Answer the following questions using the information below: The top management at Watersport Company, a manufacturer of water sport 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: $\begin{array} { l r r r r } & \text { Jetski Division } & \text { Boat Division } & \text { Surfboard Division } \\ \text { Sales } & \$ 7500000 & ( \mathrm { a } ) & \$ 1800000 \\ \text { Net operating profit } & \$ 750000 & \$ 1080000 & \$ 450000 \\ \text { Operating assets } & ( \mathrm { b } ) & ( \mathrm { c } ) & \$ 1500000 \\ \text { Retum on investment } & 0.20 & 0.10 & ( \mathrm {~d} ) \\ \text { Retum on sales } & ( \mathrm { e } ) & 0.12 & 0.25 \\ \text { Investment turnover } & \text { (f) } & ( \mathrm { g } ) & 1.2 \end{array}$ -What is the Boat Division's investment turnover?

A) 1.2 B) 0.833 C) 0.50 D) 1.5 A) 1.2 B) 0.833 C) 0.50 D) 1.5

Thacker Company has two regional offices.The data for each follows: \[\begin{array} { l r r } & \text { Sydney } & \text { Melbourne } \\ \text { Revenues } & \$ 580000 & \$ 596000 \\ \text { Operating assets } & 4800000 & 9000000 \\ \text { Net operating profit } & 2016000 & 4860000 \end{array}\] What is the return on investment for the Melbourne Division?

A) 0.42 B) 0.54 C) 0.96 D) 4.12 A) 0.42 B) 0.54 C) 0.96 D) 4.12

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 2017 reported the following results: \[\begin{array} { l r r } & \text { North } & \text { South } \\ \text { Sales } & \$ 3000000 & \$ 2500000 \\ \text { Operating profit } & 750000 & 550000 \\ \text { Taxable income } & 650000 & 375000 \\ \text { Investment } & 6000000 & 5000000 \end{array}\] The company's desired rate of return is 10%.Profit is defined as operating profit. -Another name for 'return-on-investment' is the:

A) residual income. B) accounting rate of return. C) internal rate of return. D) net present value. A) residual income. B) accounting rate of return. C) internal rate of return. D) net present value.

Provide the missing data for the following situations: \[\begin{array} { | l | r | r | r | } \hline & \text { River Division } & \text { Stream Division } & \text { Creek Division } \\ \hline \text { Sales } & \$ ? & \$ 5000000 & \$ ? \\ \hline \text { Net operating profit } & \$ 100000 & \$ 200000 & \$ 144000 \\ \hline \text { Operating assets } & \$ ? & \$ ? & \$ 800000 \\ \hline \text { Return on investment } & 0.16 & 0.10 & ? \\ \hline \text { Return on sales } & 0.04 & ? & 0.12 \\ \hline \text { Investment turnover } & ? & ? & 1.5 \\ \hline \end{array}\]

The answer of Provide the missing data for the following...

Answer the following questions using the information below: The top management at Groundscare 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: \[\begin{array} { l r r r } & \text { Tractor Division } & \text { Tiller Division } & \text { Digger Division } \\ \text { Sales } & \$ 5000000 & ( \mathrm { a } ) & \$ 1200000 \\ \text { Net operating profit } & \$ 500000 & \$ 720000 & \$ 300000 \\ \text { Operating assets } & ( \mathrm { b } ) & ( \mathrm { c } ) & \$ 1000000 \\ \text { Return on investment } & 0.20 & 0.10 & ( \mathrm {~d} ) \\ \text { Return on sales } & ( \mathrm { e } ) & 0.12 & 0.25 \\ \text { Investment turnover } & ( \mathrm { f } ) & ( \mathrm { g } ) & 1.2 \end{array}\] -What is the Digger Division's return on investment?

A) 0.25 B) 0.30 C) 0.60 D) 0.45 A) 0.25 B) 0.30 C) 0.60 D) 0.45

Answer the following questions using the information below: The top management at Watersport Company, a manufacturer of water sport 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: $\begin{array} { l r r r r } & \text { Jetski Division } & \text { Boat Division } & \text { Surfboard Division } \\ \text { Sales } & \$ 7500000 & ( \mathrm { a } ) & \$ 1800000 \\ \text { Net operating profit } & \$ 750000 & \$ 1080000 & \$ 450000 \\ \text { Operating assets } & ( \mathrm { b } ) & ( \mathrm { c } ) & \$ 1500000 \\ \text { Retum on investment } & 0.20 & 0.10 & ( \mathrm {~d} ) \\ \text { Retum on sales } & ( \mathrm { e } ) & 0.12 & 0.25 \\ \text { Investment turnover } & \text { (f) } & ( \mathrm { g } ) & 1.2 \end{array}$ -What is the Jetski Division's investment turnover?

A) .50 B) 2.5 C) 2.0 D) 1.0 A) .50 B) 2.5 C) 2.0 D) 1.0

Answer the following questions using the information below: The top management at Watersport Company, a manufacturer of water sport 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: $\begin{array} { l r r r r } & \text { Jetski Division } & \text { Boat Division } & \text { Surfboard Division } \\ \text { Sales } & \$ 7500000 & ( \mathrm { a } ) & \$ 1800000 \\ \text { Net operating profit } & \$ 750000 & \$ 1080000 & \$ 450000 \\ \text { Operating assets } & ( \mathrm { b } ) & ( \mathrm { c } ) & \$ 1500000 \\ \text { Retum on investment } & 0.20 & 0.10 & ( \mathrm {~d} ) \\ \text { Retum on sales } & ( \mathrm { e } ) & 0.12 & 0.25 \\ \text { Investment turnover } & \text { (f) } & ( \mathrm { g } ) & 1.2 \end{array}$ -What is the value of the operating assets belonging to the Boat Division?

A) $7 500 000 B) $11 650 000 C) $10 800 000 D) $9 000 000 A) $7 500 000 B) $11 650 000 C) $10 800 000 D) $9 000 000

Tassietiger Corporation had the following information for 2017: \[\begin{array} { l r } \text { Revenue } & \$ 900000 \\ \text { Operating expenses } & 670000 \\ \text { Total assets } & 1150000 \end{array}\] What is the return on investment?

A) 10% B) 20% C) 25% D) 78.2% A) 10% B) 20% C) 25% D) 78.2%

Exam 20: Performance Measurement, Compensation and Multinational Considerations

Answer the following questions using the information below: The top management at Watersport Company, a manufacturer of water sport 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: Jetski Division Boat Division Surfboard Division Sales \ 7500000 () \ 1800000 Net operating profit \ 750000 \ 1080000 \ 450000 Operating assets () () \ 1500000 Retum on investment 0.20 0.10 () Retum on sales () 0.12 0.25 Investment turnover (f) () 1.2 -What is the Boat Division's investment turnover?

(Multiple Choice)

4.8/5

(36)

Question 41

Answer the following questions 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 profits,total assets,and current liabilities.The cost of equity capital is 15%,while the tax rate is 30%. Operating Profit Assets Current Liabilities Darwin \ 815000 \ 3750000 \ 800000 Hobart \ 1100000 \ 5000000 \ 1200000 Newcastle \ 2450000 \ 9250000 \ 3180000 -What is the EVA for Darwin?

(Multiple Choice)

4.8/5

(37)

Question 42

'Moral hazard' describes contexts in which an employee prefers to exert less effort than the effort that the owner wants because the employee's effort cannot be accurately monitored and enforced.

(True/False)

4.9/5

(34)

Question 43

A problem with using residual income as a performance measure is that a corporation with a:

(Multiple Choice)

4.9/5

(33)

Question 44

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

(Multiple Choice)

4.7/5

(31)

Question 45

Thacker Company has two regional offices.The data for each follows: Sydney Melbourne Revenues \ 580000 \ 596000 Operating assets 4800000 9000000 Net operating profit 2016000 4860000 What is the return on investment for the Melbourne Division?

(Multiple Choice)

4.9/5

(37)

Question 46

Answer the following questions using the information below: Echidna Company has two sources of funds: long-term debt with a market and book value of $30 million issued at an interest rate of 10%,and equity capital that has a market value of $18 million (book value of $5 million).Echidna Company has profit centres in the following locations with the following operating profits,total assets,and current liabilities.The cost of equity capital is 15%,while the tax rate is 30%. Operating Profit Assets Current Liabilities Mt Iron \ 1630000 \ 5625000 \ 1600000 Mt Pilbara \ 2200000 \ 7500000 \ 2400000 Broken Hill \ 4900000 \ 13875000 \ 6360000 -In an Economic Added Value (EVA)calculation,the corporate charge for a division's investment is based entirely on the after-tax interest rate on the firm's debt.

(True/False)

4.9/5

(40)

Question 47

Return on investment can be increased by:

(Multiple Choice)

4.7/5

(43)

Question 48

If a company is a multinational company with operations in several different countries,one way to achieve comparability of historical-cost based ROIs for facilities in different countries is to:

(Multiple Choice)

4.9/5

(37)

Question 49

Some companies present financial and non-financial performance measures for their subunits in a single report called the 'balanced scorecard'.

(True/False)

4.7/5

(37)

Question 50

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 2017 reported the following results: North South Sales \ 3000000 \ 2500000 Operating profit 750000 550000 Taxable income 650000 375000 Investment 6000000 5000000 The company's desired rate of return is 10%.Profit is defined as operating profit. -Another name for 'return-on-investment' is the:

(Multiple Choice)

4.9/5

(36)

Question 51

Residual income is a better evaluation method than return on investment because it has a lower required rate of return for the company projects than return on investment does.

(True/False)

4.7/5

(38)

Question 52

Another term for benchmarking is a 'relative performance evaluation'.

(True/False)

4.8/5

(39)

Question 53

Provide the missing data for the following situations: River Division Stream Division Creek Division Sales \ ? \ 5000000 \ ? Net operating profit \ 100000 \ 200000 \ 144000 Operating assets \ ? \ ? \ 800000 Return on investment 0.16 0.10 ? Return on sales 0.04 ? 0.12 Investment turnover ? ? 1.5

(Essay)

4.9/5

(24)

Question 54

Answer the following questions using the information below: The top management at Groundscare 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: Tractor Division Tiller Division Digger Division Sales \ 5000000 () \ 1200000 Net operating profit \ 500000 \ 720000 \ 300000 Operating assets () () \ 1000000 Return on investment 0.20 0.10 () Return on sales () 0.12 0.25 Investment turnover () () 1.2 -What is the Digger Division's return on investment?

(Multiple Choice)

4.8/5

(33)

Question 55

R&D Storage is a small,but diversified,moving and storage company.In recent years,its profit has declined to unacceptable levels.To change the direction of the company,the board of directors hired a new chief executive officer.She is currently considering three alternative ways to reward division managers for performance.They are: 1.Give each manager a competitive salary with no bonus for performance. 2.Give each manager a base salary with the largest portion being a bonus based on performance,ROI being the yardstick. 3.Give each manager a base salary with a bonus based on comparative performance with the other divisions. Required: Evaluate each of the ideas,giving strengths and weaknesses. _ _

(Essay)

4.8/5

(41)

Question 56

Answer the following questions using the information below: The top management at Watersport Company, a manufacturer of water sport 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: Jetski Division Boat Division Surfboard Division Sales \ 7500000 () \ 1800000 Net operating profit \ 750000 \ 1080000 \ 450000 Operating assets () () \ 1500000 Retum on investment 0.20 0.10 () Retum on sales () 0.12 0.25 Investment turnover (f) () 1.2 -What is the Jetski Division's investment turnover?

(Multiple Choice)

4.9/5

(34)

Question 57

Answer the following questions using the information below: The top management at Watersport Company, a manufacturer of water sport 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: Jetski Division Boat Division Surfboard Division Sales \ 7500000 () \ 1800000 Net operating profit \ 750000 \ 1080000 \ 450000 Operating assets () () \ 1500000 Retum on investment 0.20 0.10 () Retum on sales () 0.12 0.25 Investment turnover (f) () 1.2 -What is the value of the operating assets belonging to the Boat Division?

(Multiple Choice)

4.8/5

(38)

Question 58

Tassietiger Corporation had the following information for 2017: Revenue \ 900000 Operating expenses 670000 Total assets 1150000 What is the return on investment?

(Multiple Choice)

4.9/5

(40)

Question 59

'Return on investment' is also called the 'imputed cost' of the investment.

(True/False)

4.8/5

(26)

Question 60

'Moral hazard' describes contexts in which an employee prefers to exert less effort than the effort that the owner wants because the employee's effort cannot be accurately monitored and enforced.

A problem with using residual income as a performance measure is that a corporation with a:

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

Thacker Company has two regional offices.The data for each follows: Sydney Melbourne Revenues \ 580000 \ 596000 Operating assets 4800000 9000000 Net operating profit 2016000 4860000 What is the return on investment for the Melbourne Division?

Return on investment can be increased by:

If a company is a multinational company with operations in several different countries,one way to achieve comparability of historical-cost based ROIs for facilities in different countries is to:

Some companies present financial and non-financial performance measures for their subunits in a single report called the 'balanced scorecard'.

Residual income is a better evaluation method than return on investment because it has a lower required rate of return for the company projects than return on investment does.

Another term for benchmarking is a 'relative performance evaluation'.

Provide the missing data for the following situations: River Division Stream Division Creek Division Sales \ ? \ 5000000 \ ? Net operating profit \ 100000 \ 200000 \ 144000 Operating assets \ ? \ ? \ 800000 Return on investment 0.16 0.10 ? Return on sales 0.04 ? 0.12 Investment turnover ? ? 1.5

Tassietiger Corporation had the following information for 2017: Revenue \ 900000 Operating expenses 670000 Total assets 1150000 What is the return on investment?

'Return on investment' is also called the 'imputed cost' of the investment.

Management Accounting in Context

Different Costs for Different Purposes

Determining How Costs Behave

Costvolumeprofit Analysis

Estimating the Cost of Producing Services

Estimating the Costs of Products and Inventory

Target Costing, Managing Activities and Managing Capacity

Activity-Based Management and Activity-Based Costing

Pricing and Customer Profitability

Decision Making and Relevant Information

Budgeting, Management Control and Responsibility Accounting

Flexible Budgets, Direct Cost Variances and Management Control

Flexible Budgets, Overhead Cost Variances and Management Control

Allocation of Support-Department Costs, Common Costs and Revenues

Strategy Formation, Strategic Control and the Balanced Scorecard

Quality, Time and the Balanced Scorecard

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

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing and Multinational Considerations

Measuring and Reporting Sustainability

Filters