Question 1

What was the West Division's minimum required return in March?

Accepted Answer

A) $80,100 
B) $86,800 
C) $11,214 
D) $98,014 
A) $80,100 
B) $86,800 
C) $11,214 
D) $98,014 B

Question 2

Residual income should not be used to evaluate a cost center.

Accepted Answer

A) True 
 B)False  True

Question 3

The return on investment in Year 1 was:

Accepted Answer

A) 48.00% 
B) 32.50% 
C) 7.58% 
D) 1.92% 
A) 48.00% 
B) 32.50% 
C) 7.58% 
D) 1.92% A

Question 4

If expenses exceed revenues in a department, then it would be considered a cost center.

Accepted Answer

A) True 
 B)False

Question 5

Iles Industries is a division of a major corporation. The following data are for the latest year of operations:   Required:
What is the division's residual income?

Accepted Answer

Residual income = Net operatin

Question 6

The average operating assets in Year 2 were:

Accepted Answer

A) $720,000 
B) $750,000 
C) $800,000 
D) $900,000 
A) $720,000 
B) $750,000 
C) $800,000 
D) $900,000

Question 7

Soderquist Corporation uses residual income to evaluate the performance of its divisions. The company's minimum required rate of return is 11%. In April, the Commercial Products Division had average operating assets of $100,000 and net operating income of $9,400. What was the Commercial Products Division's residual income in April?

Accepted Answer

A) -$1,600 
B) $1,600 
C) $1,034 
D) -$1,034 
A) -$1,600 
B) $1,600 
C) $1,034 
D) -$1,034

Question 8

The average operating assets for Year 2 amounted to:

Accepted Answer

A) $400,000 
B) $800,000 
C) $600,000 
D) $500,000 
A) $400,000 
B) $800,000 
C) $600,000 
D) $500,000

Question 9

Last year a company had stockholder's equity of $160,000, net operating income of $16,000 and sales of $100,000. The turnover was 0.5. The return on investment (ROI) was:

Accepted Answer

A) 10% 
B) 9% 
C) 8% 
D) 7% 
A) 10% 
B) 9% 
C) 8% 
D) 7%

Question 10

The manufacturing cycle efficiency (MCE) was closest to:

Accepted Answer

A) 0.17 
B) 0.05 
C) 0.43 
D) 0.19 
A) 0.17 
B) 0.05 
C) 0.43 
D) 0.19

Question 11

Which of the following statements provide(s) an argument in favor of including only a plant's net book value rather than gross book value as part of operating assets in the ROI computation? I. Net book value is consistent with how plant and equipment items are reported on a balance sheet.
II) Net book value is consistent with the computation of net operating income, which includes depreciation as an operating expense.
III) Net book value allows ROI to decrease over time as assets get older.

Accepted Answer

A) Only I. 
B) Only III. 
C) Only I and II. 
D) Only I and III. 
A) Only I. 
B) Only III. 
C) Only I and II. 
D) Only I and III.

Question 12

Financial data for Windsor, Inc. for last year appear below:     The company paid dividends of $104,000 last year. The "Investment in Pine Company" on the statement of financial position represents an investment in the stock of another company.
Required:
a. Compute the company's margin, turnover, and return on investment for last year.
b. The Board of Directors of Windsor, Inc. has set a minimum required return of 25%. What was the company's residual income last year?

Accepted Answer

a. Operating assets do not include inves

Question 13

The division's return on investment (ROI) is closest to:

Accepted Answer

A) 4.1% 
B) 21.75% 
C) 17.9% 
D) 1.1% 
A) 4.1% 
B) 21.75% 
C) 17.9% 
D) 1.1%

Question 14

The Casket Division of Rosencranz Corporation had average operating assets of $150,000 and net operating income of $27,800 in March. The company uses residual income to evaluate the performance of its divisions, with a minimum required rate of return of 17%.
Required:
What was the Casket Division's residual income in March?

Accepted Answer

The answer of The Casket Division of Rosencranz Corporation had...

Question 15

Which of the following will not result in an increase in the residual income, assuming other factors remain constant?

Accepted Answer

A) An increase in sales. 
B) An increase in the minimum required rate of return. 
C) A decrease in expenses. 
D) A decrease in operating assets. 
A) An increase in sales. 
B) An increase in the minimum required rate of return. 
C) A decrease in expenses. 
D) A decrease in operating assets.

Question 16

Niemiec Corporation keeps careful track of the time required to fill orders. The times recorded for a particular order appear below:   The manufacturing cycle efficiency (MCE) was closest to:

Accepted Answer

A) 0.20 
B) 0.06 
C) 0.12 
D) 0.96 
A) 0.20 
B) 0.06 
C) 0.12 
D) 0.96

Question 17

Division B had an ROI last year of 15%. The division's minimum required rate of return is 10%. If the division's average operating assets last year were $450,000, then the division's residual income for last year was:

Accepted Answer

A) $67,500 
B) $22,500 
C) $37,500 
D) $45,000 
A) $67,500 
B) $22,500 
C) $37,500 
D) $45,000

Question 18

Jaster Corporation's management keeps track of the time it takes to process orders. During the most recent month, the following average times were recorded per order:   Required:
a. Compute the throughput time.
b. Compute the manufacturing cycle efficiency (MCE).
c. What percentage of the production time is spent in non-value-added activities?
d. Compute the delivery cycle time.

Accepted Answer

a. Throughput time
= Process time + Insp

Question 19

The division's turnover is closest to:

Accepted Answer

A) 20.00 
B) 4.35 
C) 0.22 
D) 3.57 
A) 20.00 
B) 4.35 
C) 0.22 
D) 3.57

Question 20

The division's return on investment (ROI) is closest to:

Accepted Answer

A) 0.2% 
B) 41.6% 
C) 10.0% 
D) 1.9% 
A) 0.2% 
B) 41.6% 
C) 10.0% 
D) 1.9%

What was the West Division's minimum required return in March?

Residual income should not be used to evaluate a cost center.

The return on investment in Year 1 was:

If expenses exceed revenues in a department, then it would be considered a cost center.

Iles Industries is a division of a major corporation. The following data are for the latest year of operations: Required: What is the division's residual income?

The average operating assets in Year 2 were:

The average operating assets for Year 2 amounted to:

Last year a company had stockholder's equity of $160,000, net operating income of $16,000 and sales of $100,000. The turnover was 0.5. The return on investment (ROI) was:

The manufacturing cycle efficiency (MCE) was closest to:

The division's return on investment (ROI) is closest to:

Which of the following will not result in an increase in the residual income, assuming other factors remain constant?

Niemiec Corporation keeps careful track of the time required to fill orders. The times recorded for a particular order appear below: The manufacturing cycle efficiency (MCE) was closest to:

Division B had an ROI last year of 15%. The division's minimum required rate of return is 10%. If the division's average operating assets last year were $450,000, then the division's residual income for last year was:

The division's turnover is closest to:

The division's return on investment (ROI) is closest to:

Managerial Accounting and Cost Concepts

Cost-Volume-Profit Relationships

Job-Order Costing

Variable Costing and Segment Reporting: Tools for Management

Activity-Based-Costing: a Tool to Aid Decision Making

Differential Analysis: The Key to Decision Making

Capital Budgeting Decisions

Capital Budgeting Decisions

Profit Planning

Flexible Budgets and Performance Analysis

Standard Costs and Variances

Managerial Accounting and Cost Concepts

Job-Order Costing

Activity-Based-Costing: a Tool to Aid Decision Making

A Capital Budgeting Decisions

Standard Costs and Variances

Performance Measurement in Decentralized Organizations

Performance Measurement in Decentralized Organizations

Profitability Analysis

Pricing Products and Services

Filters

Exam 13: Performance Measurement in Decentralized Organizations

What was the West Division's minimum required return in March?

Residual income should not be used to evaluate a cost center.

The return on investment in Year 1 was:

If expenses exceed revenues in a department, then it would be considered a cost center.

Iles Industries is a division of a major corporation. The following data are for the latest year of operations: Required: What is the division's residual income?

The average operating assets in Year 2 were:

The average operating assets for Year 2 amounted to:

Last year a company had stockholder's equity of $160,000, net operating income of $16,000 and sales of $100,000. The turnover was 0.5. The return on investment (ROI) was:

The manufacturing cycle efficiency (MCE) was closest to:

The division's return on investment (ROI) is closest to:

Which of the following will not result in an increase in the residual income, assuming other factors remain constant?

Niemiec Corporation keeps careful track of the time required to fill orders. The times recorded for a particular order appear below: The manufacturing cycle efficiency (MCE) was closest to:

Division B had an ROI last year of 15%. The division's minimum required rate of return is 10%. If the division's average operating assets last year were $450,000, then the division's residual income for last year was:

The division's turnover is closest to:

The division's return on investment (ROI) is closest to:

Managerial Accounting and Cost Concepts

Cost-Volume-Profit Relationships

Job-Order Costing

Variable Costing and Segment Reporting: Tools for Management

Activity-Based-Costing: a Tool to Aid Decision Making

Differential Analysis: The Key to Decision Making

Capital Budgeting Decisions

Capital Budgeting Decisions

Profit Planning

Flexible Budgets and Performance Analysis

Standard Costs and Variances

Managerial Accounting and Cost Concepts

Job-Order Costing

Activity-Based-Costing: a Tool to Aid Decision Making

A Capital Budgeting Decisions

Standard Costs and Variances

Performance Measurement in Decentralized Organizations

Performance Measurement in Decentralized Organizations

Profitability Analysis

Pricing Products and Services

Filters