Question 1

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

Accepted Answer

A) 30.5 hours 
B) 4.5 hours 
C) 13.9 hours 
D) 26 hours

Question 2

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 residual income is closest to:

Accepted Answer

A) $582, 320 
B) $22, 320 
C) ($823, 280) 
D) $1, 142, 320

Question 3

Residual income:

Accepted Answer

A) is the return on investment (ROI)percentage multiplied by average operating assets. 
B) is the net operating income earned above a certain minimum required return on sales. 
C) is the net operating income earned above a certain minimum required return on average operating assets. 
D) will always be greater than zero.

Question 4

A balanced scorecard should not contain any performance measures concerning customer satisfaction since the extent to which customers are satisfied is beyond the control of any manager in the company.

Accepted Answer

A) True 
 B)False

Question 5

The following information relates to last year's operations at the Bread Division of Rison Bakery, Inc.:  What was the Bread Division's minimum required rate of return last year?

Accepted Answer

A) 12% 
B) 4% 
C) 15% 
D) 20%

Question 6

Wait time is considered non-value-added time.

Accepted Answer

A) True 
 B)False

Question 7

Last year a company had sales of $400, 000, a turnover of 2.4, and a return on investment of 36%.The company's net operating income for the year was:

Accepted Answer

A) $144, 000 
B) $120, 000 
C) $80, 000 
D) $60, 000

Question 8

Chabot Company had the following results last year: net operating income, $2, 160;turnover, 5;and ROI 18%.Chabot Company's average operating assets were:

Accepted Answer

A) $300, 000 
B) $60, 000 
C) $10, 800 
D) $12, 000

Question 9

The Jenkins Division recorded operating data as follows for the past year:  For the past year, the margin used in ROI calculations was:

Accepted Answer

A) 15% 
B) 8.33% 
C) 10% 
D) 5%

Question 10

Koogle Corporation uses residual income to evaluate the performance of its divisions.The company's minimum required rate of return is 13%.In August, the Commercial Products Division had average operating assets of $530, 000 and net operating income of $76, 700.What was the Commercial Products Division's residual income in August?

Accepted Answer

A) -$9, 971 
B) -$7, 800 
C) $7, 800 
D) $9, 971

Question 11

For the past year, Allargando Company recorded sales of $500, 000 and average operating assets of $250, 000.What is the margin that Allargando Company needed to earn in order to achieve an ROI of 12%?

Accepted Answer

A) 6.00% 
B) 12.00% 
C) 2.00% 
D) 8.33%

Question 12

The Jenkins Division recorded operating data as follows for the past year:  For the past year, the return on investment was:

Accepted Answer

A) 5% 
B) 15% 
C) 30% 
D) 25%

Question 13

The North Division of the Lyman Company reported the following data for last year:  The return on investment last year for the North Division was:

Accepted Answer

A) 18% 
B) 40% 
C) 36% 
D) 80%

Question 14

The Casket Division of Landazuri Corporation had average operating assets of $620, 000 and net operating income of $86, 000 in February.The company uses residual income to evaluate the performance of its divisions, with a minimum required rate of return of 14%.
Required:
What was the Casket Division's residual income in February?

Accepted Answer

The answer of The Casket Division of Landazuri Corporation had...

Question 15

The Consumer Products Division of Mickolick Corporation had average operating assets of $450, 000 and net operating income of $38, 700 in August.The minimum required rate of return for performance evaluation purposes is 10%. What was the Consumer Products Division's residual income in August?

Accepted Answer

A) $3, 870 
B) $6, 300 
C) ($3, 870) 
D) ($6, 300)

Exam 11: Performance Measurement in Decentralized Organizations

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

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 residual income is closest to:

Residual income:

A balanced scorecard should not contain any performance measures concerning customer satisfaction since the extent to which customers are satisfied is beyond the control of any manager in the company.

The following information relates to last year's operations at the Bread Division of Rison Bakery, Inc.: What was the Bread Division's minimum required rate of return last year?

Wait time is considered non-value-added time.

Last year a company had sales of $400, 000, a turnover of 2.4, and a return on investment of 36%.The company's net operating income for the year was:

Chabot Company had the following results last year: net operating income, $2, 160;turnover, 5;and ROI 18%.Chabot Company's average operating assets were:

The Jenkins Division recorded operating data as follows for the past year: For the past year, the margin used in ROI calculations was:

For the past year, Allargando Company recorded sales of $500, 000 and average operating assets of $250, 000.What is the margin that Allargando Company needed to earn in order to achieve an ROI of 12%?

The Jenkins Division recorded operating data as follows for the past year: For the past year, the return on investment was:

The North Division of the Lyman Company reported the following data for last year: The return on investment last year for the North Division was:

The Consumer Products Division of Mickolick Corporation had average operating assets of $450, 000 and net operating income of $38, 700 in August.The minimum required rate of return for performance evaluation purposes is 10%. What was the Consumer Products Division's residual income in August?