Question 1

Return on investment is also called the accrual accounting rate of return.

Accepted Answer

A) True 
 B)False

Question 2

Boundary systems describe standards of behaviour and codes of conduct expected of all employees, especially actions that are off-limits.

Accepted Answer

A) True 
 B)False

Question 3

________ and ________ would be uncontrollable factors that a firm would need to consider when evaluating the return on investment of an international division.

Accepted Answer

A) Manager's experience; currency stability 
B) Manager's compensation; political climate 
C) Required rate of return; legal requirements 
D) Custom duties; cultural environment 
E) Cultural requirements; required rate of return 
A) Manager's experience; currency stability 
B) Manager's compensation; political climate 
C) Required rate of return; legal requirements 
D) Custom duties; cultural environment 
E) Cultural requirements; required rate of return

Question 4

Use the information below to answer the following question(s).Brandorf Company has two sources of funds: long term debt with a market and book value of $9 million issued at an interest rate of 10 percent; and, equity capital that has a market value of $6 million (book value of $2 million).The cost of equity capital is 5 percent, while the tax rate is 30 percent.Brandorf Company has profit centres in the following locations with the following data:
  
-What is EVA for Ottawa?

Accepted Answer

A) $218,200 
B) $362,200 
C) $163,200 
D) $480,000 
E) $140,000 
A) $218,200 
B) $362,200 
C) $163,200 
D) $480,000 
E) $140,000

Question 5

Endicott Inc.has four divisions.Each division produces and sells a variety of industrial products.The company is developing a compensation plan for division managers.Three options are being considered: (a)salary, (b)performance based incentive using RI, (c)mix of salary and a performance based incentive using RI.What factors should be considered in designing this plan?

Accepted Answer

The basic trade-off to consider in desig

Question 6

Randall Ltd.reported the following results for its two divisions:
     Required:
a.Using the DuPont method, calculate the return on investment for each division for each year.
b.Comment on the performance of each division.

Accepted Answer

a.Division A:
2015: $19,240/$260,000 ∗ $

Question 7

Use the information below to answer the following question(s).Ruth Cleaning Products manufactures home cleaning products.The company has two divisions, Bleach and Bleach-2.Because of different accounting methods and inflation rates, the company is considering multiple evaluation measures.The following information is provided for the year just ended:
   The company is currently using a required rate of return of 15 percent.
-What are Bleach's and Bleach-2's return on investment based on current values?

Accepted Answer

A) 0.22; 0.67 
B) 0.42; 0.52 
C) 0.52; 0.42 
D) 0.67; 0.22 
E) 0.50; 0.45 
A) 0.22; 0.67 
B) 0.42; 0.52 
C) 0.52; 0.42 
D) 0.67; 0.22 
E) 0.50; 0.45

Question 8

Use the information below to answer the following question(s).Brandorf Company has two sources of funds: long term debt with a market and book value of $9 million issued at an interest rate of 10 percent; and, equity capital that has a market value of $6 million (book value of $2 million).The cost of equity capital is 5 percent, while the tax rate is 30 percent.Brandorf Company has profit centres in the following locations with the following data:
  
-A company's weighted-average cost of capital [WACC] was 9.6% last year.The company has $6,000,000 of bonds payable (its only debt)with a 9.25% coupon, and has $9,000,000 in equity capital.The tax rate is 35%.What is the company's cost of equity capital?

Accepted Answer

A) 6.00% 
B) 6.25% 
C) 6.50% 
D) 9.25% 
E) 12.00% 
A) 6.00% 
B) 6.25% 
C) 6.50% 
D) 9.25% 
E) 12.00%

Question 9

The term "investment" used in the calculation of accounting performance measures can vary from company to company.By using financial statement terminology describe four different ways that categories of accounts are used to determine the amount of investment.

Accepted Answer

Total assets available.Includes all busi

Question 10

A control system that describes standards of behaviour and codes of conduct expected of all employees, especially actions that are off-limits, is known as a(n)

Accepted Answer

A) diagnostic control system. 
B) boundary system. 
C) belief system. 
D) interactive control system. 
E) isolated system. 
A) diagnostic control system. 
B) boundary system. 
C) belief system. 
D) interactive control system. 
E) isolated system.

Question 11

Museum Corporation uses the investment centre concept for the museums that it manages.Select operating data for three of its museums for the current year are as follows:
   Required:
a.Compute the return on investment for each division.
b.Which museum manager is doing best based only on ROI?
c.What other accounting performance measures are available when evaluating the managers?

Accepted Answer

a.Montreal = $25,500/$150,000 = 0.170
 @#IMG-DLM&

Question 12

Which of the following statements is TRUE?

Accepted Answer

A) The economic, legal, political, social, and cultural environments are always similar across countries. 
B) Governments in some countries may impose controls and limit selling prices of a company's products. 
C) The availability of materials and skilled labour does not normally differ across countries. 
D) There are no difficulties in comparing performance of divisions across different countries. 
E) Nonfinancial performance measures should not be used when comparing performance of divisions in different countries. 
A) The economic, legal, political, social, and cultural environments are always similar across countries. 
B) Governments in some countries may impose controls and limit selling prices of a company's products. 
C) The availability of materials and skilled labour does not normally differ across countries. 
D) There are no difficulties in comparing performance of divisions across different countries. 
E) Nonfinancial performance measures should not be used when comparing performance of divisions in different countries.

Question 13

Divisions operating in different countries often record performance is different currencies.

Accepted Answer

A) True 
 B)False

Question 14

Use the information below to answer the following question(s).Brandorf Company has two sources of funds: long term debt with a market and book value of $9 million issued at an interest rate of 10 percent; and, equity capital that has a market value of $6 million (book value of $2 million).The cost of equity capital is 5 percent, while the tax rate is 30 percent.Brandorf Company has profit centres in the following locations with the following data:
  
-A company's weighted-average cost of capital [WACC] was 9.6% last year.The company has $6,000,000 of bonds payable (its only debt)with a 9.25% coupon, and has $9,000,000 in equity capital.The tax rate is 35%.What is the company's cost of debt funding?

Accepted Answer

A) 6.01% 
B) 6.25% 
C) 6.50% 
D) 9.25% 
E) 12.00% 
A) 6.01% 
B) 6.25% 
C) 6.50% 
D) 9.25% 
E) 12.00%

Question 15

Use the information below to answer the following question(s).The top management at Groundsource Company, a manufacturer of lawn and garden equipment, is attempting to recover from a flood, which destroyed some of its accounting records.The main computer system was also severely damaged.The following information was salvaged:
  
-What is the value of the total assets belonging to the Tractor Division?

Accepted Answer

A) $3,500,000 
B) $4,000,000 
C) $4,500,000 
D) $5,000,000 
E) $2,000,000 
A) $3,500,000 
B) $4,000,000 
C) $4,500,000 
D) $5,000,000 
E) $2,000,000

Question 16

Rozman Construction Supplies Ltd.is preparing the budget for the upcoming year and planning the size of the executive bonus pool.The following table presents budget amounts and their respective probabilities:
   The VP Finance is interested in determining the size of the bonus pool for the executive team.The base bonus pool is 10% of operating income, if the company reaches the budget.In addition the VP Finance would like to recommend an additional 20% incentive bonus based on operating income in excess of the budget.Required:
1.Prepare a budget income statement, in contribution margin format, based on the expected values for sales, variable costs, and fixed costs.2.What is the maximum amount that should be budgeted for the executive bonus pool?

Accepted Answer

1. @#IMG-DLM& @#IMG-DLM& 2. @#IMG-DLM& @#IMG-DLM& (10% × $2,

Question 17

Which of the following approaches include investment in the performance measure?

Accepted Answer

A) ROI and RI 
B) ROI and ROS 
C) ROS and RI 
D) EVA and ROI 
E) ROI, EVA, and RI 
A) ROI and RI 
B) ROI and ROS 
C) ROS and RI 
D) EVA and ROI 
E) ROI, EVA, and RI

Question 18

The economic value added concept has attracted considerable attention in recent years.Explain the attractiveness of this number as a measure of performance.

Accepted Answer

The attractiveness of economic value add

Question 19

Use the information below to answer the following question(s).The following data are available for a foundry operation started as a new company four years ago when the construction cost index was 125:
   * = "of long-term assets at historical cost"
-What is the ROI using current cost?

Accepted Answer

A) (11.50)% 
B) 16.00% 
C) 22.5% 
D) 12.00% 
E) 11.25% 
A) (11.50)% 
B) 16.00% 
C) 22.5% 
D) 12.00% 
E) 11.25%

Question 20

ROI, residual income, and economic value-added, can be used as performance measures.

Accepted Answer

A) True 
 B)False

Return on investment is also called the accrual accounting rate of return.

Boundary systems describe standards of behaviour and codes of conduct expected of all employees, especially actions that are off-limits.

and would be uncontrollable factors that a firm would need to consider when evaluating the return on investment of an international division.

Randall Ltd.reported the following results for its two divisions: Required: a.Using the DuPont method, calculate the return on investment for each division for each year. b.Comment on the performance of each division.

The term "investment" used in the calculation of accounting performance measures can vary from company to company.By using financial statement terminology describe four different ways that categories of accounts are used to determine the amount of investment.

A control system that describes standards of behaviour and codes of conduct expected of all employees, especially actions that are off-limits, is known as a(n)

Which of the following statements is TRUE?

Divisions operating in different countries often record performance is different currencies.

Which of the following approaches include investment in the performance measure?

The economic value added concept has attracted considerable attention in recent years.Explain the attractiveness of this number as a measure of performance.

Use the information below to answer the following question(s).The following data are available for a foundry operation started as a new company four years ago when the construction cost index was 125: * = "of long-term assets at historical cost" -What is the ROI using current cost?

ROI, residual income, and economic value-added, can be used as performance measures.

The Accountants Vital Role in Decision Making

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Management

Master Budget and Responsibility Accounting

Flexible Budgets, Variances, and Management Control: I

Flexible Budgets, Variances, and Management Control: II

Income Effects of Denominator Level on Inventory Valuation

Analysis of Cost Behaviour

Decision Making and Relevant Information

Pricing Decisions, Product Profitability Decisions, and Cost Management

Strategy, Balanced Scorecard, and Profitability Analysis

Period Cost Allocation

Cost Allocation: Joint Products and Byproducts

Revenue and Customer Profitability Analysis

Process Costing

Spoilage, Rework, and Scrap

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Transfer Pricing and Multinational Management Control Systems

Filters

Exam 22: Multinational Performance Measurement and Compensation

Return on investment is also called the accrual accounting rate of return.

Boundary systems describe standards of behaviour and codes of conduct expected of all employees, especially actions that are off-limits.

________ and ________ would be uncontrollable factors that a firm would need to consider when evaluating the return on investment of an international division.

Randall Ltd.reported the following results for its two divisions: Required: a.Using the DuPont method, calculate the return on investment for each division for each year. b.Comment on the performance of each division.

The term "investment" used in the calculation of accounting performance measures can vary from company to company.By using financial statement terminology describe four different ways that categories of accounts are used to determine the amount of investment.

A control system that describes standards of behaviour and codes of conduct expected of all employees, especially actions that are off-limits, is known as a(n)

Which of the following statements is TRUE?

Divisions operating in different countries often record performance is different currencies.

Which of the following approaches include investment in the performance measure?

The economic value added concept has attracted considerable attention in recent years.Explain the attractiveness of this number as a measure of performance.

Use the information below to answer the following question(s).The following data are available for a foundry operation started as a new company four years ago when the construction cost index was 125: * = "of long-term assets at historical cost" -What is the ROI using current cost?

ROI, residual income, and economic value-added, can be used as performance measures.

The Accountants Vital Role in Decision Making

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Management

Master Budget and Responsibility Accounting

Flexible Budgets, Variances, and Management Control: I

Flexible Budgets, Variances, and Management Control: II

Income Effects of Denominator Level on Inventory Valuation

Analysis of Cost Behaviour

Decision Making and Relevant Information

Pricing Decisions, Product Profitability Decisions, and Cost Management

Strategy, Balanced Scorecard, and Profitability Analysis

Period Cost Allocation

Cost Allocation: Joint Products and Byproducts

Revenue and Customer Profitability Analysis

Process Costing

Spoilage, Rework, and Scrap

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Transfer Pricing and Multinational Management Control Systems

Filters

and would be uncontrollable factors that a firm would need to consider when evaluating the return on investment of an international division.