Question 1

Which of the following is the expression of the DuPont method of profitability analysis?

Accepted Answer

A)  Income / Investment = Income / Total costs + Revenues / Equity 
B)  Income / Investment = Income / Revenues + Revenues / Investment 
C)  Income / Investment = Income / Revenues × Revenues / Investment 
D)  Income / Investment = Income / Total costs × Revenues / Equity 
A)  Income / Investment = Income / Total costs + Revenues / Equity 
B)  Income / Investment = Income / Revenues + Revenues / Investment 
C)  Income / Investment = Income / Revenues × Revenues / Investment 
D)  Income / Investment = Income / Total costs × Revenues / Equity

Question 2

Executive compensation plans are based on both financial and nonfinancial performance measures. Discuss

Accepted Answer

These plans are based on both financial

Question 3

Times Corporation, whose tax rate is 30%, has two sources of funds: long-term debt with a market value of $6,500,000 and an interest rate of 7%, and equity capital with a market value of $18,000,000 and a cost of equity of 11%. Times Corporation's after-tax cost of debt is ________.

Accepted Answer

A)  9.38% 
B)  4.90% 
C)  7.00% 
D)  11.00% 
A)  9.38% 
B)  4.90% 
C)  7.00% 
D)  11.00%

Question 4

When designing the steps in accounting-based performance measures, should the decisions in these steps be sequential?

Accepted Answer

Features - The decisions made in these s

Question 5

Economic value added, unlike residual income, charges managers for the costs of their investments in long-term assets and working capital.

Accepted Answer

A) True 
 B)False

Question 6

Bouvous Corporation had the following information for 2015:
 
What is the return on investment?

Accepted Answer

A)  9.4% 
B)  75.5% 
C)  8.6% 
D)  10.4% 
A)  9.4% 
B)  75.5% 
C)  8.6% 
D)  10.4%

Question 7

Economic value added is equal to ________.

Accepted Answer

A)  After-tax operating income - [Weighted-average cost of capital + (Total assets - Current liabilities)] 
B)  Pre-tax operating income - [Weighted-average cost of capital + (Total assets - Current liabilities)] 
C)  After-tax operating income - [Weighted-average cost of capital × (Total assets - Current liabilities)] 
D)  Pre-tax operating income - [Weighted-average cost of capital × (Total assets - Current liabilities)] 
A)  After-tax operating income - [Weighted-average cost of capital + (Total assets - Current liabilities)] 
B)  Pre-tax operating income - [Weighted-average cost of capital + (Total assets - Current liabilities)] 
C)  After-tax operating income - [Weighted-average cost of capital × (Total assets - Current liabilities)] 
D)  Pre-tax operating income - [Weighted-average cost of capital × (Total assets - Current liabilities)]

Question 8

Which of the following is true of performance measurement?

Accepted Answer

A)  Preferred performance measures do not change much with changes in factors that are beyond manager's control. 
B)  Sensitive performance measures increases the cost of providing incentives. 
C)  Less-sensitive performance measures induce managers to improve. 
D)  Managers' performances should be evaluated based on the financial measures such as residual income and economic value added. 
A)  Preferred performance measures do not change much with changes in factors that are beyond manager's control. 
B)  Sensitive performance measures increases the cost of providing incentives. 
C)  Less-sensitive performance measures induce managers to improve. 
D)  Managers' performances should be evaluated based on the financial measures such as residual income and economic value added.

Question 9

To calculate the value of fixed assets for an overseas branch, the historical rate of exchange is used for its conversion.

Accepted Answer

A) True 
 B)False

Question 10

In performance evaluations ________.

Accepted Answer

A)  managers should use the swap exchange rate prevailing at the end of a financial period 
B)  managers should use the average exchange rate prevailing at the end of a financial period 
C)  managers should use the exchange rate prevailing on the date the assets were acquired 
D)  managers should use the exchange rate prevailing at the end of a financial period 
A)  managers should use the swap exchange rate prevailing at the end of a financial period 
B)  managers should use the average exchange rate prevailing at the end of a financial period 
C)  managers should use the exchange rate prevailing on the date the assets were acquired 
D)  managers should use the exchange rate prevailing at the end of a financial period

Question 11

Coldbrook Company has two sources of funds: long-term debt with a market and book value of $17,000,000 issued at an interest rate of 11%, and equity capital that has a market value of $3,000,000 (book value of $4,000,000). Coldbrook Company has profit centers in the following locations with the following operating incomes, total assets, and current liabilities. The cost of equity capital is 15%, while the tax rate is 35%.
 
What is the EVA® for Bish Bash Falls? (Round intermediary calculations to four decimal places.)

Accepted Answer

A)  $530,400 
B)  $264,061 
C)  $266,339 
D)  $159,638 
A)  $530,400 
B)  $264,061 
C)  $266,339 
D)  $159,638

Question 12

Return on sales can provide how effectively costs are managed and is part of the DuPont method of profitability analysis.

Accepted Answer

A) True 
 B)False

Question 13

In an EVA calculation, the appropriate measure of a division's profit would be that division's pre-tax operating income.

Accepted Answer

A) True 
 B)False

Question 14

Ventaz Corp. purchased assets for its overseas branch for $15,000 The rate of conversion at the time of purchase of asset was $1.400 / Euro. If the company evaluates a project's ROI based on its initial costs and its operating income and does that in the foreign currency, what value of assets in Euros to be used to calculate the ROI if the rate current conversion rate is $1.511 / Euro and the average rate being $1.410 / Euro?

Accepted Answer

A)  10,714 Euros 
B)  9927 Euros 
C)  10,638 Euros 
D)  21,000 Euros 
A)  10,714 Euros 
B)  9927 Euros 
C)  10,638 Euros 
D)  21,000 Euros

Question 15

Home Decor Inc., manufactures home cleaning products. The company has two divisions, Bleach and Cleanser. Because of different accounting methods and inflation rates, the company is considering multiple evaluation measures. The following information is provided for 2018:
ASSETSINCOME
 
The company is currently using a 15% required rate of return.
What are Bleach's and Cleanser's return on investment based on current values, respectively?

Accepted Answer

A)  43%; 29% 
B)  29%; 43% 
C)  54%; 36% 
D)  36%; 54% 
A)  43%; 29% 
B)  29%; 43% 
C)  54%; 36% 
D)  36%; 54%

Question 16

Many manufacturing, marketing, and design problems require employees with multiple skills; therefore, teams are used and the members have the added encouragement of ________.

Accepted Answer

A)  individual incentives 
B)  management incentives 
C)  morale incentives 
D)  team incentives 
A)  individual incentives 
B)  management incentives 
C)  morale incentives 
D)  team incentives

Question 17

All of the following are ways to calculate different versions of ROI except ________.

Accepted Answer

A)  Revenues/Total Assets 
B)  Return on sales x investment turnover 
C)  Income/Investments 
D)  Operating Income/Revenues x Revenues/Total Assets 
A)  Revenues/Total Assets 
B)  Return on sales x investment turnover 
C)  Income/Investments 
D)  Operating Income/Revenues x Revenues/Total Assets

Question 18

Gas Supply Corporation uses the investment center concept for the gasoline stations that it manages in the city. Consolidated has a 15% required rate of return on investment in order for a branch station to be viable. Select operating data for three of its stations for 2015 are as follows:
   
Required:
a.Compute the return on investment for each station.
b.Which station manager is doing best based only on ROI? Why?
c.Are any of the stations in danger of being closed due to lack of performance?
d.What other factors should be included when evaluating the managers?

Accepted Answer

@#IMG-DLM& 
b.Oak Street is doing the best because

Question 19

Waldorf Company has two sources of funds: long-term debt with a market and book value of $5,200,000 issued at an interest rate of 13%, and equity capital that has a market value of $4,200,000 (book value of $2,400,000). Waldorf Company has profit centers in the following locations with the following operating incomes, total assets, and current liabilities. The cost of equity capital is 13%, while the tax rate is 25%.
 
What is the EVA® for Cedar Rapids? (Round intermediary calculations to four decimal places.)

Accepted Answer

A)  $275,720 
B)  $465,000 
C)  $430,720 
D)  $241,000 
A)  $275,720 
B)  $465,000 
C)  $430,720 
D)  $241,000

Question 20

Companies that adopt the EVA concept define investment as total assets employed minus current liabilities.

Accepted Answer

A) True 
 B)False

Which of the following is the expression of the DuPont method of profitability analysis?

Executive compensation plans are based on both financial and nonfinancial performance measures. Discuss

Times Corporation, whose tax rate is 30%, has two sources of funds: long-term debt with a market value of $6,500,000 and an interest rate of 7%, and equity capital with a market value of $18,000,000 and a cost of equity of 11%. Times Corporation's after-tax cost of debt is ________.

When designing the steps in accounting-based performance measures, should the decisions in these steps be sequential?

Economic value added, unlike residual income, charges managers for the costs of their investments in long-term assets and working capital.

Bouvous Corporation had the following information for 2015: What is the return on investment?

Economic value added is equal to ________.

Which of the following is true of performance measurement?

To calculate the value of fixed assets for an overseas branch, the historical rate of exchange is used for its conversion.

In performance evaluations ________.

Return on sales can provide how effectively costs are managed and is part of the DuPont method of profitability analysis.

In an EVA calculation, the appropriate measure of a division's profit would be that division's pre-tax operating income.

Many manufacturing, marketing, and design problems require employees with multiple skills; therefore, teams are used and the members have the added encouragement of ________.

All of the following are ways to calculate different versions of ROI except ________.

Companies that adopt the EVA concept define investment as total assets employed minus current liabilities.

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, Direct-Cost Variances, and Management Control

Flexible Budgets, Overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, Common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, Rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, Just-in-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing, and Multinational Considerations

Filters

Exam 23: Performance Measurement, Compensation, and Multinational Considerations

Which of the following is the expression of the DuPont method of profitability analysis?

Executive compensation plans are based on both financial and nonfinancial performance measures. Discuss

Times Corporation, whose tax rate is 30%, has two sources of funds: long-term debt with a market value of $6,500,000 and an interest rate of 7%, and equity capital with a market value of $18,000,000 and a cost of equity of 11%. Times Corporation's after-tax cost of debt is ________.

When designing the steps in accounting-based performance measures, should the decisions in these steps be sequential?

Economic value added, unlike residual income, charges managers for the costs of their investments in long-term assets and working capital.

Bouvous Corporation had the following information for 2015: What is the return on investment?

Economic value added is equal to ________.

Which of the following is true of performance measurement?

To calculate the value of fixed assets for an overseas branch, the historical rate of exchange is used for its conversion.

In performance evaluations ________.

Return on sales can provide how effectively costs are managed and is part of the DuPont method of profitability analysis.

In an EVA calculation, the appropriate measure of a division's profit would be that division's pre-tax operating income.

Many manufacturing, marketing, and design problems require employees with multiple skills; therefore, teams are used and the members have the added encouragement of ________.

All of the following are ways to calculate different versions of ROI except ________.

Companies that adopt the EVA concept define investment as total assets employed minus current liabilities.

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, Direct-Cost Variances, and Management Control

Flexible Budgets, Overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, Common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, Rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, Just-in-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing, and Multinational Considerations

Filters