Answer the following questions using the information below: The Cybertronics Corporation reported the following information for its Cyclotron Division: \[\begin{array} { l r } \text { Revenues } & \$ 2,000,000 \\ \text { Operating costs } & 1,200,000 \\ \text { Operating assets } & 1,000,000 \end{array}\] Income is defined as operating income. -What is the Cyclotron Division's return on investment?

A) 35% B) 75% C) 50% D) 80% A) 35% B) 75% C) 50% D) 80% D

Answer the following questions using the information below: The top management at Amore Corp, 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: $\begin{array}{lrrr}&\text { Alpha Division }&\text { Beta Division }&\text { Gamma Division }\\ \text { Sales } & \$ 5,500,000 & (\mathrm{a}) & \$ 2,500,000 \\ \text { Net operating income } & \$ 3,500,000 & \$ 1,100,000 & \$ 1,200,000 \\ \text { Operating assets } & (\mathrm{b}) & (\mathrm{c}) & \$ 1,600,000 \\ \text { Return on investment } & 0.25 & 0.15 & \text { (d) } \\ \text { Return on sales } & (\mathrm{e}) & 0.10 & 0.5 \\ \text { Investment turnover } & (\mathrm{f}) & \text { (g) } & 1.5 \end{array}$ -What is the value of the operating assets belonging to the Alpha Division (b)?

A) $8,666,667 B) $14,000,000 C) $13,000,000 D) $14,303,600 A) $8,666,667 B) $14,000,000 C) $13,000,000 D) $14,303,600

Answer the following questions using the information below: Care Inc., has two divisions that operate independently of one another. The financial data for the year 2015 reported the following results: \[\begin{array} { l r r } & \text { North } & \text { South } \\ \text { Sales } & \$ 6,000,000 & \$ 5,000,000 \\ \text { Operating income } & 1,500,000 & 1,200,000 \\ \text { Taxable income } & 1,200,000 & 700,000 \\ \text { Investment } & 14,000,000 & 10,000,000 \end{array}\] The company's desired rate of return is 10%. Income is defined as operating income. -What are the respective residual incomes for the North and South Divisions?

A) $60,000 and $100,000 B) $300,000 and $60,000 C) $300,000 and $100,000 D) $100,000 and $200,000 A) $60,000 and $100,000 B) $300,000 and $60,000 C) $300,000 and $100,000 D) $100,000 and $200,000

Answer the following questions using the information below: Care Inc., has two divisions that operate independently of one another. The financial data for the year 2015 reported the following results: \[\begin{array} { l r r } & \text { North } & \text { South } \\ \text { Sales } & \$ 6,000,000 & \$ 5,000,000 \\ \text { Operating income } & 1,500,000 & 1,200,000 \\ \text { Taxable income } & 1,200,000 & 700,000 \\ \text { Investment } & 14,000,000 & 10,000,000 \end{array}\] The company's desired rate of return is 10%. Income is defined as operating income. -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) North, South D) South, North A) North, North B) South, South C) North, South D) South, North

Provide the missing data for the following situations: \[\begin{array} { | l | r | r | r | } \hline & \text { Red Division } & \text { White Division } & \text { Blue Division } \\ \hline \text { Sales } & \$ ? & \$ 10,000,000 & \$ ? \\ \hline \text { Net operating income } & \$ 200,000 & \$ 400,000 & \$ 288,000 \\ \hline \text { Operating assets } & \$ ? & \$ ? & \$ 1,600,000 \\ \hline \text { Return on investment } & 0.16 & 0.10 & ? \\ \hline \text { Return on sales } & 0.04 & ? & 0.12 \\ \hline \text { Investment turnover } & ? & ? & 1.5 \\ \hline \end{array}\]

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

Exam 23: Performance Measurement, compensation, and Multinational Considerations

Answer the following questions using the information below: The Cybertronics Corporation reported the following information for its Cyclotron Division: Revenues \ 2,000,000 Operating costs 1,200,000 Operating assets 1,000,000 Income is defined as operating income. -What is the Cyclotron Division's return on investment?

Free

(Multiple Choice)

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Question 1

Correct Answer:

Verified

D

Intrinsic motivation comes from being given greater responsibility,doing interesting and creative work,and having pride in doing that work.

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(True/False)

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Question 2

Correct Answer:

Verified

True

Gas Supply Corporation uses the investment center concept for the gasoline 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 2015 are as follows: Maple Street Oak Street High Street Revenue \ 17,000,000 \ 13,500,000 \ 15,000,000 Operating assets 7,000,000 7,000,000 6,000,000 Net operating income 900,000 1,200,000 980,000 Required: a.Compute the return on investment for each station. b.Which station manager is doing best based only on ROI? Why? c.Are any of the stations in danger of being closed due to lack of performance? d.What other factors should be included when evaluating the managers?

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(Essay)

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Question 3

Correct Answer:

Verified

a.
$\begin{array} { l l } \text { Maple } & = \$ 900,000 / \$ 7,000,000 = 12.86 \% \\\text { Oak } & = \$ 1,200,000 / \$ 7,000,000 = 17.14 \% \\\text { High } & = \$ 980,000 / \$ 6,000,000 = 16.33 \%\end{array}$ b.Oak Street is doing the best because the ROI is the highest.
c.Maple Street is in danger of being shut down because it is only making a return on its investment base of 12.86%.This is less than the required rate of return of 15%.
d.At a minimum,the company should consider examining the DuPont method,residual income,and the age of operating assets.

Total assets employed is the total assets available minus the sum of idle assets and assets purchased for future expansion.

(True/False)

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Question 4

Answer the following questions using the information below: The top management at Amore Corp, 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 \ 5,500,000 () \ 2,500,000 Net operating income \ 3,500,000 \ 1,100,000 \ 1,200,000 Operating assets () () \ 1,600,000 Return on investment 0.25 0.15 (d) Return on sales () 0.10 0.5 Investment turnover () (g) 1.5 -What is the value of the operating assets belonging to the Alpha Division (b)?

(Multiple Choice)

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Question 5

Springfield Corporation,whose tax rate is 40%,has two sources of funds: long-term debt with a market value of $8,000,000 and an interest rate of 8%,and equity capital with a market value of $12,000,000 and a cost of equity of 12%.Springfield has two operating divisions,the Blue division and the Gold division,with the following financial measures for the current year: Total Assets Current Liabilities Operating Income Blue Div. \ 9,500,000 \ 2,800,000 \ 1,055,000 Gold Div. \ 11,000,000 \ 2,200,000 \ 1,200,000 What is Economic Value Added (EVA)for the Blue Division?

(Multiple Choice)

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Question 6

Times Corporation,whose tax rate is 40%,has two sources of funds: long-term debt with a market value of $6,000,000 and an interest rate of 9%,and equity capital with a market value of $18,000,000 and a cost of equity of 11%.Times Corporation's after-tax cost of debt is ________.

(Multiple Choice)

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Question 7

In performance evaluations ________.

(Multiple Choice)

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Question 8

Answer the following questions using the information below: Care Inc., has two divisions that operate independently of one another. The financial data for the year 2015 reported the following results: North South Sales \ 6,000,000 \ 5,000,000 Operating income 1,500,000 1,200,000 Taxable income 1,200,000 700,000 Investment 14,000,000 10,000,000 The company's desired rate of return is 10%. Income is defined as operating income. -What are the respective residual incomes for the North and South Divisions?

(Multiple Choice)

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Question 9

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

(True/False)

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Question 10

Interactive control system ________.

(Multiple Choice)

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Question 11

The after-tax average cost of all the long-term funds used by a corporation equals ________.

(Multiple Choice)

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Question 12

An additional criticism of team-based compensation is that there can be problems managing team members who are not productive contributors to a team's success but who,nevertheless,share in the team's rewards.

(True/False)

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Question 13

Inflation and fluctuations in foreign-currency exchange rates affect performance measurement.

(True/False)

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Question 14

Return on investment is an accounting measure of income minus a dollar amount for required return on an accounting measure of investment.

(True/False)

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Question 15

Higher inflation will lead to higher prices for goods or services,which will increase a company's operating income and lead to a higher ROI.

(True/False)

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Question 16

Craylon Corp has three divisions,which operate autonomously.Their results for 2015 were as follows: East West International Sales \ 30,000,000 \ 40,000,000 \ 50,000,000 Cost of goods sold 15,000,000 25,000,000 37,000,000 Operating income 4,500,000 5,000,000 5,500,000 Investment base 30,000,000 32,000,000 34,000,000 The company's desired rate of return is 15%. Required: a.Compute each division's ROI.Round to three decimal places. b.Compute each division's residual income.

(Essay)

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Question 17

Answer the following questions using the information below: Care Inc., has two divisions that operate independently of one another. The financial data for the year 2015 reported the following results: North South Sales \ 6,000,000 \ 5,000,000 Operating income 1,500,000 1,200,000 Taxable income 1,200,000 700,000 Investment 14,000,000 10,000,000 The company's desired rate of return is 10%. Income is defined as operating income. -Which division has the best return on investment and which division has the best residual income figure,respectively?

(Multiple Choice)

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Question 18

Provide the missing data for the following situations: Red Division White Division Blue Division Sales \ ? \ 10,000,000 \ ? Net operating income \ 200,000 \ 400,000 \ 288,000 Operating assets \ ? \ ? \ 1,600,000 Return on investment 0.16 0.10 ? Return on sales 0.04 ? 0.12 Investment turnover ? ? 1.5

(Essay)

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Question 19

The net present value of all cash flows over the life of an investment equals the net present value of the residual incomes.

(True/False)

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Question 20

Intrinsic motivation comes from being given greater responsibility,doing interesting and creative work,and having pride in doing that work.

Total assets employed is the total assets available minus the sum of idle assets and assets purchased for future expansion.

Times Corporation,whose tax rate is 40%,has two sources of funds: long-term debt with a market value of $6,000,000 and an interest rate of 9%,and equity capital with a market value of $18,000,000 and a cost of equity of 11%.Times Corporation's after-tax cost of debt is ________.

In performance evaluations ________.

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

Interactive control system ________.

The after-tax average cost of all the long-term funds used by a corporation equals ________.

An additional criticism of team-based compensation is that there can be problems managing team members who are not productive contributors to a team's success but who,nevertheless,share in the team's rewards.

Inflation and fluctuations in foreign-currency exchange rates affect performance measurement.

Return on investment is an accounting measure of income minus a dollar amount for required return on an accounting measure of investment.

Higher inflation will lead to higher prices for goods or services,which will increase a company's operating income and lead to a higher ROI.

Provide the missing data for the following situations: Red Division White Division Blue Division Sales \ ? \ 10,000,000 \ ? Net operating income \ 200,000 \ 400,000 \ 288,000 Operating assets \ ? \ ? \ 1,600,000 Return on investment 0.16 0.10 ? Return on sales 0.04 ? 0.12 Investment turnover ? ? 1.5

The net present value of all cash flows over the life of an investment equals the net present value of the residual incomes.

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, direct-Cost Variances, and Management Control

Flexible Budgets, overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy, balanced Scorecard, and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, rework, and Scrap

Balanced Scorecard: Quality and Time

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

Capital Budgeting and Cost Analysis

Management Control Systems, transfer Pricing, and Multinational Considerations

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