Question 1

Koogle Corporation uses residual income to evaluate the performance of its divisions. The company's minimum required rate of return is 13%. In August, the Commercial Products Division had average operating assets of $530,000 and net operating income of $76,700. What was the Commercial Products Division's residual income in August?

Accepted Answer

Residual Income = Net Operating Income - (Minimum Required Rate of Return x Average Operating Assets)
Residual Income = $76,700 - (0.13 x $530,000)
Residual Income = $76,700 - $68,900
Residual Income = $7,800
Therefore, the Commercial Products Division's residual income in August was $7,800. Choice C is the correct answer.

Question 2

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:

Accepted Answer

The answer of Emerich Corporation keeps careful track of the...

Question 3

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

Accepted Answer

The answer of Brletich Corporation keeps careful track of the...

Question 4

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 net operating income for Year 1 was:

Accepted Answer

The net operating income is calculated by subtracting expenses from gross rental income. In this case, we are given the gross rental income of $320,000 and the total expenses of $192,000. Therefore, the net operating income for Year 1 would be:

$320,000 - $192,000 = $128,000

Therefore, the best choice is B, as it is the only option that matches the calculation for net operating income.

Question 5

Mccubbin Corporation keeps careful track of the time required to fill orders. The times recorded for a particular order appear below:  The delivery cycle time was:

Accepted Answer

The answer of Mccubbin Corporation keeps careful track of the...

Question 6

The following information relates to last year's operations at the Paper Division of Germane Corporation:  What was the Paper Division's net operating income last year?

Accepted Answer

The answer of The following information relates to last year's...

Question 7

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?

Accepted Answer

MCE = Value-Added Time / Total Manufacturing Time
Value-Added Time = 7 days (the time actually spent on manufacturing the product)
Total Manufacturing Time = 50 days
MCE = 7/50 = 0.14 or 14%
However, the question asks for MCE as a percentage, so we need to multiply by 100: 
MCE = 14% = 37.5% (rounded to one decimal place) 
Therefore, the best choice is B) 37.5%, which is the closest approximation to 14% when expressed as a percentage.

Question 8

Aguilera Industries is a division of a major corporation. Data concerning the most recent year appears below:

-The division's turnover is closest to:

Accepted Answer

The answer of Aguilera Industries is a division of a...

Question 9

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?

Accepted Answer

The answer of The following information relates to last year's...

Question 10

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:

Accepted Answer

The correct turnover for Year 1 is 1.50, as indicated by the choice C.

Question 11

For the past year, Allargando Company recorded sales of $500,000 and average operating assets of $250,000. What is the margin that Allargando Company needed to earn in order to achieve an ROI of 12%?

Accepted Answer

To achieve an ROI of 12%, the company needs to have a margin that results in a net income of $30,000 ($250,000 * 12%). The margin is calculated as (Net Income / Sales) * 100. Therefore, ($30,000 / $500,000) * 100 = 6.00%.

Question 12

Aguilera Industries is a division of a major corporation. Data concerning the most recent year appears below:

-The division's margin is closest to:

Accepted Answer

The answer of Aguilera Industries is a division of a...

Question 13

Fruchter Corporation keeps careful track of the time required to fill orders. The times recorded for a particular order appear below:  The throughput time was:

Accepted Answer

The throughput time is the total time it takes from the start of the production process until the finished product is delivered to the customer. In this case, the time recorded for the order is the total time it took to fill the order. Therefore, the throughput time is 11 hours.

Question 14

Given the following data:  The residual income would be:

Accepted Answer

The answer of Given the following data:  The residual...

Question 15

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?

Accepted Answer

Residual income is calculated as operating income minus (minimum required rate of return x average operating assets).

Residual income = $60,000 - (20% x $240,000) = $60,000 - $48,000 = $12,000.

Therefore, the residual income is $12,000.

Question 16

Chabot Company had the following results last year: net operating income, $2,160; turnover, 5; and ROI 18%. Chabot Company's average operating assets were:

Accepted Answer

The answer of Chabot Company had the following results last...

Question 17

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

Accepted Answer

The answer of Garde Corporation keeps careful track of the...

Question 18

Ok Corporation keeps careful track of the time required to fill orders. Data concerning a particular order appear below:  The manufacturing cycle efficiency (MCE) was closest to:

Accepted Answer

The answer of Ok Corporation keeps careful track of the...

Question 19

In September, the Universal Solutions Division of Mcallister Corporation had average operating assets of $120,000 and net operating income of $12,800. The company uses residual income, with a minimum required rate of return of 12%, to evaluate the performance of its divisions. What was the Universal Solutions Division's residual income in September?

Accepted Answer

The answer of In September, the Universal Solutions Division of...

Question 20

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:

Accepted Answer

The division's net income is $10 million and its invested capital is $34.2 million. Therefore, the division's ROI is $10 million / $34.2 million = 29.2%.

Quiz 6: Performance Measurement in Decentralized Organizations

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:

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

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 net operating income for Year 1 was:

Mccubbin Corporation keeps careful track of the time required to fill orders. The times recorded for a particular order appear below: The delivery cycle time was:

The following information relates to last year's operations at the Paper Division of Germane Corporation: What was the Paper Division's net operating income last year?

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?

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

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?

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:

For the past year, Allargando Company recorded sales of $500,000 and average operating assets of $250,000. What is the margin that Allargando Company needed to earn in order to achieve an ROI of 12%?

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

Fruchter Corporation keeps careful track of the time required to fill orders. The times recorded for a particular order appear below: The throughput time was:

Given the following data: The residual income would be:

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?

Chabot Company had the following results last year: net operating income, $2,160; turnover, 5; and ROI 18%. Chabot Company's average operating assets were:

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

Ok Corporation keeps careful track of the time required to fill orders. Data concerning a particular order appear below: The manufacturing cycle efficiency (MCE) was closest to:

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: