Question 1

Return on investment can be increased by ________.

Accepted Answer

A)  increasing current assets 
B)  decreasing total assets 
C)  decreasing revenues 
D)  increasing the debt portion of the capital 
A)  increasing current assets 
B)  decreasing total assets 
C)  decreasing revenues 
D)  increasing the debt portion of the capital

Question 2

Inflation clouds the real economic returns on an asset and ________.

Accepted Answer

A)  makes variable-cost-based ROI higher 
B)  makes historical-cost-based ROI lower. 
C)  makes historical-cost-based ROI higher 
D)  makes variable-cost-based ROI lower 
A)  makes variable-cost-based ROI higher 
B)  makes historical-cost-based ROI lower. 
C)  makes historical-cost-based ROI higher 
D)  makes variable-cost-based ROI lower

Question 3

Home Decor Inc., manufactures home cleaning products. The company has two divisions, Bleach and Cleanser. Because of different accounting methods and inflation rates, the company is considering multiple evaluation measures. The following information is provided for 2015:
 
The company is currently using a 15% required rate of return.
-What are Bleach's and Cleanser's return on investment based on book values,respectively?

Accepted Answer

A)  0.25; 0.67 
B)  0.42; 0.52 
C)  0.52; 0.47 
D)  0.46; 0.25 
A)  0.25; 0.67 
B)  0.42; 0.52 
C)  0.52; 0.47 
D)  0.46; 0.25

Question 4

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 $5 million issued at an interest rate of 12%, and equity capital that has a market value of $4 million (book value of $2 million). Waldorf Company has profit centers in the following locations with the following operating incomes, total assets, and current liabilities. The cost of equity capital is 12%, while the tax rate is 25%.
 $$\begin{array} { | l | r | r | r | } 
\hline & \text { Operating Income } & \text { Assets } & \text { Current Liabilities } \
\hline \text { St. Louis } & \$ 480,000 & \$ 2,000,000 & \$ 100,000 \
\hline \text { Cedar Rapids } & \$ 600,000 & \$ 4,000,000 & \$ 300,000 \
\hline \text { Wichita } & \$ 1,020,000 & \$ 6,000,000 & \$ 600,000 \
\hline
\end{array}$$
-What is the EVA for St.Louis?

Accepted Answer

A)  $127,870 
B)  $163,730 
C)  $196,270 
D)  $360,000 
A)  $127,870 
B)  $163,730 
C)  $196,270 
D)  $360,000

Question 5

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 Beta Division (c)?

Accepted Answer

A)  $7,333,333 
B)  $11,904,760 
C)  $8,333,333 
D)  $14,303,600 
A)  $7,333,333 
B)  $11,904,760 
C)  $8,333,333 
D)  $14,303,600

Question 6

The first step in designing accounting based performance measures is to choose a target level of performance and feedback mechanism.

Accepted Answer

A) True 
 B)False

Question 7

Answer the following questions using the information below:
The top management at Groundsource 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:
 $\begin{array}{lrrr}&\text { Tractor Division }& \text { Tiller Division  }& \text {Digger Division }\
\text { Sales } & \$ 10,000,000 & (\mathrm{a}) & \$ 2,400,000 \
\text { Net operating income } & \$ 1,000,000 & \$ 1,440,000 & \$ 600,000 \
\text { Operating assets } & (\mathrm{b}) & (\mathrm{c}) & \$ 2,000,000 \
\text { Return on investment } & 0.20 & 0.10 & \text { (d) } \
\text { Return on sales } & (\mathrm{e}) & 0.12 & 0.25 \
\text { Investment turnover } & \text { (f) } & \text { (g) } & 1.2
\end{array}$
-What is the value of the operating assets belonging to the Tiller Division?

Accepted Answer

A)  $ 10,000,000 
B)  $ 12,000,000 
C)  $ 14,400,000 
D)  $ 15,000,000 
A)  $ 10,000,000 
B)  $ 12,000,000 
C)  $ 14,400,000 
D)  $ 15,000,000

Question 8

Answer the following questions using the information below:
The top management at Groundsource 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:
 $\begin{array}{lrrr}&\text { Tractor Division }& \text { Tiller Division  }& \text {Digger Division }\
\text { Sales } & \$ 10,000,000 & (\mathrm{a}) & \$ 2,400,000 \
\text { Net operating income } & \$ 1,000,000 & \$ 1,440,000 & \$ 600,000 \
\text { Operating assets } & (\mathrm{b}) & (\mathrm{c}) & \$ 2,000,000 \
\text { Return on investment } & 0.20 & 0.10 & \text { (d) } \
\text { Return on sales } & (\mathrm{e}) & 0.12 & 0.25 \
\text { Investment turnover } & \text { (f) } & \text { (g) } & 1.2
\end{array}$
-What is the Tractor Division's investment turnover?

Accepted Answer

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

Question 9

One criticism of team-based compensation is that it diminishes the incentives of individual employees,which can harm a firm's overall performance.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is true of an executive compensation plan?

Accepted Answer

A)  The compensation paid to the executives should be linked only to the financial performance of the company. 
B)  The executive compensations should be reported to credit rating agencies. 
C)  It does not help balancing risk with short-run and long-run incentives. 
D)  It includes benefits such as medical benefits, pension plans, and life insurance. 
A)  The compensation paid to the executives should be linked only to the financial performance of the company. 
B)  The executive compensations should be reported to credit rating agencies. 
C)  It does not help balancing risk with short-run and long-run incentives. 
D)  It includes benefits such as medical benefits, pension plans, and life insurance.

Question 11

The SEC requires companies to disclose the performance criteria-such as a firm's profitability,revenue growth,and market share-used to reward executives.

Accepted Answer

A) True 
 B)False

Question 12

Answer the following questions using the information below:
The top management at Groundsource 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:
 $\begin{array}{lrrr}&\text { Tractor Division }& \text { Tiller Division  }& \text {Digger Division }\
\text { Sales } & \$ 10,000,000 & (\mathrm{a}) & \$ 2,400,000 \
\text { Net operating income } & \$ 1,000,000 & \$ 1,440,000 & \$ 600,000 \
\text { Operating assets } & (\mathrm{b}) & (\mathrm{c}) & \$ 2,000,000 \
\text { Return on investment } & 0.20 & 0.10 & \text { (d) } \
\text { Return on sales } & (\mathrm{e}) & 0.12 & 0.25 \
\text { Investment turnover } & \text { (f) } & \text { (g) } & 1.2
\end{array}$
-What is the Digger Division's return on investment?

Accepted Answer

A)  .25 
B)  .30 
C)  .45 
D)  .60 
A)  .25 
B)  .30 
C)  .45 
D)  .60

Question 13

Customer-satisfaction measures are an example of the ________.

Accepted Answer

A)  goal-congruence approach 
B)  balanced scorecard approach 
C)  financial report scorecard approach 
D)  investment success approach 
A)  goal-congruence approach 
B)  balanced scorecard approach 
C)  financial report scorecard approach 
D)  investment success approach

Question 14

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

Accepted Answer

There are wide differences in legal,poli

Question 15

________ would be an uncontrollable factor that a firm would need to consider when evaluating the return on investment of an international division.

Accepted Answer

A)  Manager's experience 
B)  Manager's compensation 
C)  Pricing decisions 
D)  Custom duties 
A)  Manager's experience 
B)  Manager's compensation 
C)  Pricing decisions 
D)  Custom duties

Question 16

Which of the following is a difference between a diagnostic control system and an interactive control system?

Accepted Answer

A)  A diagnostic control system focuses on meeting expectations, while an interactive control system focuses on standards of ethical behavior. 
B)  A diagnostic control system focuses on standards of ethical behavior while an interactive control system focus on meeting expectations. 
C)  A diagnostic control system focuses on meeting expectations, while an interactive control system focuses on organizational attention and learning on key strategic issues. 
D)  A diagnostic control system focuses on organizational attention and learning on key strategic issues, while an interactive control system focuses on meeting expectations. 
A)  A diagnostic control system focuses on meeting expectations, while an interactive control system focuses on standards of ethical behavior. 
B)  A diagnostic control system focuses on standards of ethical behavior while an interactive control system focus on meeting expectations. 
C)  A diagnostic control system focuses on meeting expectations, while an interactive control system focuses on organizational attention and learning on key strategic issues. 
D)  A diagnostic control system focuses on organizational attention and learning on key strategic issues, while an interactive control system focuses on meeting expectations.

