Exam 11: Performance Measurement in Decentralized Organizations

Suppose a company evaluates divisional performance using both ROI and residual income.The company's minimum required rate of return for the purposes of residual income calculations is 12%.If a division has a residual income of $6, 000, then its ROI is greater than 12%.

Ebsen 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:

All other things being the same, which of the following would increase the residual income?

Jolin Corporation keeps careful track of the time required to fill orders.The times recorded for a particular order appear below: The delivery cycle time was:

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

Inspection Time is generally considered to be non-value-added time.

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

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

Jolin Corporation keeps careful track of the time required to fill orders.The times recorded for a particular order appear below: The throughput time was:

Which of the following performance measures will decrease if the minimum required rate of return increases?

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 turnover for Year 1 was:

Daab Products is a division of a major corporation.The following data are for the most recent year of operations: The division's turnover used to compute ROI is closest to:

Baad Industries is a division of a major corporation.Last year the division had total sales of $20, 440, 000, net operating income of $1, 860, 040, and average operating assets of $7, 000, 000. The division's turnover is closest to:

Margin equals net operating income divided by sales.

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 return on investment (ROI)is closest to:

Throughput time is the amount of time required to process raw materials into completed products.

Iba 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?

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

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. Last year at Uptown the margin used to calculate ROI amounted 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 turnover is closest to: