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 Surfboard Division's return on investment?

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

Consolidated Supply Corporation uses the investment centre concept for the service stations that it manages in the city.Consolidated has a 15% required rate of return on investment in order for a branch station to be viable.Select operating data for three of its stations for 2017 are as follows: \[\begin{array} { | l | r | r | r | } \hline &{ \text { Pine Street } } & \text { Oak Street } & { \text { GumStreet } } \\ \hline \text { Revenue } & \$ 8500000 & \$ 6750000 & \$ 7500000 \\ \hline \text { Operating assets } & 3500000 & 3500000 & 2500000 \\ \hline \text { Net operating profit } & 480000 & 575000 & 455000 \\ \hline \end{array}\] Required: a.Compute the return on investment for each station. b.Which service station manager is doing best based only on ROI? Why? c.Are any of the service stations 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 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 Tiller Division's investment turnover?

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

Frenchs Forest Publishing Company has three divisions that operate autonomously.Their results for 2017 are as follows: \[\begin{array} { | l | r | r | r | } \hline & { \text { Academic } } & { \text { Fiction } } & { \text { Non-fiction } } \\ \hline \text { Sales } & \$ 15000000 & \$ 17000000 & \$ 20000000 \\ \hline \text { Contribution margin } & 1440000 & 1700000 & 3500000 \\ \hline \text { Operating profit } & 1500000 & 1200000 & 2120000 \\ \hline \text { Investment base } & 7000000 & 5000000 & 14000000 \\ \hline \end{array}\] The company's desired rate of return is 20%. Required: a.Calculate each division's ROI. b.Calculate each division's residual income. c.Rank each division by both ROI and residual income. d.Which division had the best performance in 2017? Why? _____________________________________________________________________________________________ _____________________________________________________________________________________________

a.\[ \begin{array} { l l l } \text { Ac

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 Jetski Division?

A) $2 250 000 B) $1 750 000 C) $2 000 000 D) $3 750 000 A) $2 250 000 B) $1 750 000 C) $2 000 000 D) $3 750 000

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 division has the best return on investment and which division has the best residual income figure,respectively?

A) North,North B) South,South C) South,North D) North,South A) North,North B) South,South C) South,North D) North,South

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 Surfboard Division's return on investment?

(Multiple Choice)

4.7/5

(34)

Question 121

Managers only employ one task as a part of their job,and thus evaluation of how well they do is simple to accomplish.

(True/False)

4.8/5

(32)

Question 122

Consolidated Supply Corporation uses the investment centre concept for the service stations that it manages in the city.Consolidated has a 15% required rate of return on investment in order for a branch station to be viable.Select operating data for three of its stations for 2017 are as follows: Pine Street Oak Street GumStreet Revenue \ 8500000 \ 6750000 \ 7500000 Operating assets 3500000 3500000 2500000 Net operating profit 480000 575000 455000 Required: a.Compute the return on investment for each station. b.Which service station manager is doing best based only on ROI? Why? c.Are any of the service stations in danger of being closed due to lack of performance? d.What other factors should be included when evaluating the managers?

(Essay)

4.9/5

(32)

Question 123

Imputed costs are costs recognised in particular situations that are not usually incorporated in financial accounting records.

(True/False)

4.8/5

(36)

Question 124

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 Tiller Division's investment turnover?

(Multiple Choice)

4.7/5

(35)

Question 125

The ROI,RI,and EVA calculations represent the results for a several periods;for example,three years.

(True/False)

4.9/5

(41)

Question 126

The return on investment is usually considered the most popular approach to incorporating the investment base into a performance measure because:

(Multiple Choice)

4.9/5

(42)

Question 127

To evaluate overall aggregate performance,return on investment and residual income measures are more appropriate than return on sales.

(True/False)

4.9/5

(40)

Question 128

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

(True/False)

5.0/5

(42)

Question 129

Frenchs Forest Publishing Company has three divisions that operate autonomously.Their results for 2017 are as follows: Academic Fiction Non-fiction Sales \ 15000000 \ 17000000 \ 20000000 Contribution margin 1440000 1700000 3500000 Operating profit 1500000 1200000 2120000 Investment base 7000000 5000000 14000000 The company's desired rate of return is 20%. Required: a.Calculate each division's ROI. b.Calculate each division's residual income. c.Rank each division by both ROI and residual income. d.Which division had the best performance in 2017? Why? _ _

(Essay)

4.7/5

(25)

Question 130

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 Newcastle?

(Multiple Choice)

4.8/5

(38)

Question 131

The economic value added (EVA)concept has attracted considerable attention in recent years.Explain the attractiveness of this number as a measure of performance.

(Essay)

4.9/5

(31)

Question 132

Using gross book value as an investment base is consistent with the amount of total assets shown in the conventional balance sheet.

(True/False)

4.9/5

(40)

Question 133

Discuss the issues and complications that may arise when multinational corporations conduct performance measurement and comparisons among divisions located in different countries. _ _

(Essay)

4.9/5

(30)

Question 134

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 Jetski Division?

(Multiple Choice)

4.8/5

(42)

Question 135

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

(Multiple Choice)

4.9/5

(34)

Question 136

The Frozen Foods Division of Northern Territory Products is planning the 2019 operating budget.Average operating assets of $4 500 000 will be used during the year and unit selling prices are expected to average $50 each.Variable costs of the division are budgeted at $1 200 000,while fixed costs are set at $500 000.The company's required rate of return is 20%. Required: a.Calculate the sales volume necessary to achieve a 22% ROI. b.The division manager receives a bonus of 50% of residual income.What is his anticipated bonus for 2019,assuming he achieves the 22% ROI from part (a)? _ _

(Essay)

4.9/5

(33)

Question 137

Which of the following statements is true?

(Multiple Choice)

5.0/5

(43)

Question 138

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 -A major weakness of comparing two companies using only operating profits as the basis of comparison is that this method ignores differences in the size of the investment required to earn the operating profit.

(True/False)

4.9/5

(41)

Question 139

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 division has the best return on investment and which division has the best residual income figure,respectively?

(Multiple Choice)

4.8/5

(40)

Question 140

Managers only employ one task as a part of their job,and thus evaluation of how well they do is simple to accomplish.

Imputed costs are costs recognised in particular situations that are not usually incorporated in financial accounting records.

The ROI,RI,and EVA calculations represent the results for a several periods;for example,three years.

The return on investment is usually considered the most popular approach to incorporating the investment base into a performance measure because:

To evaluate overall aggregate performance,return on investment and residual income measures are more appropriate than return on sales.

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

The economic value added (EVA)concept has attracted considerable attention in recent years.Explain the attractiveness of this number as a measure of performance.

Using gross book value as an investment base is consistent with the amount of total assets shown in the conventional balance sheet.

Discuss the issues and complications that may arise when multinational corporations conduct performance measurement and comparisons among divisions located in different countries. _ _

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

Which of the following statements is true?

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