Exam 11: Performance Measurement in Decentralized Organizations

Guerlane Fragrance Corporation has a perfume division, Essense, and a cologne division, Karisma.The following information relates to last year's operations at each division.The minimum required rate of return is the same for both divisions. Required: Compute the unknown quantities above [(a)through (g)].SHOW YOUR COMPUTATIONS.

Net operating income is defined as:

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

All other things being the same, a decrease in average operating assets will decrease return on investment (ROI).

A disadvantage of using ROI to evaluate performance is that it encourages the manager to reduce the investment in operating assets as well as increase net operating income.

The West Division of Frede Corporation had average operating assets of $700, 000 and net operating income of $120, 800 in December.The minimum required rate of return for performance evaluation purposes is 16%. What was the West Division's residual income in December?

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

The following data pertain to operations at Quick Incorporated: The combined inspection and move time for this operation would be:

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:

Pardun 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.

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

Financial data for Redstone Company for last year appear below: The company paid dividends of $32, 200 last year.The "Investment in Balsam 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 Redstone has set a minimum required return of 25%.What was the company's residual income last year?

Ricric Corporation has provided the following data for one of its products: The delivery cycle time for this operation is:

Given the following data: The residual income would be:

CS Company has a profit margin of 11%.Sales are $320, 000, net operating income is $35, 200, and average operating assets are $128, 000.What is the company's return on investment (ROI)?

Because continuous improvement is very difficult, the emphasis in the balanced scorecard tends to be on meeting preset standards.

The following information relates to the Quilt Division of TDS Corporation for last year: What was the Quilt Division's return on investment (ROI)for last year?

Ricric Corporation has provided the following data for one of its products: The throughput time for this operation is:

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 following data pertain to operations at Quick Incorporated: The manufacturing cycle efficiency (MCE)for this operation would be: