FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 14: Performance Evaluation for Decentralized Operations

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 41

Multiple Choice

Review LaterAdd Note

Review Later

In evaluating the profit center manager,the income from operations should be compared:

A) across profit centers.
B) to historical performance or budget.
C) to the competitor's net income.
D) to the total company's earnings per share.

E) B) and C)
F) None of the above

Correct Answer

verified

Show Answer

Question 42

Multiple Choice

Review LaterAdd Note

Review Later

Blancher Corporation had $495,000 in invested assets,sales of $660,000,income from operations amounting to $99,000,and a desired minimum rate of return of 15%.The profit margin for Blancher is:

A) 16%.
B) 20%.
C) 18%.
D) 15%.

E) A) and D)
F) All of the above

Correct Answer

verified

Show Answer

Question 43

True/False

Review LaterAdd Note

The service department will determine its service department charge rate and charge the company's divisions or departments based on the usage of the service by each department.

A responsibility center in which the authority and responsibility for costs and revenues is vested on the department manager is termed an investment center.

A common balanced scorecard measures performance in all of the following areas except:

How much would Division A's income from operations increase?

The balanced scorecard evaluates managers on financial and nonfinancial measures of performance.

The minimum amount of desired divisional income from operations is set by top management by establishing a maximum rate of return that is expected from the invested assets.

Plamba Corporation had $250,000 invested in assets,sales of $490,000,income from operations amounting to $70,000,and a desired minimum rate of return of 15%.The rate of return on investment for Plamba is:

The financial performance of responsibility centers is evaluated in the balanced scorecard under the financial section of the scorecard.

Materials used by Ford Company in producing Division A's product are currently purchased from outside suppliers at a cost of $30 per unit.However,the same materials are available from Division B.Division B has unused capacity and can produce the materials needed by Division A at a variable cost of $20 per unit. (a) If a transfer price of $25 per unit is established and 60,000 units of material are transferred with no reductions in Division B's current sales, how much would Ford Company's total income from operations increase? (b) How much would the income from operations of Division A increase? (c) How much would the income from operations of Division B increase? (d) If the negotiated price approach is used, what would be the range of acceptable transfer prices?

Under the cost price approach,the transfer price is the price at which the product or service transferred could be sold to outside buyers.

The net income for Globe Corporation is:

The ratio of income from operations to sales is termed the profit margin,a component of the rate of return on investment.

The profit margin is the ratio of:

The rate of return on investment can be computed by dividing investment turnover by the profit margin.

Investment turnover (as used in determining the rate of return on investment)focuses on the rate of profit earned on each sales dollar.

If income from operations for a division is $6,000,invested assets are $25,000,and sales are $30,000,the investment turnover would be 1.2.

Division A of Purvis Company has a rate of return on investment of 15% and an investment turnover of 1.6.What is the profit margin?

Which of the following is true of the balanced scorecard?