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: \[\begin{array} { l r r r } & \text { Alpha Division } & \text { Beta Division } & \text { Gamma Division } \\ \text { Sales } & \$ 2500000 & ( \mathrm { a } ) & \$ 1150000 \\ \text { Net operating profit } & \$ 1500000 & \$ 650000 & \$ 575000 \\ \text { Operating assets } & ( \mathrm { b } ) & ( \mathrm { c } ) & \$ 766667 \\ \text { Return on investment } & 0.25 & 0.15 & \text { (d) } \\ \text { Return on sales } & ( \mathrm { e } ) & 0.10 & 0.5 \\ \text { Investment turnover } & ( \mathrm { f } ) & ( \mathrm { g } ) & 1.5 \end{array}\] -What is the value of the operating assets belonging to the Beta Division?

A) $4 333 333 B) $5 952 380 C) $6 500 000 D) $7 151 800 A) $4 333 333 B) $5 952 380 C) $6 500 000 D) $7 151 800

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: \[\begin{array} { l r r r } & \text { Alpha Division } & \text { Beta Division } & \text { Gamma Division } \\ \text { Sales } & \$ 2500000 & ( \mathrm { a } ) & \$ 1150000 \\ \text { Net operating profit } & \$ 1500000 & \$ 650000 & \$ 575000 \\ \text { Operating assets } & ( \mathrm { b } ) & ( \mathrm { c } ) & \$ 766667 \\ \text { Return on investment } & 0.25 & 0.15 & \text { (d) } \\ \text { Return on sales } & ( \mathrm { e } ) & 0.10 & 0.5 \\ \text { Investment turnover } & ( \mathrm { f } ) & ( \mathrm { g } ) & 1.5 \end{array}\] -What is Beta Division's investment turnover?

A) 0.15 B) 1.5 C) 2.4 D) 0.67 A) 0.15 B) 1.5 C) 2.4 D) 0.67

Illawarra Pizzas Corporation uses the investment centre concept for the pizza bars that it manages in the city.Illawarra has a 30% required rate of return on investment in order for a branch to be viable.Select operating data for three of its branches for 2017 are as follows: \[\begin{array} { | l | r | r | r | } \hline & \text { Acacia Street } & \text { Wattle Street } & \text { Gum Street } \\ \hline \text { Revenue } & \$ 4250000 & \$ 3375000 & \$ 3750000 \\ \hline \text { Operating assets } & 1750000 & 1750000 & 1250000 \\ \hline \text { Net operating profit } & 480000 & 575000 & 455000 \\ \hline \end{array}\] Required: a.Compute the return on investment for each. b.Which branch manager is doing best based only on ROI? Why? c.Are any of the pizza bars in danger of being closed due to lack of performance? d.What other factors should be included when evaluating the managers? _____________________________________________________________________________________________ _____________________________________________________________________________________________

a. b.Gum Street was doing the best becau

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 were the sales for the Boat Division?

A) $7 200 000 B) $9 000 000 C) $11 750 000 D) $7 500 000 A) $7 200 000 B) $9 000 000 C) $11 750 000 D) $7 500 000

Answer the following questions using the information below: The Echuca Electrical Corporation reported the following information for its Coaxial Cables Division: \[\begin{array} { l r } \text { Revenues } & \$ 1000000 \\ \text { Operating costs } & 600000 \\ \text { Taxable income } & 200000 \\ \text { Operating assets } & 500000 \end{array}\] Profit is defined as operating profit. -What is the Coaxial Cables Division's investment turnover ratio?

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

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. -Which of the following is the correct formula for return on sales?

A) Investment/Profit B) Profit/Revenue C) Revenue/Investment D) Profit/Investment A) Investment/Profit B) Profit/Revenue C) Revenue/Investment D) Profit/Investment

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. -What are the respective residual incomes for the North and South Divisions?

A) $30 000 and $50 000 B) $50 000 and a negative $150 000 C) $150 000 and $50 000 D) $150 000 and $30 000 A) $30 000 and $50 000 B) $50 000 and a negative $150 000 C) $150 000 and $50 000 D) $150 000 and $30 000

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 -Investment turnover is calculated by dividing investments by revenues.

(True/False)

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Question 61

Capital Investments has three divisions.Each division's required rate of return is 15%.Planned operating results for 2019 are as follows: Division Operating profit Investment \ 15,000,000 \ 100,000,000 \ 25,000,000 \ 125,000,000 \ 11,000,000 \ 50,000,000 The company is planning an expansion,which will require each division to increase its investments by $25 000 000 and its profit by $4 500 000. Required: a.Compute the current ROI for each division. b.Compute the current residual income for each division. c.Rank the divisions according to their current ROIs and residual incomes. d.Determine the effects after adding the new project to each division's ROI and residual income. e.Assuming the managers are evaluated on either ROI or residual income,which divisions are pleased with the expansion and which ones are unhappy? _ _

(Essay)

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Question 62

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: Alpha Division Beta Division Gamma Division Sales \ 2500000 () \ 1150000 Net operating profit \ 1500000 \ 650000 \ 575000 Operating assets () () \ 766667 Return on investment 0.25 0.15 (d) Return on sales () 0.10 0.5 Investment turnover () () 1.5 -What is the value of the operating assets belonging to the Beta Division?

