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Exam 10: Differential Analysis: the Key to Decision Making

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Question 41

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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?

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a. ROI = Net operating income ÷ Average ...

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Question 42

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

A) 2.9 hours
B) 12.3 hours
C) 30.5 hours
D) 28.9 hours

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Question 43

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The following information relates to last year's operations at the Bread Division of Rison Bakery Inc.: What was the Bread Division's minimum required rate of return last year?

Aguilera Industries is a division of a major corporation. Data concerning the most recent year appears below: The division's return on investment (ROI) is closest to:

Return on investment is superior to residual income as a means of measuring performance because it encourages managers to make investment decisions that are more consistent with the interests of the company as a whole.

Guerlane Fragrance Corporation has a perfume division, Essense, and a cologne division, Karisma. The following information relates to last year's operations at each division. The minimum required rate of return is the same for both divisions. Required: Compute the unknown quantities above [(a) through (g)]. SHOW YOUR COMPUTATIONS.

Which of the following would be an argument for the use of net book value in the computation of operating assets in return on investment calculations?

The Casket Division of Landazuri Corporation had average operating assets of $620,000 and net operating income of $86,000 in February. The company uses residual income to evaluate the performance of its divisions, with a minimum required rate of return of 14%. Required: What was the Casket Division's residual income in February?

Hardenburg Corporation keeps careful track of the time required to fill orders. The times required for a particular order appear below: Required: a. Determine the throughput time. Show your work! b. Determine the manufacturing cycle efficiency (MCE), Show your work! c. Determine the delivery cycle time. Show your work!

Contribution income statements are used to measure the performance of:

Because continuous improvement is very difficult, the emphasis in the balanced scorecard tends to be on meeting preset standards.

The Portland Division's operating data for the past two years is as follows: The Portland Division's margin in Year 2 was 150% of the margin for Year 1. The turnover for Year 1 was:

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 residual income is closest to:

The following information relates to the Quilt Division of TDS Corporation for last year: What was the Quilt Division's return on investment (ROI) for last year?

Last year the Uptown Division of Gorcen Enterprises had sales of $300,000 and a net operating income of $24,000. The average operating assets at Uptown last year amounted to $120,000. Last year at Uptown the return on investment was:

The Consumer Products Division of Mickolick Corporation had average operating assets of $450,000 and net operating income of $38,700 in August. The minimum required rate of return for performance evaluation purposes is 10%. What was the Consumer Products Division's minimum required return in August?

Consider the following three conditions: I. An increase in sales II) An increase in operating assets III) A reduction in expenses Which of the above conditions provide a way in which a manager can improve return on investment?

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

Queue time is considered value-added time.

A balanced scorecard should not contain any performance measures concerning customer satisfaction since the extent to which customers are satisfied is beyond the control of any manager in the company.