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Exam 6: Performance Measurement in Decentralized Organizations

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Question 1

Multiple Choice

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Ricric Corporation has provided the following data for one of its products: -The manufacturing cycle efficiency for this operation is closest to:

A) 0.375
B) 0.45
C) 0.18
D) 0.33

E) A) and D)
F) C) and D)

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Question 2

Multiple Choice

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The West Division of Frede Corporation had average operating assets of $700,000 and net operating income of $120,800 in December. The minimum required rate of return for performance evaluation purposes is 16%. -What was the West Division's minimum required return in December?

A) $112,000
B) $120,800
C) $131,328
D) $19,328

E) All of the above
F) B) and C)

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Question 3

Multiple Choice

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Given the following data: Return on investment (ROI) would be:

Brandon, Inc. has provided the following data for last year's operations: -Brandon's residual income is:

Emerich Corporation keeps careful track of the time required to fill orders. The times recorded for a particular order appear below: The manufacturing cycle efficiency (MCE) was closest to:

All other things being the same, which of the following would increase the residual income?

Nash Corporation manufactures and sells custom snowmobiles. From the time an order is placed till the time the snowmobile reaches the customer averages 50 days. This 50 days is spent as follows: What is Nash's manufacturing cycle efficiency (MCE) for its snowmobiles?

Inspection Time is generally considered to be non-value-added time.

Ebsen Corporation keeps careful track of the time required to fill orders. Data concerning a particular order appear below: -The delivery cycle time was:

Contribution income statements are used to measure the performance of:

Faas Wares is a division of a major corporation. The following data are for the latest year of operations: Required: a. What is the division's return on investment (ROI)? b. What is the division's residual income?

If operating income is $60,000, average operating assets are $240,000, and the minimum required rate of return is 20%, what is the residual income?

Aguilera Industries is a division of a major corporation. Data concerning the most recent year appears below: -The division's margin is closest to:

The North Division of the Lyman Company reported the following data for last year: -The residual income for the North Division last year was:

Daab Products is a division of a major corporation. The following data are for the most recent year of operations: -The division's return on investment (ROI) is closest to:

Hysong Corporation uses residual income to evaluate the performance of its divisions. The minimum required rate of return for performance evaluation purposes is 11%. The Games Division had average operating assets of $530,000 and net operating income of $56,200 in June. Required: What was the Games Division's residual income in June?

The following data pertain to operations at Quick Incorporated: -The manufacturing cycle efficiency (MCE) for this operation would be:

ROI and residual income are tools used to evaluate managerial performance in profit centers.

A company that is seeking to increase ROI should attempt to decrease:

Cabal Products is a division of a major corporation. Last year the division had total sales of $10,040,000, net operating income of $582,320, and average operating assets of $4,000,000. The company's minimum required rate of return is 14%. -The division's turnover is closest to: