Question 1

Which of the following is used in the calculation of both return on investment and residual income?

Accepted Answer

A)  Total shareholders' equity 
B)  Retained earnings 
C)  Invested capital 
D)  Cost of capital 
A)  Total shareholders' equity 
B)  Retained earnings 
C)  Invested capital 
D)  Cost of capital

Question 2

The asset turnover of an organisation can be calculated as:

Accepted Answer

A)  the amount of sales revenue divided by total invested capital 
B)  total invested capital divided by sales revenue 
C)  total sales revenue divided by profit 
D)  profit divided by sales margin 
A)  the amount of sales revenue divided by total invested capital 
B)  total invested capital divided by sales revenue 
C)  total sales revenue divided by profit 
D)  profit divided by sales margin

Question 3

For Mildura Ltd,if the sales are $1 500 000,the invested capital $450 000 and the profit $90 000,what is the asset turnover for the year?

Accepted Answer

A)  20% 
B)  5% 
C)  30% 
D)  333% 
A)  20% 
B)  5% 
C)  30% 
D)  333%

Question 4

Richard's Division of Richard and Sons has the following data related to a particular period:
Calculate the return on investment for the period.

Accepted Answer

A)  11% 
B)  10% 
C)  4% 
D)  Always the same as the imputed interest rate 
A)  11% 
B)  10% 
C)  4% 
D)  Always the same as the imputed interest rate

Question 5

A division of a firm has a net profit of $640 000 before imputed interest and a residual income of $240 000.If a rate of 10 per cent is used to compute imputed interest,calculate the division's return on investment (rounded to a whole number).

Accepted Answer

A)  4% 
B)  10% 
C)  16% 
D)  35% 
A)  4% 
B)  10% 
C)  16% 
D)  35%

Question 6

Which of the following statements is false?

Accepted Answer

A)  Tying rewards to a profit-based measure can provide an incentive for managers to manipulate accounting results. 
B)  Reward systems can be used at all levels of the organisation. 
C)  Reward systems focus on long-term results. 
D)  A reward system can include both cash and non-cash rewards. 
A)  Tying rewards to a profit-based measure can provide an incentive for managers to manipulate accounting results. 
B)  Reward systems can be used at all levels of the organisation. 
C)  Reward systems focus on long-term results. 
D)  A reward system can include both cash and non-cash rewards.

Question 7

For Echuca Ltd sales are $1 500 000,profit is $90 000,invested capital is $450 000 and the interest rate is 8 per cent.What is the residual income for the year?

Accepted Answer

A)  ($30 000) 
B)  $54 000 
C)  $82 800 
D)  $36 000 
A)  ($30 000) 
B)  $54 000 
C)  $82 800 
D)  $36 000

Question 8

The income calculation for a divisional manager's return on investment should be based on:

Accepted Answer

A)  divisional contribution margin 
B)  profit margin controllable by the divisional manager 
C)  profit margin traceable to the division 
D)  division income before interest and income tax 
A)  divisional contribution margin 
B)  profit margin controllable by the divisional manager 
C)  profit margin traceable to the division 
D)  division income before interest and income tax

Question 9

Carlton division has been stagnant for the past five years,neither growing nor contracting in size and profitability.Investments in new property,plant and equipment have been minimal.Would the division's use of total assets (valued at net book value)when measuring return on investment result in (1)using numbers that are consistent with those in the balance sheet and (2)a rising return on investment over time?
A.
Yes
Yes
B.
No
Yes
C.
No
No
D.
Yes
Need more information to judge

Accepted Answer

Consistent with numbers on the

Question 10

Which of the following may be implemented as targets for a group or company-wide performance reward scheme?
i.Employee absenteeism
ii.Lost-time accident
iii.Customer satisfaction

Accepted Answer

A)  i and ii 
B)  ii and iii 
C)  i and iii 
D)  All of the given answers 
A)  i and ii 
B)  ii and iii 
C)  i and iii 
D)  All of the given answers

Question 11

The return on investment can be defined as:

Accepted Answer

A)  capital invested divided by total sales 
B)  total sales divided by capital invested 
C)  profit divided by capital invested 
D)  profit divided by total sales 
A)  capital invested divided by total sales 
B)  total sales divided by capital invested 
C)  profit divided by capital invested 
D)  profit divided by total sales

Question 12

Which of the following are included in performance-related reward systems?
i.Share options
ii.Profit sharing
iii.Team-based bonuses

Accepted Answer

A)  i and ii 
B)  i and iii 
C)  ii and iii 
D)  All of the given answers 
A)  i and ii 
B)  i and iii 
C)  ii and iii 
D)  All of the given answers

Question 13

Richard's Division of Richard and Sons has the following data related to a particular period:
Calculate the return on sales for the period.

Accepted Answer

A)  4% 
B)  11% 
C)  40% 
D)  0.4% 
A)  4% 
B)  11% 
C)  40% 
D)  0.4%

Question 14

Calculate the asset turnover from the following data:

Accepted Answer

A)  0.07 
B)  0.67 
C)  0.53 
D)  0.05 
A)  0.07 
B)  0.67 
C)  0.53 
D)  0.05

Question 15

Precious Metals Pty Ltd earned residual income of $70 000 during the year.The net profit was $250 000 during the year and the required return was 15 per cent.What was the invested capital?

Accepted Answer

A)  $1 200 000 
B)  $1 500 000 
C)  $1 400 000 
D)  $1 300 000 
A)  $1 200 000 
B)  $1 500 000 
C)  $1 400 000 
D)  $1 300 000

Question 16

Motivation of staff is a key factor in a company achieving their goals and ensuring goal congruence.

Accepted Answer

A) True 
 B)False

Question 17

Tentafield Ltd has an after tax operating income of $2.6 million,assets totalling $8 million and current liabilities totalling $400 000.The weighted average cost of capital is 10 per cent.What is the economic value added?

Accepted Answer

A)  $1 400 000 
B)  $1 800 000 
C)  $1 840 000 
D)  None of the given answers 
A)  $1 400 000 
B)  $1 800 000 
C)  $1 840 000 
D)  None of the given answers

Question 18

Calculate the return on investment of new equipment in the first year if:
Profit = $3 000 000
Invested capital = $45 000 000
Increase in divisional profits = $45 000
Purchase of new machine = $900 000

Accepted Answer

A)  5% 
B)  6.66% 
C)  1.5% 
D)  None of the given answers 
A)  5% 
B)  6.66% 
C)  1.5% 
D)  None of the given answers

Question 19

Individual reward schemes have which of the following advantages?
i.They relate to individual effort
ii.They reward only good performers.
iii.They discourage dysfunctional competition between individuals.

Accepted Answer

A)  i and ii 
B)  i and iii 
C)  ii and iii 
D)  None of the given answers 
A)  i and ii 
B)  i and iii 
C)  ii and iii 
D)  None of the given answers

Question 20

Which of the following is/are an intrinsic reward?

Accepted Answer

A)  Share options 
B)  Job satisfaction 
C)  Promotion 
D)  Share options AND job satisfaction 
A)  Share options 
B)  Job satisfaction 
C)  Promotion 
D)  Share options AND job satisfaction

Which of the following is used in the calculation of both return on investment and residual income?

The asset turnover of an organisation can be calculated as:

For Mildura Ltd,if the sales are $1 500 000,the invested capital $450 000 and the profit $90 000,what is the asset turnover for the year?

Richard's Division of Richard and Sons has the following data related to a particular period: Calculate the return on investment for the period.

A division of a firm has a net profit of $640 000 before imputed interest and a residual income of $240 000.If a rate of 10 per cent is used to compute imputed interest,calculate the division's return on investment (rounded to a whole number).

Which of the following statements is false?

For Echuca Ltd sales are $1 500 000,profit is $90 000,invested capital is $450 000 and the interest rate is 8 per cent.What is the residual income for the year?

The income calculation for a divisional manager's return on investment should be based on:

Which of the following may be implemented as targets for a group or company-wide performance reward scheme? i.Employee absenteeism ii.Lost-time accident iii.Customer satisfaction

The return on investment can be defined as:

Which of the following are included in performance-related reward systems? i.Share options ii.Profit sharing iii.Team-based bonuses

Richard's Division of Richard and Sons has the following data related to a particular period: Calculate the return on sales for the period.

Calculate the asset turnover from the following data:

Precious Metals Pty Ltd earned residual income of $70 000 during the year.The net profit was $250 000 during the year and the required return was 15 per cent.What was the invested capital?

Motivation of staff is a key factor in a company achieving their goals and ensuring goal congruence.

Tentafield Ltd has an after tax operating income of $2.6 million,assets totalling $8 million and current liabilities totalling $400 000.The weighted average cost of capital is 10 per cent.What is the economic value added?

Calculate the return on investment of new equipment in the first year if: Profit = $3 000 000 Invested capital = $45 000 000 Increase in divisional profits = $45 000 Purchase of new machine = $900 000

Individual reward schemes have which of the following advantages? i.They relate to individual effort ii.They reward only good performers. iii.They discourage dysfunctional competition between individuals.

Which of the following is/are an intrinsic reward?

Management Accounting: Information for Creating Value and Managing Resources

Management Accounting: Cost Terms and Concepts

Cost Behaviour, Cost Drivers and Cost Estimation

Product Costing Systems

Process Costing and Operation Costing

Service Costing

A Closer Look at Overhead Costs

Activity-Based Costing

Budgeting Systems

Standard Costs for Control: Direct Material and Direct Labour

Standard Costs for Control: Flexible Budgets and Manufacturing Overhead

Managing and Reporting Performance

Strategic Performance Measurement Systems

Managing Suppliers and Customers

Managing Costs and Quality

Sustainability and Management Accounting

Cost Volume Profit Analysis

Information for Decisions: Relevant Costs and Benefits

Pricing and Product Mix Decisions

Information for Capital Expenditure Decisions

Filters

Exam 13: Financial Performance Measures and Incentive Schemes

Which of the following is used in the calculation of both return on investment and residual income?

The asset turnover of an organisation can be calculated as:

For Mildura Ltd,if the sales are $1 500 000,the invested capital $450 000 and the profit $90 000,what is the asset turnover for the year?

Richard's Division of Richard and Sons has the following data related to a particular period: Calculate the return on investment for the period.

A division of a firm has a net profit of $640 000 before imputed interest and a residual income of $240 000.If a rate of 10 per cent is used to compute imputed interest,calculate the division's return on investment (rounded to a whole number).

Which of the following statements is false?

For Echuca Ltd sales are $1 500 000,profit is $90 000,invested capital is $450 000 and the interest rate is 8 per cent.What is the residual income for the year?

The income calculation for a divisional manager's return on investment should be based on:

Which of the following may be implemented as targets for a group or company-wide performance reward scheme? i.Employee absenteeism ii.Lost-time accident iii.Customer satisfaction

The return on investment can be defined as:

Which of the following are included in performance-related reward systems? i.Share options ii.Profit sharing iii.Team-based bonuses

Richard's Division of Richard and Sons has the following data related to a particular period: Calculate the return on sales for the period.

Calculate the asset turnover from the following data:

Precious Metals Pty Ltd earned residual income of $70 000 during the year.The net profit was $250 000 during the year and the required return was 15 per cent.What was the invested capital?

Motivation of staff is a key factor in a company achieving their goals and ensuring goal congruence.

Tentafield Ltd has an after tax operating income of $2.6 million,assets totalling $8 million and current liabilities totalling $400 000.The weighted average cost of capital is 10 per cent.What is the economic value added?

Calculate the return on investment of new equipment in the first year if: Profit = $3 000 000 Invested capital = $45 000 000 Increase in divisional profits = $45 000 Purchase of new machine = $900 000

Individual reward schemes have which of the following advantages? i.They relate to individual effort ii.They reward only good performers. iii.They discourage dysfunctional competition between individuals.

Which of the following is/are an intrinsic reward?

Management Accounting: Information for Creating Value and Managing Resources

Management Accounting: Cost Terms and Concepts

Cost Behaviour, Cost Drivers and Cost Estimation

Product Costing Systems

Process Costing and Operation Costing

Service Costing

A Closer Look at Overhead Costs

Activity-Based Costing

Budgeting Systems

Standard Costs for Control: Direct Material and Direct Labour

Standard Costs for Control: Flexible Budgets and Manufacturing Overhead

Managing and Reporting Performance

Strategic Performance Measurement Systems

Managing Suppliers and Customers

Managing Costs and Quality

Sustainability and Management Accounting

Cost Volume Profit Analysis

Information for Decisions: Relevant Costs and Benefits

Pricing and Product Mix Decisions

Information for Capital Expenditure Decisions

Filters