Exam 11: Performance Evaluation and the Balanced Scorecard

Use the information below to answer the following question(s): The Beverage Division of Natural Foods Corporation had sales of $4,200,000 and operating income of $840,000 last year. The total assets of the Beverage Division were $1,680,000, while current liabilities were $360,000. Natural Foods Corporation's target rate of return is 9%, while its weighted average cost of capital is 7%. The effective tax rate for the company is 40%. -What is the Beverage Division's Return on Investment (ROI)?

Kleener Company has a profit margin of 15%, a target rate of return of 12%, and asset turnover of 2.0. The sales in dollars for Kleener Company would be closest to

Which of the following is a potential advantage of decentralization?

Use the information below to answer the following question(s): The Beverage Division of Natural Foods Corporation had sales of $4,200,000 and operating income of $840,000 last year. The total assets of the Beverage Division were $1,680,000, while current liabilities were $360,000. Natural Foods Corporation's target rate of return is 9%, while its weighted average cost of capital is 7%. The effective tax rate for the company is 40%. -What is the Beverage Division's Residual Income (RI)?

Performance evaluation systems provide top management with a framework for maintaining control over the organization.

What will happen to return on investment (ROI) if a company must decrease its selling price while all of the company's expenses remain constant?

Using what measure may cause a manager to reject a project that would be profitable for the company as a whole?

Prescott Enterprises has a target rate of return of 12%, an ROI of 30%, and asset turnover of 2.0. The profit margin for Prescott Enterprises would be closest to

The change in the amount invested in research and development is an example of a leading performance indicator.

Small companies tend to use centralized decision making.

Use the information below to answer the following question(s): The following data relates to Logan Electric and its Light Bulb Division. -What is the Light Bulb Division's asset turnover?

Goal congruence is more likely to be achieved at a decentralized organization rather than a centralized organization.

The financial results for one of the subunits of Factory Six Racing is presented in the partially completed performance evaluation report below. Required: 1. Complete the performance report rounding to three decimal places. 2. Based on the data presented, what type of responsibility centre is this subunit? 3. Which items should be investigated if part of management's decision criteria is to investigate all variances equal to or exceeding $5,000 and exceeding 10% ( both criteria must be met)?

Residual income is used in the denominator when calculating ROI.

Manufacturing cycle efficiency is a potential measure of the

Decentralization allows top management to concentrate on long-term strategic planning.

Variances which exceed a certain dollar amount or a certain percentage are the variances which are investigated when using management by exception.

The number of complaints about the company's product is a potential measure of the

Cost centre performance reports typically focus on the flexible budget variance.

Which of the following is a feature of a good balanced scorecard?