Exam 7: Performance Management and Evaluation
Exam 1: The Changing Business Environment - a Managers Perspective130 Questions
Exam 2: Costing Systems- Job Order Costing80 Questions
Exam 3: Costing Systems- Process Costing123 Questions
Exam 4: Value-Based Systems- Abm and Lean149 Questions
Exam 5: Cost Behavior Analysis167 Questions
Exam 6: The Budgeting Process113 Questions
Exam 7: Performance Management and Evaluation116 Questions
Exam 8: Standard Costing and Variance Analysis119 Questions
Exam 9: Short Run Decision Analysis89 Questions
Exam 10: Capital Investment Analysis123 Questions
Exam 11: Pricing Decisions, Incl Target Costing and Transfer Pricing141 Questions
Exam 12: Quality Management and Measurement79 Questions
Exam 13: Financial Analysis of Performance162 Questions
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Compute the June 20xx cost of capital (rounded to nearest percent) for an investment center with the following information: Pre-tax operating income for June 20 \ 17,500,000 Assets at June 30,20 200,000 Current liabilities at June 30,20 4,000,000 Long-term liabilities at June 30,20 1,500,000 Income tax expense for June 30, 20:x 5,000,000 EVA 11,940,000
(Multiple Choice)
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Variable costing is utilized to evaluate the performance of
(Multiple Choice)
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Incentive plans must be developed with input from which of the following groups?
(Multiple Choice)
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Why is it important that a manager's evaluation be based only on those revenues and costs that he or she can control?
(Essay)
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Tying compensation incentives to performance targets decreases the likelihood that the goals of responsibility centers, managers, and the entire organization will be well coordinated.
(True/False)
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Compute the current liabilities for the Yi Yo investment center as shown below.
Yi Yo Subsiliary Total sales \ 18,000 After-tax operating income \ 1,000 Total assets \ 15,000 Current liabilities \ ? Total assets - current liabilities \ 3,500 Cost of capital 15\% Econnmic value addled \ ?
(Multiple Choice)
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The balanced scorecard links the perspectives of an organization's stakeholders with the organization's
(Multiple Choice)
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The use of quantitative tools to gauge an organization's performance in relation to a specific goal or an expected outcome is known as
(Multiple Choice)
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An evaluation of EVA will prove more meaningful if it is compared to
(Multiple Choice)
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Calculate ROI, residual income, and EVA for each of the investment centers listed. (Round to two decimal places.)
Investment Center 1 Investment Center 2 Operating income \ 50,000 \ 70,000 Assets invested 125,000 180,000 Income taxes 15,000 21,000 Cost of capital in clollars 13,000 25,000 Desired ROI 56\% 48\%
(Essay)
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Incentive awards are utilized mainly to encourage long-term performance.
(True/False)
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Use the following performance report for a cost center of the Dry Cat Food Division for the month ended December 31 to answer the question below.
-What is the direct labor variance between the actual results and the flexible budget?

(Multiple Choice)
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Identify the following and show the formula for calculating each:
a. ROI
b. RI
c. EVA
(Essay)
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Responsibility accounting is more concerned with performance evaluation than performance management.
(True/False)
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As the staff accountant for Investment Center 713, calculate the October 20xx ROI, using the following information:
October 20 profit margin 38\% October 20 sales \ 2,000,000 Assets at September 30,20 1,850,000 Assets at October 31,20 1,855,000
(Essay)
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What are some items that can affect an investment center's EVA calculation, and how can EVA be improved?
(Essay)
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Residual income is the amount of profit left after subtracting expenses of a particular investment center.
(True/False)
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Employer-provided health insurance is a common type of incentive compensation.
(True/False)
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Use the following performance report for a cost center of the Dry Cat Food Division for the month ended December 31 to answer the question below.
-The flexible budget is based on how many units produced?

(Multiple Choice)
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