Exam 10: Performance Evaluation

The Pasta Division of Whole Grain Corporation had sales of $5,500,000 and operating income of $1,375,000 last year.The total assets of the Pasta Division were $2,750,000,while current liabilities were $330,000.Whole Grain Corporation's target rate of return is 12%,while its weighted average cost of capital is 8%.The effective tax rate for the company is 30%. What is the Pasta Division's Return on Investment (ROI)?

The Engine Division of The Cleveland Automotive Corporation had sales of $7,200,000 and operating income of $864,000 last year.The total assets of the Engine Division were $3,200,000 while current liabilities were $800,000.The Cleveland Automotive Corporation's target rate of return is 13% while its weighted average cost of capital is 9%.The effective tax rate for the company is 45%. Required: a.Calculate the sales margin. b.Calculate the capital turnover. c.Calculate the return on investment (ROI). d.Calculate the residual income.

The number of defects found during the manufacturing process may be an example of measuring which perspective of the balanced scorecard?

Which type of variance causes operating income to be lower than the budgeted operating income?

An investment center is generally a large division of a corporation.

The number of new products developed may be an example of measuring which perspective of the balanced scorecard?

Decentralization may duplicate a company's costs because each business unit can contain its own purchasing department.

Potential duplication of costs is a disadvantage of decentralized organizations.

Pendant Publishing reported the following results for its Textbook Division: Pendant's target rate of return is 15% and the weighted average cost of capital is 10%.Its effective tax rate is 35%. What is the Textbook Division's Residual Income (RI)?

Dove Incorporated has operating income of $650,000,a sales margin of 10%,and a capital turnover rate of 2.0.What amount would Dove report for sales?

Rider Company had the following financial results for last month.Which type of responsibility center do these financial results reflect?

The convenience store that is responsible for its own revenues,costs,and is owned by a national convenience store chain may be classified as a(n)

Small companies tend to use decentralized decision making.

The subscription sales manager at The New York Times may be in charge of a(n)

The difference between the actual revenues and expenses and the master budget is known as a

The number of new services offered during the period may be an example of measuring which perspective of the balanced scorecard?

A performance report compares expected revenues and expenses against budgeted figures for each responsibility center that the manager evaluates in an organization.

A manager can increase return on investment (ROI)by doing which of the following?

Total assets is the denominator in the formula managers use to compute ROI.

The four perspectives of the balanced scorecard include all of the following except