Question 1

In an EVA calculation,the appropriate measure of a division's profit would be that division's pre-tax operating income.

Accepted Answer

A) True 
 B)False  False

Question 2

Interactive control systems are informal information systems managers use to focus the company's attention and learning on key strategic issues.

Accepted Answer

A) True 
 B)False  False

Question 3

Relative performance evaluation ________.

Accepted Answer

A) determines the effective intensity of incentives placed on each measure of performance 
B) filters out the effect of common uncontrollable factors 
C) results in managers helping each other who run similar operations 
D) leads to goal congruence 
A) determines the effective intensity of incentives placed on each measure of performance 
B) filters out the effect of common uncontrollable factors 
C) results in managers helping each other who run similar operations 
D) leads to goal congruence B

Question 4

The ________ method of profitability analysis recognizes the two basic ingredients in profit-making: increasing income per dollar of revenues and using assets to generate more revenues.

Accepted Answer

A) Balanced Scorecard 
B) Residual-Income 
C) DuPont 
D) Economic Value Added 
A) Balanced Scorecard 
B) Residual-Income 
C) DuPont 
D) Economic Value Added

Question 5

Home Decor Inc. ,manufactures home cleaning products.The company has two divisions,Bleach and Cleanser.Because of different accounting methods and inflation rates,the company is considering multiple evaluation measures.The following information is provided for 2018:
 
The company is currently using a 15% required rate of return.
What are Bleach's and Cleanser's residual incomes based on book values,respectively?

Accepted Answer

A) $83,750;$63,500 
B) $125,000;$71,750 
C) $63,500;$83,750 
D) $71,750;$125,000 
A) $83,750;$63,500 
B) $125,000;$71,750 
C) $63,500;$83,750 
D) $71,750;$125,000

Question 6

Which of the following best describes interactive control systems?

Accepted Answer

A) it articulates the mission,purpose,and core values of a company 
B) it articulates standards of behavior and codes of conduct expected of all employees and help in achieving the maximum benefit 
C) they are formal information systems managers use to focus the company's attention and learning on key strategic issues 
D) it describes the geographic limits of a company and help organize its layout 
A) it articulates the mission,purpose,and core values of a company 
B) it articulates standards of behavior and codes of conduct expected of all employees and help in achieving the maximum benefit 
C) they are formal information systems managers use to focus the company's attention and learning on key strategic issues 
D) it describes the geographic limits of a company and help organize its layout

Question 7

The Cybertronics Corporation reported the following information for its Cyclotron Division:
$\begin{array}{ll}
\text { Revenues } & \$ 2,400,000 \
\text { Operating costs } & 1,300,000 \
\text { Operating assets } & 1,200,000
\end{array}$
Income is defined as operating income.
What is the Cyclotron Division's return on sales?

Accepted Answer

A) 91.7% 
B) 45.8% 
C) 50.0% 
D) 92.3% 
A) 91.7% 
B) 45.8% 
C) 50.0% 
D) 92.3%

Question 8

________ would be an uncontrollable factor that a firm would need to consider when evaluating the return on investment of an international division.

Accepted Answer

A) Manager's experience 
B) Manager's compensation 
C) Pricing decisions 
D) Custom duties 
A) Manager's experience 
B) Manager's compensation 
C) Pricing decisions 
D) Custom duties

Question 9

Customer-satisfaction measures are an example of the ________.

Accepted Answer

A) goal-congruence approach 
B) balanced scorecard approach 
C) financial report scorecard approach 
D) investment success approach 
A) goal-congruence approach 
B) balanced scorecard approach 
C) financial report scorecard approach 
D) investment success approach

Question 10

All other things held constant,increase in assets such as receivables or decrease in operating income results in an increase in return on investment.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is true of performance measurement?

Accepted Answer

A) Preferred performance measures do not change much with changes in factors that are beyond manager's control. 
B) Sensitive performance measures increases the cost of providing incentives. 
C) Less-sensitive performance measures induce managers to improve. 
D) Managers' performances should be evaluated based on the financial measures such as residual income and economic value added. 
A) Preferred performance measures do not change much with changes in factors that are beyond manager's control. 
B) Sensitive performance measures increases the cost of providing incentives. 
C) Less-sensitive performance measures induce managers to improve. 
D) Managers' performances should be evaluated based on the financial measures such as residual income and economic value added.

Question 12

A manager's job entails gathering information,interpreting that information and making judgments on that information and thus is less susceptible to moral hazards than jobs that require repetitive tasks and less subjective decision making.

Accepted Answer

A) True 
 B)False

Question 13

The top management at Groundsource Company,a manufacturer of lawn and garden equipment,is attempting to recover from a fire that destroyed some of their accounting records.The main computer system was also severely damaged.The following information was salvaged:
 
What is the value of the operating assets belonging to the Tractor Division?

Accepted Answer

A) $15,000,000 
B) $2,179,487 
C) $13,300,000 
D) $7,727,273 
A) $15,000,000 
B) $2,179,487 
C) $13,300,000 
D) $7,727,273

Question 14

Which of the following describes a situation in which an employee prefers to exert less effort than the effort the owner desires because the employee's effort cannot be accurately monitored and enforced?

Accepted Answer

A) Goal incongruence 
B) Moral hazard 
C) Performance report variance 
D) Incentive report variance 
A) Goal incongruence 
B) Moral hazard 
C) Performance report variance 
D) Incentive report variance

Question 15

Aeralia Inc. ,has two regional offices.The data for each are as follows:
$\begin{array}{lll}&\text { Maryland}&\text { New lersey }\
\text { Revenues } & \$ 292,000 & \$ 302,000 \
\text { Operating assets } & 2,900,000 & 4,800,000 \
\text { Net operating income } & 1,300,000 & 1,500,000
\end{array}$
What is the Maryland Division's return on investment?

Accepted Answer

A) 44.8% 
B) 10.1% 
C) 31.3% 
D) 22.5% 
A) 44.8% 
B) 10.1% 
C) 31.3% 
D) 22.5%

Question 16

The return on investment is usually considered the most popular approach to measure performance because ________.

Accepted Answer

A) it blends all the ingredients of profitability into a single percentage 
B) once determined,there is no need to use it with other measures of performance 
C) it throws light on the company's working capital 
D) it measures the cash balance of the company in the most efficient manner 
A) it blends all the ingredients of profitability into a single percentage 
B) once determined,there is no need to use it with other measures of performance 
C) it throws light on the company's working capital 
D) it measures the cash balance of the company in the most efficient manner

Question 17

Return on investment can be calculated by multiplying return on assets by investment turnover.

Accepted Answer

A) True 
 B)False

Question 18

The top management at Groundsource Company,a manufacturer of lawn and garden equipment,is attempting to recover from a fire that destroyed some of their accounting records.The main computer system was also severely damaged.The following information was salvaged:
 
What is the Tiller Division's investment turnover?

Accepted Answer

A) 1)27 
B) 0)79 
C) 0)02 
D) 0)25 
A) 1)27 
B) 0)79 
C) 0)02 
D) 0)25

Question 19

The top management at Groundsource Company,a manufacturer of lawn and garden equipment,is attempting to recover from a fire that destroyed some of their accounting records.The main computer system was also severely damaged.The following information was salvaged:
 
What is the Digger Division's return on investment?

Accepted Answer

A) 0)25 
B) 0)30 
C) 0)34 
D) 0)43 
A) 0)25 
B) 0)30 
C) 0)34 
D) 0)43

Question 20

Coldbrook Company has two sources of funds: long-term debt with a market and book value of $17,000,000 issued at an interest rate of 11%,and equity capital that has a market value of $3,000,000 (book value of $4,000,000).Coldbrook Company has profit centers in the following locations with the following operating incomes,total assets,and current liabilities.The cost of equity capital is 15%,while the tax rate is 35%.
 
What is the EVA® for Bish Bash Falls? (Round intermediary calculations to four decimal places. )

Accepted Answer

A) $530,400 
B) $264,061 
C) $266,339 
D) $159,638 
A) $530,400 
B) $264,061 
C) $266,339 
D) $159,638

In an EVA calculation,the appropriate measure of a division's profit would be that division's pre-tax operating income.

Interactive control systems are informal information systems managers use to focus the company's attention and learning on key strategic issues.

Relative performance evaluation ________.

The ________ method of profitability analysis recognizes the two basic ingredients in profit-making: increasing income per dollar of revenues and using assets to generate more revenues.

Which of the following best describes interactive control systems?

The Cybertronics Corporation reported the following information for its Cyclotron Division: Revenues \ 2,400,000 Operating costs 1,300,000 Operating assets 1,200,000 Income is defined as operating income. What is the Cyclotron Division's return on sales?

________ would be an uncontrollable factor that a firm would need to consider when evaluating the return on investment of an international division.

Customer-satisfaction measures are an example of the ________.

All other things held constant,increase in assets such as receivables or decrease in operating income results in an increase in return on investment.

Which of the following is true of performance measurement?

A manager's job entails gathering information,interpreting that information and making judgments on that information and thus is less susceptible to moral hazards than jobs that require repetitive tasks and less subjective decision making.

Which of the following describes a situation in which an employee prefers to exert less effort than the effort the owner desires because the employee's effort cannot be accurately monitored and enforced?

Aeralia Inc. ,has two regional offices.The data for each are as follows: Maryland New lersey Revenues \ 292,000 \ 302,000 Operating assets 2,900,000 4,800,000 Net operating income 1,300,000 1,500,000 What is the Maryland Division's return on investment?

The return on investment is usually considered the most popular approach to measure performance because ________.

Return on investment can be calculated by multiplying return on assets by investment turnover.

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets,direct-Cost Variances,and Management Control

Flexible Budgets, overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy,balanced Scorecard,and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, transfer Pricing, and Multinational Considerations

Filters

Exam 23: Performance Measurement, compensation, and Multinational Considerations

In an EVA calculation,the appropriate measure of a division's profit would be that division's pre-tax operating income.

Interactive control systems are informal information systems managers use to focus the company's attention and learning on key strategic issues.

Relative performance evaluation ________.

The ________ method of profitability analysis recognizes the two basic ingredients in profit-making: increasing income per dollar of revenues and using assets to generate more revenues.

Which of the following best describes interactive control systems?

The Cybertronics Corporation reported the following information for its Cyclotron Division: Revenues \ 2,400,000 Operating costs 1,300,000 Operating assets 1,200,000 Income is defined as operating income. What is the Cyclotron Division's return on sales?

________ would be an uncontrollable factor that a firm would need to consider when evaluating the return on investment of an international division.

Customer-satisfaction measures are an example of the ________.

All other things held constant,increase in assets such as receivables or decrease in operating income results in an increase in return on investment.

Which of the following is true of performance measurement?

A manager's job entails gathering information,interpreting that information and making judgments on that information and thus is less susceptible to moral hazards than jobs that require repetitive tasks and less subjective decision making.

Which of the following describes a situation in which an employee prefers to exert less effort than the effort the owner desires because the employee's effort cannot be accurately monitored and enforced?

Aeralia Inc. ,has two regional offices.The data for each are as follows: Maryland New lersey Revenues \ 292,000 \ 302,000 Operating assets 2,900,000 4,800,000 Net operating income 1,300,000 1,500,000 What is the Maryland Division's return on investment?

The return on investment is usually considered the most popular approach to measure performance because ________.

Return on investment can be calculated by multiplying return on assets by investment turnover.

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets,direct-Cost Variances,and Management Control

Flexible Budgets, overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy,balanced Scorecard,and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, transfer Pricing, and Multinational Considerations

Filters