Chat with AIExam 11: How Do Managers Evaluate Performance in Decentralized Organizations
Exam 1: What Is Managerial Accounting83 Questions
Exam 2: How Is Job Costing Used to Track Production Costs44 Questions
Exam 3: How Does an Organization Use Activity-Based Costing to Allocate Overhead Costs71 Questions
Exam 4: How Is Process Costing Used to Track Production Costs58 Questions
Exam 5: How Do Organizations Identify Cost Behavior Patterns69 Questions
Exam 6: How Is Cost-Volume-Profit Analysis Used for Decision Making79 Questions
Exam 7: How Are Relevant Revenues and Costs Used to Make Decisions76 Questions
Exam 8: How Is Capital Budgeting Used to Make Decisions71 Questions
Exam 9: How Are Operating Budgets Created68 Questions
Exam 10: How Do Managers Evaluate Performance Using Cost Variance Analysis69 Questions
Exam 11: How Do Managers Evaluate Performance in Decentralized Organizations63 Questions
Exam 12: How Is the Statement of Cash Flows Prepared and Used65 Questions
Exam 13: How Do Managers Use Financial and Nonfinancial Performance Measures62 Questions
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Exhibit 11-5
Sports Products Inc.sells skis and snowboards.Below is some financial information for each division at Sports Products for the most recent fiscal year.
To calculate economic value added (EVA),management requires adjustments for marketing and non-interest bearing current liabilities as outlined below.
Marketing will be capitalized and amortized over several years resulting in an increase to average operating assets of $125,000 for the Skis division and $82,500 for the Snowboards division.On the income statement,marketing expenses for the year will be added back to operating income,then marketing amortization expense for one year will be deducted.The current year amortization expense will total $60,000 for the Ski division and $45,000 for the Snowboards division.
Non-interest bearing liabilities will be deducted from average operating assets.
-Refer to Exhibit 11-5.After the EVA adjustments to average operating assets,what would be the amount of average operating assets (adjusted)for the Skis Division?
To calculate economic value added (EVA),management requires adjustments for marketing and non-interest bearing current liabilities as outlined below.
Marketing will be capitalized and amortized over several years resulting in an increase to average operating assets of $125,000 for the Skis division and $82,500 for the Snowboards division.On the income statement,marketing expenses for the year will be added back to operating income,then marketing amortization expense for one year will be deducted.The current year amortization expense will total $60,000 for the Ski division and $45,000 for the Snowboards division.
Non-interest bearing liabilities will be deducted from average operating assets.
-Refer to Exhibit 11-5.After the EVA adjustments to average operating assets,what would be the amount of average operating assets (adjusted)for the Skis Division? (Multiple Choice)
4.8/5 
(41)
(41) Exhibit 11-1
Ashville Company has two divisions - Bikes and Trikes.
-Refer to Exhibit 11-1.Assume the Trikes Division has average operating assets totaling $400,000 for the year and the company's cost of capital rate is ten percent.What is the residual income for the Trikes division?
-Refer to Exhibit 11-1.Assume the Trikes Division has average operating assets totaling $400,000 for the year and the company's cost of capital rate is ten percent.What is the residual income for the Trikes division? (Multiple Choice)
4.8/5 (30)
(30) Titus Inc.has two divisions - Southeast and Northwest.
(1)Using the segmented income statements presented,determine the profit margin ratio for each division.
(2)Assume the Southeast division had average operating assets totaling $6,000,000 for the year,and the Northwest division had average operating assets totaling $1,800,000.Calculate return on investment (ROI)for each division.
(3)Assume Titus has a cost of capital rate of nine percent.Calculate residual income for each division.
(1)Using the segmented income statements presented,determine the profit margin ratio for each division.
(2)Assume the Southeast division had average operating assets totaling $6,000,000 for the year,and the Northwest division had average operating assets totaling $1,800,000.Calculate return on investment (ROI)for each division.
(3)Assume Titus has a cost of capital rate of nine percent.Calculate residual income for each division. (Essay)
4.7/5 (36)
(36) Exhibit 11-5
Sports Products Inc.sells skis and snowboards.Below is some financial information for each division at Sports Products for the most recent fiscal year.
To calculate economic value added (EVA),management requires adjustments for marketing and non-interest bearing current liabilities as outlined below.
Marketing will be capitalized and amortized over several years resulting in an increase to average operating assets of $125,000 for the Skis division and $82,500 for the Snowboards division.On the income statement,marketing expenses for the year will be added back to operating income,then marketing amortization expense for one year will be deducted.The current year amortization expense will total $60,000 for the Ski division and $45,000 for the Snowboards division.
Non-interest bearing liabilities will be deducted from average operating assets.
