The Cybertronics Corporation reported the following information for its Cyclotron Division: $\begin{array}{ll} \text { Revenues } & \$ 2,500,000 \\ \text { Operating costs } & 1,600,000 \\ \text { Operating assets } & 1,300,000 \end{array}$ Income is defined as operating income. What is the Cyclotron Division's investment turnover ratio?

A) 1)92 B) 1)56 C) 0)81 D) 1)23 A) 1)92 B) 1)56 C) 0)81 D) 1)23

Exam 23: Performance Measurement, compensation, and Multinational Considerations

Historical costs are costs recognized in particular situations that are not usually recognized by accrual accounting procedures.

(True/False)

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Question 21

Using net book value as an investment base will result in a lower ROI than using gross book value as an investment base.

(True/False)

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Question 22

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 return on investment based on current values,respectively?

(Multiple Choice)

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Question 23

Return on sales can provide how effectively costs are managed and is part of the DuPont method of profitability analysis.

(True/False)

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Question 24

Inflation and fluctuations in foreign-currency exchange rates affect performance measurement.

(True/False)

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Question 25

The credit rating agencies require detailed disclosures of the compensation arrangements of top-level executives.

(True/False)

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Question 26

The more owners have access to sensitive performance measures,the more they can rely on incentive compensation for their managers.

(True/False)

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Question 27

Care Inc. ,has two divisions that operate independently of one another.The financial data for the year 2015 reported the following results: The company's desired rate of return is 10%.Income is defined as operating income. What are the respective residual incomes for the North and South Divisions?

(Multiple Choice)

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Question 28

An example of a performance measure with a long time horizon is ________.

(Multiple Choice)

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Question 29

An excessive focus on diagnostic control systems and critical performance variables can cause an organization to ignore emerging threats and opportunities.

(True/False)

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Question 30

Capital Investments has three divisions.Each division's required rate of return is 15%.Planned operating results for 2015 are as follows: The company is planning an expansion,which will require each division to increase its investments by $25,000,000 and its income by $4,500,000. Required: a.Compute the current ROI for each division. b.Compute the current residual income for each division. c.Rank the divisions according to their current ROIs and residual incomes. d.Determine the effects after adding the new project to each division's ROI and residual income. e.Assuming the managers are evaluated on either ROI or residual income,which divisions are pleased with the expansion and which ones are unhappy?

(Essay)

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Question 31

Springfield Corporation,whose tax rate is 30%,has two sources of funds: long-term debt with a market value of $8,400,000 and an interest rate of 8%,and equity capital with a market value of $14,000,000 and a cost of equity of 13%.Springfield has two operating divisions,the Blue division and the Gold division,with the following financial measures for the current year: What is Economic Value Added (EVA^®)for the Blue Division? (Round intermediary calculations to four decimal places. )

(Multiple Choice)

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Question 32

The balanced scorecard in most organizations is broken down into the following categories: commercial perspective,supplier perspective,external business-process perspective,and productivity perspective.

(True/False)

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Question 33

The Cybertronics Corporation reported the following information for its Cyclotron Division: Revenues \ 2,500,000 Operating costs 1,600,000 Operating assets 1,300,000 Income is defined as operating income. What is the Cyclotron Division's investment turnover ratio?

(Multiple Choice)

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Question 34

Companies are increasingly using nonfinancial measures to evaluate performance.Why? Since these numbers do not come from the company's financial records,why are they used?

(Essay)

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Question 35

Carriage Incorporated manufactures horse carriages.The company has two divisions,Wheels and Assembly.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 12% required rate of return. What are Wheels's and Assembly's residual incomes based on book values,respectively?

(Multiple Choice)

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Question 36

Zenith Corporation's net income is $80,000.What is the return on investment if the amount of the investment is $510,000?

(Multiple Choice)

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Question 37

Which of the following is true of rewarding managers on the basis of residual income?

(Multiple Choice)

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Question 38

Return on investment,Residual income,or Economic value added measures are more appropriate than return on sales because they consider only the investment to measure the performance.

(True/False)

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Question 39

Stock options give executives the right to buy company stock at a specified price,called the exercise price,within a specified period.

(True/False)

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Question 40

Showing 21 - 40 of 150

Historical costs are costs recognized in particular situations that are not usually recognized by accrual accounting procedures.

Using net book value as an investment base will result in a lower ROI than using gross book value as an investment base.

Return on sales can provide how effectively costs are managed and is part of the DuPont method of profitability analysis.

Inflation and fluctuations in foreign-currency exchange rates affect performance measurement.

The credit rating agencies require detailed disclosures of the compensation arrangements of top-level executives.

The more owners have access to sensitive performance measures,the more they can rely on incentive compensation for their managers.

Care Inc. ,has two divisions that operate independently of one another.The financial data for the year 2015 reported the following results: The company's desired rate of return is 10%.Income is defined as operating income. What are the respective residual incomes for the North and South Divisions?

An example of a performance measure with a long time horizon is ________.

An excessive focus on diagnostic control systems and critical performance variables can cause an organization to ignore emerging threats and opportunities.

The balanced scorecard in most organizations is broken down into the following categories: commercial perspective,supplier perspective,external business-process perspective,and productivity perspective.

The Cybertronics Corporation reported the following information for its Cyclotron Division: Revenues \ 2,500,000 Operating costs 1,600,000 Operating assets 1,300,000 Income is defined as operating income. What is the Cyclotron Division's investment turnover ratio?

Companies are increasingly using nonfinancial measures to evaluate performance.Why? Since these numbers do not come from the company's financial records,why are they used?

Zenith Corporation's net income is $80,000.What is the return on investment if the amount of the investment is $510,000?

Which of the following is true of rewarding managers on the basis of residual income?

Return on investment,Residual income,or Economic value added measures are more appropriate than return on sales because they consider only the investment to measure the performance.

Stock options give executives the right to buy company stock at a specified price,called the exercise price,within a specified period.

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

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