Hansen Company reported the following information for 2012: $\begin{array}{lr} \text { Sales } & \$ 787,000 \\ \text { Average Operating Assets } & \$ 375,000 \\ \text { Desired ROI } & 9 \% \\ \text { Residual Income } & \$ 11,250 \end{array}$ The company's operating income for 2012 was

A) $37,080. B) $33,750. C) $45,000. D) $363,750. A) $37,080. B) $33,750. C) $45,000. D) $363,750.

Based on the information given for a variance, indicate whether the variance is favorable or unfavorable. \[\begin{array} { | l | l | l | l | } \hline \text { Item to classify } & \text { Static budget } & \text { Actual } & \begin{array} { l } \text { Variance - Favorable or } \\ \text { Unfavorable? } \end{array} \\ \hline \text { Sales volume } & 100,000 \text { units } & 96,000 \text { units } & \\ \hline \end{array}\]

The answer of Based on the information given for a...

Caroline Farr is manager of a production department of Helling Company. Her department makes one product; the following information for her department was accumulated for 2012: $\begin{array}{|l|r|r|} \hline&\text { Static Budget }&\text { Actual Results }\\ \hline \text { Number of units } & 100,000 & 97,000 \\ \hline \text { Direct materials cost } & \$ 800,000 & \$ 792,000 \\ \hline \text { Direct labor cost } & \$ 400,000 & \$ 380,000 \\ \hline \begin{array}{l} \text { Variable manufacturing } \\ \text { overhead } \end{array} & \$ 200,000 & \$ 199,000 \\ \hline \begin{array}{l} \text { Fixed manufacturing } \\ \text { overhead } \end{array} & \$ 290,000 & \$ 292,000 \\ \hline \text { Total } & \$ 1,690,000 & \$ 1,663,000 \\ \hline \end{array}$ Required: a) Prepare a flexible budget for the department's actual level of activity, 97,000 units. b) Use the flexible budget to evaluate Ms. Farr's performance. c) Why does the budget not include sales revenue and net income?

a), b) @#IMG-DLM& The total difference between act

Use the following information to answer Question. Renfro Company has two divisions, the Restaurants Division and the Commissary Division. The following information was gathered for the two divisions in 2012: \[\begin{array} { | l | l | l | } \hline & \begin{array} { l } \text { Restaurants } \\ \text { Division } \end{array} & \begin{array} { l } \text { Commissary } \\ \text { Division } \end{array} \\ \hline \text { Operating Income } & \$ 4,000,000 & \$ 1,500,000 \\ \hline \text { Operating Assets } & \$ 30,000,000 & \$ 10,500,000 \\ \hline \end{array}\] Hays Company has set a target return on investment (ROI) of 12% for both divisions. Calculate residual income (RI) for the Restaurants Division and the Commissary Division. Based on RI, which division appears to have performed better?

RI for Restaurants = $4,000,000 - (0.12

Exam 15: Performance Evaluation

Hansen Company reported the following information for 2012: Sales \ 787,000 Average Operating Assets \ 375,000 Desired ROI 9\% Residual Income \ 11,250 The company's operating income for 2012 was

(Multiple Choice)

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Question 81

If the master budget prepared at a volume level of 20,000 units includes direct materials of $80,000, a flexible budget based on a volume of 18,000 units would include direct materials of $72,000.

(True/False)

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Question 82

Which of the following software applications is most suited for developing flexible budgets?

(Multiple Choice)

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Question 83

Which of the following income statement formats is most commonly used with flexible budgeting?

(Multiple Choice)

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Question 84

If Paterno Company's turnover measure is 2.5 and its margin is 7.5%, its ROI is 10%.

(True/False)

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Question 85

Based on the information given for a variance, indicate whether the variance is favorable or unfavorable. Item to classify Static budget Actual Variance - Favorable or Unfavorable? Sales volume 100,000 units 96,000 units

(Short Answer)

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Question 86

The Jordan Company, estimating its sales to be 20,000 units for the upcoming period, prepared the following static budget: Units: 20,000 Sales \2 00,000 Less variable costs: Manufacturing costs 70,000 Selling and administrative costs 40,000 Contribution margin \ 90,000 Less fixed costs: Manufacturing costs 22,000 Selling and administrative costs 17,000 Net income \5 1,000 The owner of the business is not so sure about the 20,000 unit sales volume and has requested additional budgets. Required: In the table provided, prepare two additional budgets, one at 90% of the static budget volume level and one at 110% of the static budget volume level. $The Jordan Company, estimating its sales to be 20,000 units for the upcoming period, prepared the following static budget: \begin{array}{l} \text { Units: }&20,000\\\text { Sales }&\$200,000\\ \text { Less variable costs: }\\ \text { Manufacturing costs } & 70,000 \\ \text { Selling and administrative costs } & 40,000\\\text { Contribution margin } & \$ 90,000 \\ \text { Less fixed costs: } & \\ \quad \text { Manufacturing costs } & 22,000 \\ \text { Selling and administrative costs } & 17,000\\\text { Net income }&\$51,000 \end{array} The owner of the business is not so sure about the 20,000 unit sales volume and has requested additional budgets. Required: In the table provided, prepare two additional budgets, one at 90% of the static budget volume level and one at 110% of the static budget volume level. Flexible budgets at 90% and 110%:$ Flexible budgets at 90% and 110%:

(Essay)

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Question 87

Caroline Farr is manager of a production department of Helling Company. Her department makes one product; the following information for her department was accumulated for 2012: Static Budget Actual Results Number of units 100,000 97,000 Direct materials cost \ 800,000 \ 792,000 Direct labor cost \ 400,000 \ 380,000 Variable manufacturing overhead \ 200,000 \ 199,000 Fixed manufacturing overhead \ 290,000 \ 292,000 Total \ 1,690,000 \ 1,663,000 Required: a) Prepare a flexible budget for the department's actual level of activity, 97,000 units. b) Use the flexible budget to evaluate Ms. Farr's performance. c) Why does the budget not include sales revenue and net income?

(Essay)

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Question 88

Evaluation of the amount of costs incurred should be based on the actual volume of activity rather than the planned volume of activity.

(True/False)

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Question 89

Which of the following statements about ROI is false?

(Multiple Choice)

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Question 90

The following static budget is provided: What will be the total volume variance (the effect on net income) if 18,000 units are produced and sold?

(Multiple Choice)

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Question 91

Use the following information to answer Question. Renfro Company has two divisions, the Restaurants Division and the Commissary Division. The following information was gathered for the two divisions in 2012: Restaurants Division Commissary Division Operating Income \ 4,000,000 \ 1,500,000 Operating Assets \ 30,000,000 \ 10,500,000 Hays Company has set a target return on investment (ROI) of 12% for both divisions. Calculate residual income (RI) for the Restaurants Division and the Commissary Division. Based on RI, which division appears to have performed better?

(Essay)

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Question 92

Because both the flexible budget and actual results are based on the actual volume of activity, the flexible budget sales variance is attributable to sales price, not sales volume.

(True/False)

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Question 93

The sales revenue volume variance is favorable if actual sales volume is lower than expected.

(True/False)

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Question 94

Use the following information to answer Question. Renfro Company has two divisions, the Restaurants Division and the Commissary Division. The following information was gathered for the two divisions in 2012: Restaurants Division Commissary Division Operating Income \ 4,000,000 \ 1,500,000 Operating Assets \ 30,000,000 \ 10,500,000 Hays Company has set a target return on investment (ROI) of 12% for both divisions. Calculate ROI for the Restaurants Division and the Commissary Division. Based on ROI, which division appears to have performed better?

(Essay)

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Question 95

What is suboptimization? How might use of return on investment to evaluate a manager's performance lead to suboptimization?

(Essay)

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Question 96

If the master budget prepared at a volume level of 20,000 units includes factory rent of $40,000, a flexible budget based on a volume of 18,000 units would include factory rent of $36,000.

(True/False)

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Question 97

Use the following information to answer Question. Renfro Company has two divisions, the Restaurants Division and the Commissary Division. The following information was gathered for the two divisions in 2012: Restaurants Division Commissary Division Operating Income \ 4,000,000 \ 1,500,000 Operating Assets \ 30,000,000 \ 10,500,000 Hays Company has set a target return on investment (ROI) of 12% for both divisions. Assuming that these are the only divisions of Renfro Company, calculate ROI for the company as a whole.

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Question 98

The sales volume variance is the difference between actual sales revenue and the static budget amount.

(True/False)

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Question 99

What are cost centers? What responsibilities does the manager of a cost center have? And at what level on an organization chart are you most likely to find cost centers?

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Question 100

Showing 81 - 100 of 150

Hansen Company reported the following information for 2012: Sales \ 787,000 Average Operating Assets \ 375,000 Desired ROI 9\% Residual Income \ 11,250 The company's operating income for 2012 was

If the master budget prepared at a volume level of 20,000 units includes direct materials of $80,000, a flexible budget based on a volume of 18,000 units would include direct materials of $72,000.

Which of the following software applications is most suited for developing flexible budgets?

Which of the following income statement formats is most commonly used with flexible budgeting?

If Paterno Company's turnover measure is 2.5 and its margin is 7.5%, its ROI is 10%.

Based on the information given for a variance, indicate whether the variance is favorable or unfavorable. Item to classify Static budget Actual Variance - Favorable or Unfavorable? Sales volume 100,000 units 96,000 units

Evaluation of the amount of costs incurred should be based on the actual volume of activity rather than the planned volume of activity.

Which of the following statements about ROI is false?

The following static budget is provided: What will be the total volume variance (the effect on net income) if 18,000 units are produced and sold?

Because both the flexible budget and actual results are based on the actual volume of activity, the flexible budget sales variance is attributable to sales price, not sales volume.

The sales revenue volume variance is favorable if actual sales volume is lower than expected.

What is suboptimization? How might use of return on investment to evaluate a manager's performance lead to suboptimization?

If the master budget prepared at a volume level of 20,000 units includes factory rent of $40,000, a flexible budget based on a volume of 18,000 units would include factory rent of $36,000.

The sales volume variance is the difference between actual sales revenue and the static budget amount.

What are cost centers? What responsibilities does the manager of a cost center have? And at what level on an organization chart are you most likely to find cost centers?

An Introduction to Accounting

Accounting for Accruals and Deferrals

Accounting for Merchandising Businesses

Internal Controls, Accounting for Cash, and Ethics

Accounting for Receivables and Inventory Cost Flow

Accounting for Long-Term Operational Assets

Accounting for Liabilities

Proprietorships, Partnerships, and Corporations

Financial Statement Analysis

An Introduction to Management Accounting

Cost Behavior, Operating Leverage, and Profitability Analysis

Cost Accumulation, Tracing, and Allocation

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Planning for Capital Investments

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