Exam 11: Performance Evaluation and Decentralization

Planet Company had operating income of $12,000, average operating assets of $125,000, and sales of $45,000.What is Planet's return on investment (ROI)? (Note: Round answer to two decimal places.)

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

The difference between operating income and the minimum dollar return required on a company's operating assets is:

A California hospital decided to streamline its surgical suite operation.In order to speed things up, the nurses in charge studied how much time patients actually spent in various activities.They found that on average, a patient scheduled for an operation spent about 1.50 hours waiting and 2.00 hours in moving from lab to x-ray to the operating room.The average operation takes 1.50 hours.What is the manufacturing cycle efficiency (MCE)?

The difference between operating income and the minimum dollar return required on a company's operating assets is the _______________.

A price charged for a component by the selling division to the buying division of the same company is called a(n)

Which of the following formulas computes residual income?

MCE (manufacturing cycle efficiency) is calculated using the following formula:

Decreasing inventories leads to a reduction in return on investment (ROI).

Economic value added is just a specific way of calculating residual income.

A responsibility center in which a manager is responsible only for costs is a(n)

_______________ indicate the minimum ROI necessary to accept an investment.

______________________ occurs whenever managers receive information about the effectiveness of strategy implementation as well as the validity of the assumptions underlying the strategy.

A positive result that stems from the use of return on investment (ROI) is that it encourages managers to focus on

_________________ emphasizes only effectiveness of implementation.

Unique Company makes children's board games.One popular game requires the following amounts of time: processing - 2.5 hours; waiting ? 7 hours; moving - 4.5 hours.Which of the following is the manufacturing cycle efficiency (MCE) of Unique Company? (Note: Round answer to two decimal places.)

Select the appropriate definition for each of the items listed below. -The ratio of operating income to sales.

Elite Inc.has many divisions that are evaluated on the basis of return on investment (ROI).One division, Beta, makes boxes.A second division, Lambda, makes chocolates and needs 90,000 boxes per year.Beta incurs the following costs for one box: Beta has the capacity to make 720,000 boxes per year.Lambda currently buys its boxes from an outside supplier for $2.00 each (the same price that Beta receives). - Assume that Elite Inc.allows division managers to negotiate transfer price.Beta is producing 650,000 boxes.If Beta and Lambda agree to transfer boxes, what is the floor of the bargaining range and which division sets it?

Elite Inc.has many divisions that are evaluated on the basis of return on investment (ROI).One division, Beta, makes boxes.A second division, Lambda, makes chocolates and needs 90,000 boxes per year.Beta incurs the following costs for one box: Beta has the capacity to make 720,000 boxes per year.Lambda currently buys its boxes from an outside supplier for $2.00 each (the same price that Beta receives). - Assume that Elite Inc.allows division managers to negotiate transfer price.Beta is producing 650,000 boxes.If Beta and Lambda agree to transfer boxes, what is the ceiling of the bargaining range and which division sets it?

The Balanced Scorecard perspective that describes the internal processes needed to provide value for customers and owners is the ____ perspective.