(Multiple Choice)

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Question 63

Timing of feedback depends on:

(Multiple Choice)

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Question 64

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: Alpha Division Beta Division Gamma Division Sales \ 2500000 () \ 1150000 Net operating profit \ 1500000 \ 650000 \ 575000 Operating assets () () \ 766667 Return on investment 0.25 0.15 (d) Return on sales () 0.10 0.5 Investment turnover () () 1.5 -What is Beta Division's investment turnover?

(Multiple Choice)

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Question 65

The 'balanced scorecard' in most organisations is broken down into the following categories: financial perspective,customer perspective,internal business-process perspective,and productivity perspective.

(True/False)

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Question 66

A firm will see a difference in the return on investment result depending on whether they use historical cost or current cost valuation methods for the assets.

(True/False)

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Question 67

Illawarra Pizzas Corporation uses the investment centre concept for the pizza bars that it manages in the city.Illawarra has a 30% required rate of return on investment in order for a branch to be viable.Select operating data for three of its branches for 2017 are as follows: Acacia Street Wattle Street Gum Street Revenue \ 4250000 \ 3375000 \ 3750000 Operating assets 1750000 1750000 1250000 Net operating profit 480000 575000 455000 Required: a.Compute the return on investment for each. b.Which branch manager is doing best based only on ROI? Why? c.Are any of the pizza bars in danger of being closed due to lack of performance? d.What other factors should be included when evaluating the managers? _ _

(Essay)

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Question 68

________ 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.

(Multiple Choice)

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Question 69

When using the historical cost of assets for calculation of return on investment,is it better to use the gross book value of the assets or the net book value of the assets? Discuss. _ _

(Essay)

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Question 70

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 were the sales for the Boat Division?

(Multiple Choice)

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Question 71

Answer the following questions using the information below: The Echuca Electrical Corporation reported the following information for its Coaxial Cables Division: Revenues \ 1000000 Operating costs 600000 Taxable income 200000 Operating assets 500000 Profit is defined as operating profit. -What is the Coaxial Cables Division's investment turnover ratio?

(Multiple Choice)

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Question 72

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. -Which of the following is the correct formula for return on sales?

(Multiple Choice)

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Question 73

Team incentives encourage cooperation by:

(Multiple Choice)

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Question 74

During the past 12 months,the Platypus Corporation had a net profit of $50 000.What is the amount of the investment if the return on investment is 20%?

(Multiple Choice)

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Question 75

Relative performance evaluation:

(Multiple Choice)

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Question 76

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. -What are the respective residual incomes for the North and South Divisions?

(Multiple Choice)

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Question 77

Many common performance measures,such as customer satisfaction,rely on internal financial accounting information.

(True/False)

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Question 78

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 Value Added (EVA)calculation,the appropriate measure of a division's profit would be that division's after tax operating profit.

(True/False)

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Question 79

Answer the following questions using the information below: Waldorf Company has two sources of funds: long-term debt with a market and book value of $10 million issued at an interest rate of 12%,and equity capital that has a market value of $8 million (book value of $4 million).Waldorf Company has profit centres in the following locations with the following operating profits,total assets,and current liabilities.The cost of equity capital is 12%,while the tax rate is 25%. Operating Profit Assets Current Liabilities Mildura \ 960000 \ 4000000 \ 200000 Townsville \ 1200000 \ 8000000 \ 600000 Broome \ 2040000 \ 12000000 \ 1200000 -What is the EVA for Broome?

(Multiple Choice)

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Question 80

Timing of feedback depends on:

The 'balanced scorecard' in most organisations is broken down into the following categories: financial perspective,customer perspective,internal business-process perspective,and productivity perspective.

A firm will see a difference in the return on investment result depending on whether they use historical cost or current cost valuation methods for the assets.

________ 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.

When using the historical cost of assets for calculation of return on investment,is it better to use the gross book value of the assets or the net book value of the assets? Discuss. _ _

Team incentives encourage cooperation by:

During the past 12 months,the Platypus Corporation had a net profit of $50 000.What is the amount of the investment if the return on investment is 20%?

Relative performance evaluation:

Many common performance measures,such as customer satisfaction,rely on internal financial accounting information.

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

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