent. Brandorf Company has profit centres in the following locations with the following data:
  
-A company's weighted-average cost of capital [WACC] was 9.6% last year. The company has $6,000,000 of bonds payable (its only debt) with a 9.25% coupon, and has $9,000,000 in equity capital. The tax rate is 35%. What is the company's cost of debt funding? (two decimal places only)

Accepted Answer

A)  6.01% 
B)  6.25% 
C)  6.50% 
D)  9.25% 
E)  12.00% 
A)  6.01% 
B)  6.25% 
C)  6.50% 
D)  9.25% 
E)  12.00%

Question 14

Randall Ltd. reported the following results for its two divisions:
     Required:
a. Using the DuPont method, calculate the return on investment for each division for each year.
b. Comment on the performance of each division.

Accepted Answer

a.
Division A:
2011: $19,240/$260,000 ∗

Question 15

Miller Medical Services provided the following information for its last year's operations in the Hospital Bed Division.   What is the Hospital Bed Division's asset turnover?

Accepted Answer

A)  0.00 
B)  0.53 
C)  0.92 
D)  1.33 
E)  2.50 
A)  0.00 
B)  0.53 
C)  0.92 
D)  1.33 
E)  2.50

Question 16

Use the information below to answer the following question(s).
Thacker Company has two regional offices. The information for each is as follows:
  
-What is the Edmonton Division's return on investment?

Accepted Answer

A)  0.21 
B)  0.27 
C)  0.48 
D)  2.06 
E)  0.25 
A)  0.21 
B)  0.27 
C)  0.48 
D)  2.06 
E)  0.25

Question 17

One way to achieve greater comparability of historical-cost based ROIs is to restate performance in dollars.

Accepted Answer

A) True 
 B)False

Question 18

Imputed costs are costs recognized in particular situations that are not regularly recognized by accrual accounting procedures.

Accepted Answer

A) True 
 B)False

Question 19

Some companies present financial and non-financial performance measures for various organization units in a single report called the financial performance scorecard.

Accepted Answer

A) True 
 B)False

Question 20

The executive vice president of Wicker Pen Company wants to establish an accounting-based performance measurement system for the company's new plant. The company has an accounting information system sufficient to support a fairly sophisticated performance measurement system. The new plant is going to be considered an investment centre since its products will be marketed differently from others the company currently sells and it has no internal dealings with other plants within the company.
Required:
What are some of the key steps that should be undertaken in the establishment of a performance measurement system based on the Performance Measures Decision Process Model?

Accepted Answer

Key steps include:
1. Identify and align

A part of a control system that attempts to focus an organization's attention and learning on key strategic issues is known as a(n)

Using gross book value as an investment base will result in a lower ROI than using net book value as an investment base.

Which of the following is the least typical balanced scorecard measure?

Team incentives encourage cooperation by

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

Well-designed compensation plans for executives focus on risk and long-term incentives.

Measurement of one group's performance against the best possible level of performance exhibited by another group, either inside or outside the organization, is known as

ROI, residual income, and economic value-added, can be used as performance measures.

Randall Ltd. reported the following results for its two divisions: Required: a. Using the DuPont method, calculate the return on investment for each division for each year. b. Comment on the performance of each division.

Miller Medical Services provided the following information for its last year's operations in the Hospital Bed Division. What is the Hospital Bed Division's asset turnover?

Use the information below to answer the following question(s). Thacker Company has two regional offices. The information for each is as follows: -What is the Edmonton Division's return on investment?

One way to achieve greater comparability of historical-cost based ROIs is to restate performance in dollars.

Imputed costs are costs recognized in particular situations that are not regularly recognized by accrual accounting procedures.

Some companies present financial and non-financial performance measures for various organization units in a single report called the financial performance scorecard.

The Accountants Vital Role in Decision Making

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Management

Master Budget and Responsibility Accounting

Flexible Budgets, Variances, and Management Control: I

Flexible Budgets, Variances, and Management Control: II

Income Effects of Denominator Level on Inventory Valuation

Quantitative Analyses of Cost Functions

Decision Making and Relevant Information

Pricing Decisions, Product Profitability Decisions, and Cost Management

Strategy, Balanced Scorecard, and Profitability Analysis

Period Cost Allocation

Cost Allocation: Joint Products and Byproducts

Revenue and Customer Profitability Analysis

Process Costing

Spoilage, Rework, and Scrap

Cost Management: Quality, Time, and the Theory of Constraints

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Capital Budgeting: a Closer Look

Transfer Pricing and Multinational Management Control Systems

Filters

Exam 24: Multinational Performance Measurement and Compensation

A part of a control system that attempts to focus an organization's attention and learning on key strategic issues is known as a(n)

Using gross book value as an investment base will result in a lower ROI than using net book value as an investment base.

Which of the following is the least typical balanced scorecard measure?

Team incentives encourage cooperation by

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

Well-designed compensation plans for executives focus on risk and long-term incentives.

Measurement of one group's performance against the best possible level of performance exhibited by another group, either inside or outside the organization, is known as

ROI, residual income, and economic value-added, can be used as performance measures.

Randall Ltd. reported the following results for its two divisions: Required: a. Using the DuPont method, calculate the return on investment for each division for each year. b. Comment on the performance of each division.

Miller Medical Services provided the following information for its last year's operations in the Hospital Bed Division. What is the Hospital Bed Division's asset turnover?

Use the information below to answer the following question(s). Thacker Company has two regional offices. The information for each is as follows: -What is the Edmonton Division's return on investment?

One way to achieve greater comparability of historical-cost based ROIs is to restate performance in dollars.

Imputed costs are costs recognized in particular situations that are not regularly recognized by accrual accounting procedures.

Some companies present financial and non-financial performance measures for various organization units in a single report called the financial performance scorecard.

The Accountants Vital Role in Decision Making

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Management

Master Budget and Responsibility Accounting

Flexible Budgets, Variances, and Management Control: I

Flexible Budgets, Variances, and Management Control: II

Income Effects of Denominator Level on Inventory Valuation

Quantitative Analyses of Cost Functions

Decision Making and Relevant Information

Pricing Decisions, Product Profitability Decisions, and Cost Management

Strategy, Balanced Scorecard, and Profitability Analysis

Period Cost Allocation

Cost Allocation: Joint Products and Byproducts

Revenue and Customer Profitability Analysis

Process Costing

Spoilage, Rework, and Scrap

Cost Management: Quality, Time, and the Theory of Constraints

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Capital Budgeting: a Closer Look

Transfer Pricing and Multinational Management Control Systems

Filters