Exam 11: Decentralization, Performance Evaluation, and the Balanced Scorecard

Fun-Town Amusement Center Fun-Town Amusement Center offers a variety of family entertainment. The amusement center consists of three separate divisions: miniature golf, arcade, and laser tag. The following information in available regarding each of these divisions for the year just ended: Common fixed costs of $60,000 are divided equally among the divisions. Refer to the Fun-Town Amusement Center information above. The segment margin ratio for the laser tag division is:

Amber Products Inc. has two product lines: A-100 and A-200. Revenue and cost information for each of the product lines for 2011 are as follows: In 2011, Amber had common fixed expenses of $50,000, and the company produced and sold 4,000 units of A-100 and 6,000 units of A-200. Required: Prepare a segmented income statement with a column for each product line and the total company.

Which of the following is generally not one of the classifications of quality costs?

What is residual income and how is it computed? Is it better for residual income to be high or low? Residual income (RI) is another alternative return on investment (ROI) that can be used to measure a segment's performance. It is the amount of income earned in excess of a predetermined minimum rate of return on assets.

Which of the following items is not part of the calculation for segment margin?

Fun-Town Amusement Center Fun-Town Amusement Center offers a variety of family entertainment. The amusement center consists of three separate divisions: miniature golf, arcade, and laser tag. The following information in available regarding each of these divisions for the year just ended: Common fixed costs of $60,000 are divided equally among the divisions. Refer to the Fun-Town Amusement Center information above. The segment margin for the miniature golf division is:

Grayson & Sons, a local car dealership, has three separate divisions: car repair, new car sales, and used car sales. The company has decided to implement a new system for evaluating the performance of its three division managers and the bonuses they receive. The following information is available with respect to each division for the current year: In order to receive a bonus, a division manager must have an ROI greater than 50% and residual income in excess of $1,400,000. If management uses a minimum required rate of return of 18%, which division manager(s) would be eligible to receive a bonus?

Charlotte Products Inc. produces a variety of electronic products which it sells to retail stores throughout the country. The following data is available for the year for one of the products: Required:

Which types of quality costs are incurred once the product is produced and then found to be defective before being sold to customers?

If a company consistently produces and sells defective products, which type of quality cost is likely to be the most costly in the long-run?

The number of good units that can be made in a given period of time is called:

What is the main difference between centralized and decentralized organizations?

Fun Treats Inc. sell a variety of drink and food products including juice and ice cream. The segmented income statements for these two products are as follows: The company's management is considering a special advertising campaign that will run on a Saturday morning when many children are watching television. The advertising campaign is expected to cost $25,000 and only one product can be featured. In-house marketing studies show that the campaign could increase sales of the juice division by $100,000 or increase sales of the ice cream division by $100,000. The marketing supervisor has decided that since both products have the same segment margin, the company will be equally as well off regardless of which product is featured. Required:

Which of the following will least likely be an indicator of success within the internal business perspective of the balanced scorecard?

Which of the following statements about prevention costs is true?

When comparing two different investment alternatives of different sizes, which of the following measures for each alternative would be the best to use?

How does the balanced scorecard approach differ from traditional approaches to performance evaluation?

Boone Manufacturing Boone Manufacturing produces a variety of lamp shades which it sells to retail stores throughout the country. The following data is available for the year: Refer to the Boone Manufacturing information above. What is the total throughput per production hour?

WSR Inc. WSR Inc. sells a variety of drink and food products including potato chips and sodas. The segmented income statements for these two products are as follows: WSR's management is considering a special advertising campaign that will run during a major sporting event. The advertising campaign is expected to cost $30,000 and only one product can be featured. In-house marketing studies show that the campaign could increase sales of the soda division by $200,000 or increase sales of the chips division by $275,000. Refer to the WSR Inc. information above. What will be the overall net effect on the company's total profits if the advertising focuses on chips?

Determining the market share for a company's product would be a measure of performance under which perspective of the balanced scorecard?