Exam 18: Strategic Performance Measurement: Cost Centers, Profit Centers, and the Balanced Scorecard

An employment contract is an agreement between the manager and top management designed to provide incentives for the manager to act:

Tokless Inc. planned and manufactured 400,000 units of its single product in 2019, its first year of operations. Variable manufacturing costs were $50 per unit of production. Planned and fixed manufacturing costs were $800,000. Marketing and administrative costs (all fixed) were $600,000 in 2019. Tokless Inc. sold 195,000 units of product in 2019 at $65 per unit. Sales for 2019 are calculated to be:

Production or support SBUs within the firm that have the goal of providing the best quality product or service at the lowest cost are:

The evaluation of operating level employees by mid-level managers is:

A company's operating income was $70,000 using variable costing for a given period. Beginning and ending inventories for that period were 45,000 units and 50,000 units, respectively. Ignoring income taxes, if the fixed factory overhead application rate was $8.00 per unit, what would operating income have been using full costing?

A unit of an organization is referred to as an investment center if it has:

Which of the following is not a revenue driver factor which affects sales volume for a manufacturing firm?

During January, Lang, Inc. produced 10,000 units of product with costs as follows: Direct materials \4 0,000 Direct labor 22,000 Variable overhead 10,000 Fixed overhead 90,000 What is Lang's unit cost for January, calculated on the variable costing basis?

Chadd Fisher was recently appointed vice president of operations for Cary Corporation. He has a manufacturing background and previously served as operations manager of Cary's building products division. The business units of Cary Corporation include divisions that manufacture building products, process food, and provide financial services. In a recent conversation with Drew Williams, Cary's chief financial officer, Chadd suggested evaluating unit managers on the basis of the business unit data in Cary's annual financial report. This report presents revenues, earnings, identifiable assets, and depreciation for each business unit for a five-year period. He believes that evaluating business unit managers by criteria similar to that used to evaluate the company's top management is appropriate. Drew has reservations about using information from the annual financial report for this purpose and suggested that Chadd consider other criteria to use in the evaluation. Required: 1. Explain why the business unit information prepared for public reporting purposes might not be appropriate for the evaluation of unit managers' performance. 2. Describe the possible motivational impact on Cary Corporation's unit managers if Chadd's proposal for their evaluation is accepted. 3. Identify and describe several types of financial information that would be more appropriate for Chadd Fisher to use when evaluating the performance of unit managers.

Under full costing, fixed manufacturing overhead costs would be classified as:

Treble Inc. planned and manufactured 250,000 units of its single product in 2019, its first year of operations. Variable manufacturing costs were $30 per unit of production. Planned and actual fixed manufacturing costs were $600,000. Marketing and administrative costs (all fixed) were $300,000 in 2019. Treble Inc. sold 200,000 units of product in 2019 at $60 per unit. Full costing operating income for 2019 is calculated to be:

Reasons for failure to implement the balanced scorecard effectively include all except which of the following?

Controllable fixed costs:

Inventory under the variable costing method includes:

The six steps Ittner and Larcker propose for maximizing the value of nonfinancial measures when using a balanced scorecard include all of the following except:

Tokless Inc. planned and manufactured 400,000 units of its single product in 2019, its first year of operations. Variable manufacturing costs were $50 per unit of production. Planned and fixed manufacturing costs were $800,000. Marketing and administrative costs (all fixed) were $600,000 in 2019. Tokless Inc. sold 195,000 units of product in 2019 at $65 per unit. Variable costing operating income for 2019 is calculated to be:

The objectives of management control of the manager include:

The replacing of controllable costs with non-controllable costs by a department is:

Writer One Inc. manufactures ball point pens that sell at wholesale for $0.80 per unit. Budgeted production in both 2018 and 2019 was 8,000 units. There was no beginning inventory in 2018. The following data summarized the 2018 and 2019 operations: 2018 2019 Units sold 6,500 9,000 Units produced 8,000 8,000 Costs: Variable factory overhead per unit \ 0.20 \ 0.20 Fixed factory overhead \ 1,200 \ 1,200 Variable marketing per unit \ 0.30 \ 0.30 Fixed Selling and Administrative \ 320 \ 320 Full costing operating income for 2019 is calculated to be:

Stultz Manufacturing has the following information for the years ended December 31, 2018, and December 31, 2019: 2018 2019 Units Beginning Inventory 400 Selling Price \ 90 \ 90 Sold 1,000 1,900 Actual Production 1,200 1,500 Budgeted Production 1,200 1,500 Unit Variable Costs Manufacturing \ 30 \ 30 Selling and Administrative \ 5 \ 5 Fixed Costs Manufacturing 24,000 30,000 Selling and Administrative 10,000 10,000 The 2019 cost per unit was the same as in the year 2018. Required: 1. Prepare the variable-cost and full-cost income statements for 2018 and 2019. 2. Prepare a reconciliation and explanation for the differences between full-cost and variable-cost operating income for both years.