Question 17

Zenith Corporation's net income is $78,400.What is the return on investment if the amount of the investment is $500,000?

Accepted Answer

A)  14.88% 
B)  12.78% 
C)  15.68% 
D)  16% 
A)  14.88% 
B)  12.78% 
C)  15.68% 
D)  16%

Question 18

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 centers in the following locations with the following operating incomes, total assets, and current liabilities. The cost of equity capital is 15%, while the tax rate is 30%.
 $$\begin{array} { | l | r | r | r | } 
\hline & \text { Operating Income } & \text { Assets } & \text { Current Liabilities } \
\hline \text { Bish Bash Falls } & \$ 815,000 & \$ 3,750,000 & \$ 800,000 \
\hline \text { Brooksville } & \$ 1,100,000 & \$ 5,000,000 & \$ 1,200,000 \
\hline \text { Stonybrook } & \$ 2,450,000 & \$ 9,250,000 & \$ 3,180,000 \
\hline
\end{array}$$
-What is the EVA for Brooksville?

Accepted Answer

A)  $476,250 
B)  $428,000 
C)  $415,525 
D)  $390,000 
A)  $476,250 
B)  $428,000 
C)  $415,525 
D)  $390,000

Question 19

Answer the following questions using the information below:
The top management at Groundsource 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:
 $\begin{array}{lrrr}&\text { Tractor Division }& \text { Tiller Division  }& \text {Digger Division }\
\text { Sales } & \$ 10,000,000 & (\mathrm{a}) & \$ 2,400,000 \
\text { Net operating income } & \$ 1,000,000 & \$ 1,440,000 & \$ 600,000 \
\text { Operating assets } & (\mathrm{b}) & (\mathrm{c}) & \$ 2,000,000 \
\text { Return on investment } & 0.20 & 0.10 & \text { (d) } \
\text { Return on sales } & (\mathrm{e}) & 0.12 & 0.25 \
\text { Investment turnover } & \text { (f) } & \text { (g) } & 1.2
\end{array}$
-What is the value of the operating assets belonging to the Tractor Division?

Accepted Answer

A)  $ 3,500,000 
B)  $4,000,000 
C)  $4,500,000 
D)  $5,000,000 
A)  $ 3,500,000 
B)  $4,000,000 
C)  $4,500,000 
D)  $5,000,000

Question 20

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 investment turnover ratio?

Accepted Answer

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

Return on investment can be increased by ________.

Inflation clouds the real economic returns on an asset and ________.

The first step in designing accounting based performance measures is to choose a target level of performance and feedback mechanism.

One criticism of team-based compensation is that it diminishes the incentives of individual employees,which can harm a firm's overall performance.

Which of the following is true of an executive compensation plan?

The SEC requires companies to disclose the performance criteria-such as a firm's profitability,revenue growth,and market share-used to reward executives.

Customer-satisfaction measures are an example of the ________.

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

________ would be an uncontrollable factor that a firm would need to consider when evaluating the return on investment of an international division.

Which of the following is a difference between a diagnostic control system and an interactive control system?

Zenith Corporation's net income is $78,400.What is the return on investment if the amount of the investment is $500,000?

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

Filters

Exam 23: Performance Measurement, compensation, and Multinational Considerations

Return on investment can be increased by ________.

Inflation clouds the real economic returns on an asset and ________.

The first step in designing accounting based performance measures is to choose a target level of performance and feedback mechanism.

One criticism of team-based compensation is that it diminishes the incentives of individual employees,which can harm a firm's overall performance.

Which of the following is true of an executive compensation plan?

The SEC requires companies to disclose the performance criteria-such as a firm's profitability,revenue growth,and market share-used to reward executives.

Customer-satisfaction measures are an example of the ________.

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

________ would be an uncontrollable factor that a firm would need to consider when evaluating the return on investment of an international division.

Which of the following is a difference between a diagnostic control system and an interactive control system?

Zenith Corporation's net income is $78,400.What is the return on investment if the amount of the investment is $500,000?

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

Filters