-Refer to Exhibit 11-5.What is the EVA for the Snowboards division?
To calculate economic value added (EVA),management requires adjustments for marketing and non-interest bearing current liabilities as outlined below.
Marketing will be capitalized and amortized over several years resulting in an increase to average operating assets of $125,000 for the Skis division and $82,500 for the Snowboards division.On the income statement,marketing expenses for the year will be added back to operating income,then marketing amortization expense for one year will be deducted.The current year amortization expense will total $60,000 for the Ski division and $45,000 for the Snowboards division.
Non-interest bearing liabilities will be deducted from average operating assets.
-Refer to Exhibit 11-5.What is the EVA for the Snowboards division? (Multiple Choice)
4.9/5 (40)
(40) Exhibit 11-5
Sports Products Inc.sells skis and snowboards.Below is some financial information for each division at Sports Products for the most recent fiscal year.
To calculate economic value added (EVA),management requires adjustments for marketing and non-interest bearing current liabilities as outlined below.
Marketing will be capitalized and amortized over several years resulting in an increase to average operating assets of $125,000 for the Skis division and $82,500 for the Snowboards division.On the income statement,marketing expenses for the year will be added back to operating income,then marketing amortization expense for one year will be deducted.The current year amortization expense will total $60,000 for the Ski division and $45,000 for the Snowboards division.
Non-interest bearing liabilities will be deducted from average operating assets.
-Refer to Exhibit 11-5.What is the EVA for the Skis division?
To calculate economic value added (EVA),management requires adjustments for marketing and non-interest bearing current liabilities as outlined below.
Marketing will be capitalized and amortized over several years resulting in an increase to average operating assets of $125,000 for the Skis division and $82,500 for the Snowboards division.On the income statement,marketing expenses for the year will be added back to operating income,then marketing amortization expense for one year will be deducted.The current year amortization expense will total $60,000 for the Ski division and $45,000 for the Snowboards division.
Non-interest bearing liabilities will be deducted from average operating assets.
-Refer to Exhibit 11-5.What is the EVA for the Skis division? (Multiple Choice)
4.7/5 (32)
(32) The goal in establishing transfer pricing policies is to encourage managers to do what is in the best interest of the company,while also doing what is in the best interest of the division manager.
(True/False)
4.8/5 (39)
(39) Exhibit 11-3
Dillon Company has the following information available for one of its divisions:
-Refer to Exhibit 11-3.Dillon requires a minimum return on its investments of 25%.
Based on this information,what is the division's asset turnover (rounded to two decimal places)?
-Refer to Exhibit 11-3.Dillon requires a minimum return on its investments of 25%.
Based on this information,what is the division's asset turnover (rounded to two decimal places)? (Multiple Choice)
4.9/5 (30)
(30) Exhibit 11-5
Sports Products Inc.sells skis and snowboards.Below is some financial information for each division at Sports Products for the most recent fiscal year.
To calculate economic value added (EVA),management requires adjustments for marketing and non-interest bearing current liabilities as outlined below.
Marketing will be capitalized and amortized over several years resulting in an increase to average operating assets of $125,000 for the Skis division and $82,500 for the Snowboards division.On the income statement,marketing expenses for the year will be added back to operating income,then marketing amortization expense for one year will be deducted.The current year amortization expense will total $60,000 for the Ski division and $45,000 for the Snowboards division.
Non-interest bearing liabilities will be deducted from average operating assets.
-Refer to Exhibit 11-5.After the EVA adjustments to average operating assets,what would be the amount of average operating assets (adjusted)for the Snowboards Division?
To calculate economic value added (EVA),management requires adjustments for marketing and non-interest bearing current liabilities as outlined below.
Marketing will be capitalized and amortized over several years resulting in an increase to average operating assets of $125,000 for the Skis division and $82,500 for the Snowboards division.On the income statement,marketing expenses for the year will be added back to operating income,then marketing amortization expense for one year will be deducted.The current year amortization expense will total $60,000 for the Ski division and $45,000 for the Snowboards division.
Non-interest bearing liabilities will be deducted from average operating assets.
-Refer to Exhibit 11-5.After the EVA adjustments to average operating assets,what would be the amount of average operating assets (adjusted)for the Snowboards Division? (Multiple Choice)
4.8/5 (34)
(34) Division A has a building with the same original cost as Division B,except that it was purchased four years before Division B's building.If both divisions have identical operating incomes and use the net book value approach for calculating return on investment (ROI),which of the following will be true?
(Multiple Choice)
4.8/5 (30)
(30) Petra Company has the following information available for one of its divisions:
If Petra's cost of capital is 25%,what is the division's residual income?
