Exam 11: Performance Evaluation and the Balanced Scorecard

A product line at Coca-Cola (such as the Diet Coke product line) is most likely treated as a(n)

The difference in dollars between amounts in the static budget and the flexible budget is called the

Return on Investment (ROI) is defined as operating income divided by total assets.

Describe the limitations of financial performance measurement.

The taxation department for department store chain is likely to be classified as a(n)

The laundry department for a Ritz-Carlton hotel is likely to be classified as a(n)

Match the following: A) Decentralized B) Centralized 1) Having formal training programs for lower level managers the company has a policy that they promote from within the company whenever possible. 2) The company is divided into several operating units. 3) Johnson Enterprises is a small molding manufacturer. The owner is also the senior manager. 4) Managers have the authority to make decisions about product offerings and pricing. 5) In order to avoid duplication of services the company has "flattened" its organization structure and now has only one Payroll Department, one Human Resource department and one administrative headquarters.

Customer satisfaction ratings would be an example of the

An amusement park's games department which reports revenues and expenses is likely to be classified as a(n)

The accounting department for a department store chain is likely to be considered an investment centre.

The balanced scorecard considers both financial and operational performance measures.

The reservations department for a hotel chain is likely to be classified as a(n)

The Frito-Lay division of PepsiCo is most likely treated as a(n)

What is it called when managers look at the size of the variances between actual results and budgeted amounts in order to determine which variances should be investigated?

One serious drawback of financial measures is their short-term focus.

Duplication of costs is a disadvantage of decentralized organizations.

The following information for Alpha Company was available for the past year: Management has a 25% target rate of return. Alpha Company's weighted average cost of capital is 17% and its effective tax rate is 32%. Calculate the EVA.

Which of the following is not a leading performance indicator?

The profit margin is operating income divided by sales.

The Frozen Foods Division of AgraFoods Corporation had sales of $8,400,000 and operating income of $1,848,000 last year. The total assets of the Frozen Foods Division were $3,500,000, while current liabilities were $850,000. AgraFoods Corporation's target rate of return is 12%, while its weighted average cost of capital is 8%. The effective tax rate for the company is 40%. Required: 1. Calculate the profit margin. 2. Calculate the asset turnover. 3. Calculate the return on investment (ROI). 4. Calculate the residual income. 5. Calculate the Economic Value Added (EVA).