Exam 23: Performance Measurement, compensation, and Multinational Considerations

Managers use ________ to ensure employees' intrinsic motivation,the desire to achieve self-satisfaction for performing well regardless of external rewards such as bonuses or promotion.

Which of the following best describes a belief control system?

Average number of repeat visits in a spa unit is a ________ measure on a balanced scorecard.

The top management at Amore Corp,a manufacturer of computer games,is attempting to recover from a flood 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 Beta Division (c)?

Intrinsic motivation comes from being given greater responsibility,doing interesting and creative work,and having pride in doing that work.

To convert the operating income for an overseas branch into US dollars,the historical rate of exchange is used for its conversion into US dollars.

Using residual income as a measure of performance rather than return on investment promotes goal congruence because residual income ________.

Assume you are evaluating a manufacturing company.Match the various organizational activities and concepts with the performance measures listed.Some items may have more than one match. Activities: 1.Change in revenues 2.Cycle time 3.Economic order quantity 4.Manufacturing defects 5.Market share 6.New products 7.On-time delivery 8.Operating income 9.Product reliability 10.Time-to-market Performance measure:

Which of the following best describes an interactive control system?

Reducing the investment base to improve ROI involves decreasing idle cash,paying down debt,determining proper inventory levels,and spending carefully on long-term assets.

The proponents of using net book value as an investment base maintain that it is less confusing because it is consistent with the amount of total assets shown in the conventional balance sheet.

When managers set and measure target levels of performance and feedback,________.

"Levers of control," in addition to a diagnostic control system,are needed in an organization because ________.

Coptermagic Company supplies helicopters to corporate clients.Coptermagic has two sources of funds: long term debt with a market and book value of $32 million issued at an interest rate of 10%,and equity capital that has a market value of $18 million (book value of $8 million).The cost of equity capital for Coptermagic is 15%,and its tax rate is 30%.Coptermagic has profit centers in four divisions that operate autonomously.The company's results for 2015 are as follows: Required: a.Compute Coptermagic's weighted average cost of capital. b.Compute each division's Economic Value Added. c.Rank the divisions by EVA.

Craylon Corp.is planning the 2018 operating budget.Average operating assets of $1,800,000 will be used during the year and unit selling prices are expected to average $100 each.Variable costs of the division are budgeted at $500,000,while fixed costs are set at $300,000.The company's required rate of return is 18%. Required: a.Compute the sales volume necessary to achieve a 20% ROI. b.The division manager receives a bonus of 50% of residual income.What is his anticipated bonus for 2015,assuming he achieves the 20% ROI from part (a)?

A company which favors the residual income approach to financial performance evaluation wants managers to ________.

Which of the following steps in designing an accounting-based performance measure includes decisions of selecting net income as a measure of financial performance?

An additional criticism of team-based compensation is that there can be problems managing team members who are not productive contributors to a team's success but who,nevertheless,share in the team's rewards.

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

Waldorf Company has two sources of funds: long-term debt with a market and book value of $5,400,000 issued at an interest rate of 12%,and equity capital that has a market value of $4,300,000 (book value of $2,100,000).Waldorf Company has profit centers in the following locations with the following operating incomes,total assets,and current liabilities.The cost of equity capital is 12%,while the tax rate is 35%. What is the EVA^® for Wichita? (Round intermediary calculations to four decimal places. )