Question 1

The time it takes to check into a hotel is an example of a performance measure with a ________ time horizon.

Accepted Answer

A) long 
B) equal 
C) short 
D) balanced 
E) consistent

Question 2

Measuring assets at current costs will result in different ROIs compared to the ROIs calculated on the basis of ________.

Accepted Answer

A) past cost 
B) future cost 
C) current cost 
D) historical cost 
E) suboptimal cost

Question 3

Return on investment (ROI)can provide more insight into performance when it is represented by which of the following options?

Accepted Answer

A) Two components. 
B) Four components. 
C) Three components. 
D) One representative number. 
E) Four representative numbers.

Question 4

The imputed cost of the investment is a cost recognized in particular situations and it is always recorded in financial accounting systems.

Accepted Answer

A) True 
 B)False

Question 5

The managerial accountant at Island Fabrics reported the following information:
  
The company wants to expand its operations,which will require each division to increase its investments by $25,000,000 and its income by $5,000,000.
Required
Compute the ROI and RI for each Division.Which Division has the largest RI? Compute the ROI and the RI with the investments and increases in income for each division.Should each division do the expansion?

Accepted Answer

The answer of The managerial accountant at Island Fabrics reported...

Question 6

________ performance measures are not affected by the manager's performance and fail to induct the manager to improve

Accepted Answer

A) Controlling 
B) Benchmarking 
C) Sensitive Performance 
D) Preferred Performance 
E) Less-sensitive Performance

Question 7

The ________ component of compensation dominates when performance measures that are sensitive to managers' actions are not available.

Accepted Answer

A) salary 
B) control 
C) motivate 
D) benchmark 
E) performance

Question 8

Residual income calculated in pesos has the same problems as ROI calculated using pesos.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is not true about intrinsic motivation?

Accepted Answer

A) Results from added responsibilities. 
B) Results from doing interesting and creative work. 
C) Results from doing standard and normal work with no creativity. 
D) Results from employees that actively show pride in their work. 
E) Results from the development of personal bonds with coworkers.

Question 10

The managerial accountant at Preferential Drupelet Company is compiling data.The current net income of the company is $350,000 and the total assets are $1,005,000.
Required
Compute PDCs accrual accounting rate of return.

Accepted Answer

A) 35% 
B) 13% 
C) 28%. 
D) 55% 
E) 72%

Question 11

The ________ of the investment is a cost recognized in particular situations but not recorded in financial accounting systems because it is an opportunity cost.

Accepted Answer

A) imputed cost 
B) disputed cost 
C) rejected cost 
D) preferred costs 
E) discouraged cost

Question 12

Whole Foods Company management has determined the company's 2012 ROI using the gross book value of total assets and has now compiled the following data to determine the company's 2012 ROI using net book value of total assets.

Required
Compute the ROI at the Nome plant.

Accepted Answer

A) 12.6% 
B) 21.7% 
C) 5.6% 
D) 26.1% 
E) 35.0%

Question 13

Another way to motivate managers to take a long-run perspective is by compensating them on the basis of changes in the market price of the company's stock.

Accepted Answer

A) True 
 B)False

Question 14

The Wintergreen Organization,whose tax rate is 30%,generates two sources of funds: long-term debt with a market value of $7,000,000 and an interest rate of 8%,and equity capital with a market value of $12,000,000 and a cost of equity of 11%.What is Wintergreen's weighted cost of capital (WACC)?

Accepted Answer

A) .050 
B) .060 
C) .070 
D) .080 
E) .090

Question 15

Issues of inflation and fluctuations in foreign currency exchange rates do not affect performance measures.

Accepted Answer

A) True 
 B)False

Question 16

The managerial accountant at International Food Services reported that operating income was earned evenly throughout 2012.The average exchange rate in Mexico was 11.7 pesos = $1 U.S.dollar and they have a total of 345,000,000 pesos.
Required
Compute the operating income from pesos to dollars in 2012.

Accepted Answer

A) $29,250,115 
B) $29,380,189 
C) $29,487,179 
D) $29,880,650 
E) $29,958,726

Question 17

Which of the following systems describes standards of behavior and codes of conduct expected of all employees,especially actions that are off-limits?

Accepted Answer

A) Strategic goals. 
B) Belief systems. 
C) Boundary systems. 
D) Diagnostic control systems. 
E) Interactive control systems.

Question 18

Abound Seed Company's financial manager has calculated the company's after-tax income to be $720,000.The total assets or investment of the company is $1,440,000.
Required
Compute the ROI at Abound Seed Company.

Accepted Answer

A) 68% 
B) 50% 
C) 7% 
D) 32% 
E) 28%

Question 19

Because subsequent inflation does not affect the cost of assets in JIMC's financial accounting records,managers should use the prevailing exchange rate when the assets were acquired to convert the assets into ________.

Accepted Answer

A) pesos 
B) francs 
C) dollars 
D) foreign currency 
E) non-cash assets

Question 20

How do managers determine if assets are measured at historic costs,or current costs?

Accepted Answer

The answer of How do managers determine if assets are...

Exam 16: Performance Measurement and Compensation

The time it takes to check into a hotel is an example of a performance measure with a ________ time horizon.

Measuring assets at current costs will result in different ROIs compared to the ROIs calculated on the basis of ________.

Return on investment (ROI) can provide more insight into performance when it is represented by which of the following options?

The imputed cost of the investment is a cost recognized in particular situations and it is always recorded in financial accounting systems.

________ performance measures are not affected by the manager's performance and fail to induct the manager to improve

The ________ component of compensation dominates when performance measures that are sensitive to managers' actions are not available.

Residual income calculated in pesos has the same problems as ROI calculated using pesos.

Which of the following is not true about intrinsic motivation?

The managerial accountant at Preferential Drupelet Company is compiling data.The current net income of the company is $350,000 and the total assets are $1,005,000. Required Compute PDCs accrual accounting rate of return.

The ________ of the investment is a cost recognized in particular situations but not recorded in financial accounting systems because it is an opportunity cost.

Whole Foods Company management has determined the company's 2012 ROI using the gross book value of total assets and has now compiled the following data to determine the company's 2012 ROI using net book value of total assets. Required Compute the ROI at the Nome plant.

Another way to motivate managers to take a long-run perspective is by compensating them on the basis of changes in the market price of the company's stock.

The Wintergreen Organization,whose tax rate is 30%,generates two sources of funds: long-term debt with a market value of $7,000,000 and an interest rate of 8%,and equity capital with a market value of $12,000,000 and a cost of equity of 11%.What is Wintergreen's weighted cost of capital (WACC) ?

Issues of inflation and fluctuations in foreign currency exchange rates do not affect performance measures.

Which of the following systems describes standards of behavior and codes of conduct expected of all employees,especially actions that are off-limits?

Abound Seed Company's financial manager has calculated the company's after-tax income to be $720,000.The total assets or investment of the company is $1,440,000. Required Compute the ROI at Abound Seed Company.

Because subsequent inflation does not affect the cost of assets in JIMC's financial accounting records,managers should use the prevailing exchange rate when the assets were acquired to convert the assets into ________.

How do managers determine if assets are measured at historic costs,or current costs?