Exam 10: Performance Measurement in Decentralized Organizations

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?

Heavey Fabrication is a division of a major corporation.Last year the division had total sales of $21,120,000,net operating income of $2,006,400,and average operating assets of $6,000,000.The company's minimum required rate of return is 12%. Required: What is the division's return on investment (ROI)?

Hart Manufacturing operates an automated steel fabrication process. For one operation, Hart has found that 45% of the total throughput (manufacturing cycle) time is spent on non-value-added activities. Delivery cycle time is 12 hours, waiting time during the production process is 3 hours, queue time prior to starting the production process is 2 hours, and inspection time is 1.2 hours. -The manufacturing cycle efficiency (MCE)for this operation is:

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:

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.

Ferris Wares is a division of a major corporation.The following data are for the latest year of operations: Required: a.What is the division's return on investment (ROI)? b.What is the division's residual income?

Saffer 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:

Hart Manufacturing operates an automated steel fabrication process. For one operation, Hart has found that 45% of the total throughput (manufacturing cycle) time is spent on non-value-added activities. Delivery cycle time is 12 hours, waiting time during the production process is 3 hours, queue time prior to starting the production process is 2 hours, and inspection time is 1.2 hours. -What is the move time recorded for the operation?

Durkee Corporation keeps careful track of the time required to fill orders.The times required for a particular order appear below: Required: a.Determine the throughput time.Show your work! b.Determine the manufacturing cycle efficiency (MCE).Show your work! c.Determine the delivery cycle time.Show your work!

Which of the following three statements are correct? I.A profit center has control over both cost and revenue. II.An investment center has control over invested funds,but not over costs and revenue. III.A cost center has no control over sales.

The use of return on investment as a performance measure may lead managers to make decisions that are not in the best interests of the company as a whole.

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

Chace Products is a division of a major corporation. Last year the division had total sales of $21,300,000, net operating income of $575,100, and average operating assets of $5,000,000. The company's minimum required rate of return is 12%. -The division's margin is closest to: