Question 1

The following data are for the Akron Division of Consolidated Rubber, Inc.:
 
-For the past year,the margin used in ROI calculations was:

Accepted Answer

A)  6.00% 
B)  8.67% 
C)  10.00% 
D)  8.00%

Question 2

Ranallo Inc.reported the following results from last year's operations:
  At the beginning of this year,the company has a $1,800,000 investment opportunity with the following characteristics:
  The company's minimum required rate of return is 14%.
Required:
1.What was last year's margin? (Round to the nearest 0.1%.)
2.What was last year's turnover? (Round to the nearest 0.01.)
3.What was last year's return on investment (ROI)? (Round to the nearest 0.1%.)
4.What is the margin related to this year's investment opportunity? (Round to the nearest 0.1%.)
5.What is the turnover related to this year's investment opportunity? (Round to the nearest 0.01.)
6.What is the ROI related to this year's investment opportunity? (Round to the nearest 0.1%.)
7.If the company pursues the investment opportunity and otherwise performs the same as last year,what will be the overall margin this year? (Round to the nearest 0.1%.)
8.If the company pursues the investment opportunity and otherwise performs the same as last year,what will be the overall turnover this year? (Round to the nearest 0.01.)
9.If the company pursues the investment opportunity and otherwise performs the same as last year,what will be the overall ROI will this year? (Round to the nearest 0.1%.)
10.If Westerville's chief executive officer earns a bonus only if the ROI for this year exceeds the ROI for last year,would the CEO pursue the investment opportunity? Would the owners of the company want the CEO to pursue the investment opportunity?
11.What was last year's residual income?
12.What is the residual income of this year's investment opportunity?
13.If the company pursues the investment opportunity and otherwise performs the same as last year,what will be the overall residual income this year?
14.If Westerville's CEO earns a bonus only if residual income for this year exceeds residual income for last year,would the CEO pursue the investment opportunity?

Accepted Answer

The answer of Ranallo Inc.reported the following results from last...

Question 3

Shrewsbury Inc. reported the following results from last year's operations:
  At the beginning of this year, the company has a $800,000 investment opportunity with the following characteristics:
  The company's minimum required rate of return is 14%.
-If the company pursues the investment opportunity,this year's combined residual income for the entire company will be closest to:

Accepted Answer

A)  $23,200 
B)  ($44,000) 
C)  $628,000 
D)  $652,800

Question 4

Rotan 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)  0.89 
B)  0.06 
C)  0.29 
D)  0.12

Question 5

The following data pertain to Turk Company's operations last year:
 
-If the residual income for the year was $9,000,the minimum required rate of return must have been:

Accepted Answer

A)  15% 
B)  4% 
C)  20% 
D)  36%

Question 6

Which of the following will increase a company's manufacturing cycle efficiency (MCE)?

Accepted Answer

The answer of Which of the following will increase a...

Question 7

Selma Inc.reported the following results from last year's operations:
 Last year's margin was closest to:

Accepted Answer

A)  78.1% 
B)  6.0% 
C)  13.8% 
D)  27.9%

Question 8

Cabell Products is a division of a major corporation. Last year the division had total sales of $25,320,000, net operating income of $1,924,320, and average operating assets of $6,000,000. The company's minimum required rate of return is 10%.
-The division's return on investment (ROI)is closest to:

Accepted Answer

A)  135.5% 
B)  6.1% 
C)  32.1% 
D)  2.4%

Question 9

Weafer Inc. reported the following results from last year's operations:
 
-Last year's turnover was closest to:

Accepted Answer

A)  0.05 
B)  2.00 
C)  20.00 
D)  0.50

Question 10

Queue time is considered non-value-added time.

Accepted Answer

A) True 
 B)False

Question 11

Lumsden Inc.has a $1,200,000 investment opportunity with the following characteristics:
 The company's minimum required rate of return is 7%.The residual income for this year's investment opportunity is closest to:

Accepted Answer

A)  $120,000 
B)  $36,000 
C)  $0 
D)  $84,000

Question 12

A cost center is a responsibility center.

Accepted Answer

A) True 
 B)False

Question 13

A change in sales has no effect on margin and turnover.

Accepted Answer

A) True 
 B)False

Question 14

Brodrick Corporation uses residual income to evaluate the performance of its divisions.The minimum required rate of return for performance evaluation purposes is 19%.The Games Division had average operating assets of $140,000 and net operating income of $25,900 in August.
Required:
What was the Games Division's residual income in August?

Accepted Answer

The answer of Brodrick Corporation uses residual income to evaluate...

Question 15

A balanced scorecard contains both customer and internal business process performance measures because improvements in internal business process should result in improvements in customer satisfaction.

Accepted Answer

A) True 
 B)False

Question 16

If a strategy is not working,it should become evident on the balanced scorecard when some of the predicted effects don't occur.

Accepted Answer

A) True 
 B)False

Question 17

Move time is considered non-value-added time.

Accepted Answer

A) True 
 B)False

Question 18

Parsa Inc. reported the following results from last year's operations:
  At the beginning of this year, the company has a $1,100,000 investment opportunity with the following characteristics:
 
-The ROI for this year's investment opportunity considered alone is closest to:

Accepted Answer

A)  7.0% 
B)  21.2% 
C)  12.6% 
D)  72.0%

Question 19

Parsa Inc. reported the following results from last year's operations:
  At the beginning of this year, the company has a $1,100,000 investment opportunity with the following characteristics:
 
-If the company pursues the investment opportunity and otherwise performs the same as last year,the combined ROI for the entire company will be closest to:

Accepted Answer

A)  12.0% 
B)  8.6% 
C)  10.4% 
D)  1.7%

Question 20

Dacker 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:

Accepted Answer

A)  29.6% 
B)  35.1% 
C)  21.9% 
D)  7.7%

Exam 11: Performance Measurement in Decentralized Organizations

The following data are for the Akron Division of Consolidated Rubber, Inc.: -For the past year,the margin used in ROI calculations was:

Rotan 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:

The following data pertain to Turk Company's operations last year: -If the residual income for the year was $9,000,the minimum required rate of return must have been:

Which of the following will increase a company's manufacturing cycle efficiency (MCE)?

Selma Inc.reported the following results from last year's operations: Last year's margin was closest to:

Cabell Products is a division of a major corporation. Last year the division had total sales of $25,320,000, net operating income of $1,924,320, and average operating assets of $6,000,000. The company's minimum required rate of return is 10%. -The division's return on investment (ROI) is closest to:

Weafer Inc. reported the following results from last year's operations: -Last year's turnover was closest to:

Queue time is considered non-value-added time.

Lumsden Inc.has a $1,200,000 investment opportunity with the following characteristics: The company's minimum required rate of return is 7%.The residual income for this year's investment opportunity is closest to:

A cost center is a responsibility center.

A change in sales has no effect on margin and turnover.

A balanced scorecard contains both customer and internal business process performance measures because improvements in internal business process should result in improvements in customer satisfaction.

If a strategy is not working,it should become evident on the balanced scorecard when some of the predicted effects don't occur.

Move time is considered non-value-added time.

Parsa Inc. reported the following results from last year's operations: At the beginning of this year, the company has a $1,100,000 investment opportunity with the following characteristics: -The ROI for this year's investment opportunity considered alone is closest to:

Dacker 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: