Exam 12: Performance Evaluation and Decentralization

The company as a whole may be harmed when divisions refuse to transfer goods with a market price transfer policy.

What is the term for the strategic management system that translates an organization's mission and strategy into operational objectives and performance measures?

In which of the following responsibility centres is a manager responsible for both revenues and costs?

Match each term with the correct statement from below. -A Balanced Scorecard viewpoint that defines the capabilities that an organization needs to create long-term improvement.

Dynex Company had the following income statement for last year: Sales \ 200,000 Less: COGS 100.000 Gross Frofit \ 100,000 Less: Selling \& Admin. Expense 40,000 Operating income \ 60,000 Beginning assets were $280,000,and ending assets were $300,000 A. Average operating assets were $\$\_\_\_\_$ . B. Margin was_____ C. Turnover was_____ D. Return on investment was $\_\_\_\_\%$

Sales \ 100,000 Operating income \ 30,000 Operating assets \ 200,000 -Refer to the Figure.What is the residual income for Gamma Division with the additional project?

Division A Division B Sales ? 1,250,000 Net operating income \ 25,000 \ 75,000 Average operating assets ? ? Return on investment 20\% 15\% Margin 0.05 ? Tumnover ? ? Target ROI 12\% 10\% -Refer to the Figure.What are the average operating assets for Division B?

Which of the following is NOT a reason for decentralization?

Select the appropriate definition for each of the items listed below. -The dollar difference between operating income and minimum required return.

Match each term with the correct statement from below. -A Balanced Scorecard viewpoint that describes the internal processes needed to provide value for customers and owners.

Direct materials \ 0.20 Direct labour 0.70 Variable overhead 0.10 Fixed overhead 0.23 Total \ 1.23 -Refer to the Figure.Assume that Corrugated,Inc.allows division managers to negotiate the transfer price.The Box Division is producing 500,000 boxes.Suppose the Box Division and the Candy Division agree to transfer boxes.What would be the floor of the bargaining range and which division sets it?

The snowboard manufacturing cell has 1,200 hours of time available per quarter.The cell could make 7,200 snowboards but made only 6,000 during that time.Calculate the following: A. Theoretical cycle time in minutes B. Theoretical velocity per hour C. Actual cycle time in minutes D. Actual velocity per hour E. MCE is $\_\_\_\_\%$ (round your answer two digits).

Using return on investment to calculate residual income,the dollar cost of capital employed is the actual percentage cost of capital multiplied by the total capital.

Win Company has the following data: Division A Division B Sales \ 400,000 \ 300,000 Contribution margin 160,000 125,000 Operating income 80,000 30,000 Average operating assets 320,000 200,000 Cost of capital 15\% 15\% Dixie Company has a target ROI of 20%. Required: Calculate the following amounts for each division: A. Margin ratio B. Turnover ratio C. ROI D. Residual income E. EVA

The use of residual income encourages managers to accept any project that earns below the minimum rate.

Suppose the International Division of National Products Company had a turnover ratio of 5.2 and a margin of 0.10.What would be the return on investment?

Which of the following is an advantage of the ROI performance measure?

Residual income is the difference between operating income and the product of the hurdle rate and the company's average operating assets.

Match each term with the correct statement from below. -is the practice of delegating decision-making authority to lower levels.

The selling division is forced to transfer a product internally when a cost-based transfer pricing policy is set by top management.