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Exam 11: Performance Measurement in Decentralized Organizations

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Question 91

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

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

E) A) and C)
F) B) and D)

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Question 92

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

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

E) A) and B)
F) A) and C)

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Question 93

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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?

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:

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:

Move time is considered non-value-added time.

A cost center is a responsibility center.

Queue time is considered non-value-added time.

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:

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:

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.

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

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

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:

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:

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:

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

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?

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

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: