Exam 11: Performance Evaluation and Decentralization

In _______________ decision making, decisions are made at the very top level, and lower-level managers are charged with implementing these decisions.

Quinn Inc.has a number of divisions.One division, Style, makes zippers that are used in the manufacture of boots.Another division, LeatherStuff, makes boots that use the zippers and needs 90,000 zippers per year.Style incurs the following costs for one zipper: Quinn has capacity to make 950,000 zippers per year, but due to a soft market, only plans to produce and sell 620,000 zippers next year.LeatherStuff currently buys zippers from an outside supplier for $3.50 each (the same price that Style receives) - Assume that Style and LeatherStuff have agreed on a transfer price of $3.25.What is the total benefit for Quinn, Inc.?

The Balanced Scorecard perspective that defines the customer and market segments in which the business unit will compete is the ____ perspective.

The following information pertains to the three divisions of Yang Company: - What are the average operating assets for Division B?

A _________________ is the price charged for a component by the selling division to the buying division of the same company.

If there is a competitive outside market for the transferred product, then the best transfer price is the

Turnover is the ratio of sales to average operating assets.

Select the term from below to match with the correct statement. -A(n) ___________ is a responsibility center in which a manager is responsible for revenues, costs, and investments.

The following information pertains to the three divisions of Marlow Company: What is the residual income for Division X?

Divisions in a decentralized company can be created along which of the following lines?

Select the term from below to match with the correct statement. -The practice of delegating decision-making authority to lower levels is __________.

If the operating asset turnover increased by 50% and the margin increased by 50%, the ROI would increase by

Forward Company had operating income of $75,000, sales of $220,000, and a turnover ratio of 0.55.What is Forward's return on investment (ROI)? (Note: Round answer to two decimal places.)

Last week, Davis worked for 50 hours and produced 250 business card boxes. -What is the cycle time for producing one business card box?

The Engine Division provides engines for the Tractor Division of a company.The standard unit costs for the Engine Division are: - The Engine Division has excess capacity.What is the best transfer price to avoid transfer price problems?

Residual income is sometimes used to overcome the tendency of ROI to discourage investments that are profitable for the company, but that lower the division's ROI.

Which of the following is true of economic value added (EVA)?

If the selling division is operating at less than full capacity, the floor of the bargaining range would most probably be set at

Economic value added (EVA) is similar to ROI in that it links net income to capital employed.

Decentralization is usually achieved by creating units called divisions.