Exam 10: Differential Analysis: the Key to Decision Making

The Portland Division's operating data for the past two years is as follows: The Portland Division's margin in Year 2 was 150% of the margin for Year 1. The average operating assets for Year 2 were:

Brletich Corporation keeps careful track of the time required to fill orders. Data concerning a particular order appear below: The delivery cycle time was:

All profit centers are responsibility centers, but not all responsibility centers are profit centers.

A manufacturing cycle efficiency (MCE) ratio close to 1.00 is desirable because this is the ratio of value-added time to throughput time.

The following information relates to last year's operations at the Paper Division of Germane Corporation: What was the Paper Division's net operating income last year?

Ok Corporation keeps careful track of the time required to fill orders. Data concerning a particular order appear below: The manufacturing cycle efficiency (MCE) was closest to:

Hysong Corporation uses residual income to evaluate the performance of its divisions. The minimum required rate of return for performance evaluation purposes is 11%. The Games Division had average operating assets of $530,000 and net operating income of $56,200 in June. Required: What was the Games Division's residual income in June?

The Portland Division's operating data for the past two years is as follows: The Portland Division's margin in Year 2 was 150% of the margin for Year 1. The net operating income for Year 1 was:

The Jenkins Division recorded operating data as follows for the past year: For the past year, the minimum required rate of return was:

Land held for possible plant expansion would not be included as an operating asset when computing return on investment (ROI).

ROI and residual income are tools used to evaluate managerial performance in profit centers.

Return on investment (ROI) equals margin multiplied by turnover.

Operating assets include cash, accounts receivable, and inventory but not any depreciable fixed assets.

Cabal Products is a division of a major corporation. Last year the division had total sales of $10,040,000, net operating income of $582,320, and average operating assets of $4,000,000. The company's minimum required rate of return is 14%. The division's turnover is closest to:

Aguilera Industries is a division of a major corporation. Data concerning the most recent year appears below: The division's margin is closest to:

Cabal Products is a division of a major corporation. Last year the division had total sales of $10,040,000, net operating income of $582,320, and average operating assets of $4,000,000. The company's minimum required rate of return is 14%. The division's margin is closest to:

Last year the Uptown Division of Gorcen Enterprises had sales of $300,000 and a net operating income of $24,000. The average operating assets at Uptown last year amounted to $120,000. At Uptown the turnover used to calculate ROI last year was:

A cost center is not a responsibility center.

A profit center is responsible for generating revenue and for controlling costs.

Average operating assets is used in the numerator to compute turnover in an ROI analysis.