If Petra's cost of capital is 25%,what is the division's residual income? (Multiple Choice)
4.8/5 (35)
(35) Operating assets would include office buildings leased to other companies.
(True/False)
4.8/5 (41)
(41) Exhibit 11-1
Ashville Company has two divisions - Bikes and Trikes.
-Refer to Exhibit 11-1.Assume the Trikes Division has average operating assets totaling $400,000 for the year.What is the division's return on investment?
-Refer to Exhibit 11-1.Assume the Trikes Division has average operating assets totaling $400,000 for the year.What is the division's return on investment? (Multiple Choice)
4.9/5 (39)
(39) Which of the following best describes an advantage of decentralization from the company's perspective?
(Multiple Choice)
4.9/5 (40)
(40) Which of the following statements is true regarding the use of the operating profit margin as a performance measure?
(Multiple Choice)
4.9/5 (33)
(33) Becky's Bikes Inc.has two divisions: Retail and Service.The following information is for each division at Becky's Bikes for the most recent fiscal year.
To calculate EVA,management requires adjustments for marketing and non-interest bearing current liabilities as outlined below.
Marketing will be capitalized and amortized over several years resulting in an increase to average operating assets of $50,000 for the Retail division and $32,500 for the Services division.On the income statement,marketing expense for the year will be added back to operating income,then marketing amortization expense for one year will be deducted.The current year amortization expense will total $30,000 for the Retail division and $20,000 for the Services division.
Non-interest bearing liabilities will be deducted from average operating assets.
Calculate economic value added (EVA)for each division and comment on your results.
To calculate EVA,management requires adjustments for marketing and non-interest bearing current liabilities as outlined below.
Marketing will be capitalized and amortized over several years resulting in an increase to average operating assets of $50,000 for the Retail division and $32,500 for the Services division.On the income statement,marketing expense for the year will be added back to operating income,then marketing amortization expense for one year will be deducted.The current year amortization expense will total $30,000 for the Retail division and $20,000 for the Services division.
Non-interest bearing liabilities will be deducted from average operating assets.
Calculate economic value added (EVA)for each division and comment on your results. (Essay)
5.0/5 (40)
(40) Residual income is the dollar amount of division operating profit in excess of the division's cost of acquiring capital to purchase operating assets.
(True/False)
4.8/5 (36)
(36) Residual income is the portion of income produced by the division that is not related to its daily activities.
(True/False)
4.8/5 (39)
(39) Exhibit 11-4
The following information is for two divisions at Wiley Company.
-Refer to Exhibit 11-4.What is the ROI for the Couch Division (rounded to the nearest tenth of a percent)?
-Refer to Exhibit 11-4.What is the ROI for the Couch Division (rounded to the nearest tenth of a percent)? (Multiple Choice)
4.7/5 (40)
(40) Exhibit 11-3
Dillon Company has the following information available for one of its divisions:
-Refer to Exhibit 11-3.If Dillon's cost of capital is 25%,what is the division's residual income?
-Refer to Exhibit 11-3.If Dillon's cost of capital is 25%,what is the division's residual income? (Multiple Choice)
4.9/5 (30)
(30) Exhibit 11-5
Sports Products Inc.sells skis and snowboards.Below is some financial information for each division at Sports Products for the most recent fiscal year.
To calculate economic value added (EVA),management requires adjustments for marketing and non-interest bearing current liabilities as outlined below.
Marketing will be capitalized and amortized over several years resulting in an increase to average operating assets of $125,000 for the Skis division and $82,500 for the Snowboards division.On the income statement,marketing expenses for the year will be added back to operating income,then marketing amortization expense for one year will be deducted.The current year amortization expense will total $60,000 for the Ski division and $45,000 for the Snowboards division.
Non-interest bearing liabilities will be deducted from average operating assets.
-Refer to Exhibit 11-5.After the EVA adjustments to operating income,what would be the amount of net operating profit after tax (adjusted)for the Skis Division?
To calculate economic value added (EVA),management requires adjustments for marketing and non-interest bearing current liabilities as outlined below.
Marketing will be capitalized and amortized over several years resulting in an increase to average operating assets of $125,000 for the Skis division and $82,500 for the Snowboards division.On the income statement,marketing expenses for the year will be added back to operating income,then marketing amortization expense for one year will be deducted.The current year amortization expense will total $60,000 for the Ski division and $45,000 for the Snowboards division.
Non-interest bearing liabilities will be deducted from average operating assets.
-Refer to Exhibit 11-5.After the EVA adjustments to operating income,what would be the amount of net operating profit after tax (adjusted)for the Skis Division? (Multiple Choice)
4.8/5 (34)
(34) 
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