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Exam 11: Performance Evaluation and the Balanced Scorecard

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Question 81

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A cost centre will show revenues and costs.

A) True
B) False

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Question 82

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Powell Enterprises has operating income of $72,000.Its return on investment (ROI) is 36%,while its target rate of return is 10%.The total assets of Powell Enterprises would be closest to

A) $7,200.
B) $25,920.
C) $200,000.
D) $720,000.

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

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Question 83

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List the four areas of a balanced scorecard.Describe each area.Define "key performance indicator" (KPI).Give an example of a KPI for each balanced scorecard area

The taxation department for department store chain is likely to be classified as a(n)

What is the Toy Division's profit margin?

The financial results for one of the subunits of Factory Six Racing is presented in the partially completed performance evaluation report below. * Flexible budget variance/Flexible budget Required: 1.Complete the performance report rounding to three decimal places. 2.Based on the data presented,what type of responsibility centre is this subunit? 3.Which items should be investigated if part of management's decision criteria is to investigate all variances equal to or exceeding $5,000 and exceeding 10% ( both criteria must be met)?

Rose Company has a target rate of return of 10%,an ROI of 36%,and asset turnover of 3.0.The profit margin for Rose Company would be closest to

The following information for Alpha Company was available for the past year: Management has a 25% target rate of return.Alpha Company's weighted average cost of capital is 17% and its effective tax rate is 32%. Calculate the EVA.

The duties of an investment centre manager are similar to those of a CFO.

Providing subunit managers with performance results and comparing targets to actual results would be an example of

Financial measures are lead indicators for companies.

Companies benchmark their performance against the performance of their competitors and against their own past performance.

The number of repeat customers would be an example of measuring which perspective?

Match the following:

The reservations department for a hotel chain is likely to be classified as a(n)

Return on Investment (ROI)is defined as operating income divided by total assets.

The accounting department for a department store chain is likely to be considered an investment centre.

The Frozen Foods Division of AgraFoods Corporation had sales of $8,400,000 and operating income of $1,848,000 last year.The total assets of the Frozen Foods Division were $3,500,000,while current liabilities were $850,000.AgraFoods Corporation's target rate of return is 12%,while its weighted average cost of capital is 8%.The effective tax rate for the company is 40%. Required: 1.Calculate the profit margin. 2.Calculate the asset turnover. 3.Calculate the return on investment (ROI). 4.Calculate the residual income. 5.Calculate the Economic Value Added (EVA).

Management by exception would dictate that the manager investigate which of the following variances?

What will happen to return on investment (ROI) if a company must decrease its selling price while all of the company's expenses remain constant?