Chow Company has a number of investment centers to track on a day-to-day basis.The following represent key figures related to one of Chow's investment centers for May 20xx: $\begin{array}{lr} \text { Operating income } & \$ 6,000,000 \\ \text { Sales } & 15,000,000 \\ \text { Asset turnover } & 55 \% \end{array}$ What is the investment center's ROI for May 20xx (rounded to two decimal places)?

A) 27.5 percent B) 33 percent C) 55 percent D) 22 percent A) 27.5 percent B) 33 percent C) 55 percent D) 22 percent

Compute the asset turnover (rounded to two decimal places)for the Tim Tom investment center as shown below. $\begin{array}{lr} & \text { Tim Tom Subsidiary } \\ \text { Total sales } & \$ 1,600 \\ \text { Operating income } & \$ 100 \\ \text { Average assets invested } & \$ 900 \\ \text { Profit margin } & ? \\ \text { Asset turnover } & ? \\ \text { ROI } & ? \end{array}$

A) 1.78 B) 0.56 C) 0.11 D) 9.00 A) 1.78 B) 0.56 C) 0.11 D) 9.00

Kristen Roper oversees her company's largest and most profitable investment center.She has asked you,as her staff accountant,to compute the center's ROI,residual income,and EVA for the month of August 20xx,using the following information (rounded to two decimal places): $\begin{array}{lr} \text { August 20xx operating income } & \$ 300,000 \\ \text { August 20xx sales } & 450,000 \\ \text { Assets at July 31, 20xx } & 500,000 \\ \text { Assets at August 31, 20xx } & 510,000 \\ \text { August 20x6 income taxes } & 90,000 \\ \text { Current liabilities at August 31, 20xx } & 250,000 \\ \text { Cost of capital } & 19 \% \\ \text { Desired ROI } & 52 \% \end{array}$

Assets Invested = ($510,000 + $500,000)÷

Compute the May 20xx EVA for an investment center with the following information: $\begin{array}{lr} \text { Pre-tax operating income for May 20xx } & \$ 18,000,500 \\ \text { Income tax expense for May 20xx } & 5,100,000 \\ \text { Assets at May 31, 20xx } & 13,200,500 \\ \text { Current liabilities at May 31, 20xx } & 10,000,000 \\ \text { Long-term liabilities at May 31, 20xx } & 3,500,000 \\ \text { Minimum desired rate of return } & 20 \% \end{array}$ Minimum desired rate of return 20%

A) $12,260,400 B) $12,700,500 C) $11,880,500 D) $12,200,500 A) $12,260,400 B) $12,700,500 C) $11,880,500 D) $12,200,500

Exam 22: Performance Management and Evaluation

For residual income figures to be comparable on a companywide basis,all investment centers must have equal access to resources and similar asset investment bases.

(True/False)

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Question 61

A performance management and evaluation system is a set of procedures that account for and report on

(Multiple Choice)

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Question 62

The manager of Center B produces a product that is not sold to an external party.What type of responsibility center is Center B?

(Multiple Choice)

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Question 63

A variable costing income statement is the same as

(Multiple Choice)

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Question 64

Both flexible budgeting and variable costing can be utilized to evaluate cost center performance.

(True/False)

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Question 65

One of the overall goals of the Pancake House Restaurant is customer satisfaction.In the light of that goal,match the learning and growth perspective with the appropriate objective.

(Multiple Choice)

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Question 66

ROI is a performance measure mainly connected with a company's income statement.

(True/False)

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Question 67

Which of the following is a type of incentive compensation?

(Multiple Choice)

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Question 68

Variable costing allows a manager to classify controllable costs as

(Multiple Choice)

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Question 69

Which of the following represents a basic stakeholder of an organization?

(Multiple Choice)

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Question 70

Chow Company has a number of investment centers to track on a day-to-day basis.The following represent key figures related to one of Chow's investment centers for May 20xx: Operating income \ 6,000,000 Sales 15,000,000 Asset turnover 55\% What is the investment center's ROI for May 20xx (rounded to two decimal places)?

(Multiple Choice)

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Question 71

Performance measurement is the use of both quantitative and qualitative tools to gauge an organization's performance in relation to a specific goal or an expected outcome.

(True/False)

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Question 72

As the staff accountant for Investment Center 713,calculate the October 20xx ROI,using the following information: October 20xx profit margin 38\% October 20xx sales \ 2,000,000 Assets at September 30, 20xx 1,850,000 Assets at October 31, 20xx 1,855,000

(Essay)

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Question 73

Compute the asset turnover (rounded to two decimal places)for the Tim Tom investment center as shown below. Tim Tom Subsidiary Total sales \ 1,600 Operating income \ 100 Average assets invested \ 900 Profit margin ? Asset turnover ? ROI ?

(Multiple Choice)

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Question 74

How is the contribution margin calculated when utilizing variable costing?

(Multiple Choice)

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Question 75

The manager of Center A is responsible for generating cash inflows and incurring costs with the goal of making money for the company.The manager has no responsibility for assets.What type of responsibility center is Center A?

(Multiple Choice)

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Question 76

Kristen Roper oversees her company's largest and most profitable investment center.She has asked you,as her staff accountant,to compute the center's ROI,residual income,and EVA for the month of August 20xx,using the following information (rounded to two decimal places): August 20xx operating income \ 300,000 August 20xx sales 450,000 Assets at July 31, 20xx 500,000 Assets at August 31, 20xx 510,000 August 20x6 income taxes 90,000 Current liabilities at August 31, 20xx 250,000 Cost of capital 19\% Desired ROI 52\%

(Essay)

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Question 77

A responsibility accounting system ensures that

(Multiple Choice)

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Question 78

Employer-provided health insurance is a common type of incentive compensation.

(True/False)

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Question 79

Compute the May 20xx EVA for an investment center with the following information: Pre-tax operating income for May 20xx \ 18,000,500 Income tax expense for May 20xx 5,100,000 Assets at May 31, 20xx 13,200,500 Current liabilities at May 31, 20xx 10,000,000 Long-term liabilities at May 31, 20xx 3,500,000 Minimum desired rate of return 20\% Minimum desired rate of return 20%

(Multiple Choice)

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Question 80

Exam 22: Performance Management and Evaluation

For residual income figures to be comparable on a companywide basis,all investment centers must have equal access to resources and similar asset investment bases.

A performance management and evaluation system is a set of procedures that account for and report on

The manager of Center B produces a product that is not sold to an external party.What type of responsibility center is Center B?

A variable costing income statement is the same as

Both flexible budgeting and variable costing can be utilized to evaluate cost center performance.

One of the overall goals of the Pancake House Restaurant is customer satisfaction.In the light of that goal,match the learning and growth perspective with the appropriate objective.

ROI is a performance measure mainly connected with a company's income statement.

Which of the following is a type of incentive compensation?

Variable costing allows a manager to classify controllable costs as

Which of the following represents a basic stakeholder of an organization?

Performance measurement is the use of both quantitative and qualitative tools to gauge an organization's performance in relation to a specific goal or an expected outcome.

As the staff accountant for Investment Center 713,calculate the October 20xx ROI,using the following information: October 20xx profit margin 38\% October 20xx sales \ 2,000,000 Assets at September 30, 20xx 1,850,000 Assets at October 31, 20xx 1,855,000

Compute the asset turnover (rounded to two decimal places)for the Tim Tom investment center as shown below. Tim Tom Subsidiary Total sales \ 1,600 Operating income \ 100 Average assets invested \ 900 Profit margin ? Asset turnover ? ROI ?

How is the contribution margin calculated when utilizing variable costing?

The manager of Center A is responsible for generating cash inflows and incurring costs with the goal of making money for the company.The manager has no responsibility for assets.What type of responsibility center is Center A?

A responsibility accounting system ensures that

Employer-provided health insurance is a common type of incentive compensation.

Uses of Accounting Information and the Financial Statements

Analyzing Business Transactions

Measuring Business Income

Supplement - Closing Entries and the Work Sheet

Financial Reporting and Analysis

The Operating Cycle and Merchandising Operations

Inventories

Cash and Receivables

Current Liabilities and Fair Value Accounting

Long Term Assets

Long-Term Liabilities

Contributed Capital

Investments

The Corporate Income Statement and the Statement of Stockholders Equity

The Statement of Cash Flows

The Changing Business Environment - a Managers Perspective

Cost Concepts and Cost Allocation

Costing Systems- Job Order Costing

Costing Systems- Process Costing

Value-Based Systems- Abm and Lean

Cost Behavior Analysis

The Budgeting Process

Standard Costing and Variance Analysis

Short Run Decision Analysis

Capital Investment Analysis

Pricing Decisions, incltarget Costing and Transfer Pricing

Quality Management and Measurement

Financial Analysis of Performance

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