Module 10- 13 Preparation Quizzes- Hanna
A strategy map plays an important role for a company using the balanced scorecard approach to its performance measurement system. Which of the following is not a function of the strategy map?
A strategy map shows causal relationships between only the financial and internal processes perspectives of the balanced scorecard.
Which of the following statements about corporate social responsibility (CSR) is false?
CSR activities may include waste and pollution minimization but do not include agricultural initiatives within farming and ranching.
Which of the following statements regarding CSR reporting is true?
CSR and sustainability information provides important feedback to guide a company's strategic and operational goals regarding eco-efficiency measures.
Which of the following is false when evaluating capital investments tied to a CSR objective?
CSR investment proposals cannot be analyzed with the typical managerial accounting methods used for other types of capital projects.
Stryker Industries received an offer from an exporter for 22,000 units of product at $18 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available: Domestic unit sales price: $22 Variable: 12 Fixed: 5 The differential cost from the acceptance of the offer is
Differential Cost from Acceptance of Offer = Cost Incurred if Offer Is Accepted = 22,000 units × $12 = $264,000
Carmen Co. can further process Product J to produce Product D. Product J is currently selling for $20.00 per pound and costs $15.75 per pound to produce. Product D would sell for $38.00 per pound and would require an additional cost of $8.55 per pound to produce. The differential revenue of producing Product D is
Differential Revenue of Producing Product D = Revenue per Pound of Product D - Revenue per Pound of Product J = $38.00 - $20.00 = $18.00 per pound
Blaser Corporation had $1,040,000 in invested assets, sales of $1,287,000, operating income amounting to $217,000 , and a desired minimum return on investment of 15%. The return on investment for Blaser Corporation is Round the percentage to one decimal place.
Return on Investment (ROI) = Operating Income ÷ Invested Assets = $217,000 / $1,040,000 = 20.9%
The profit margin for the Central Division is 20%, and the investment turnover is 2.8. The return on investment (ROI) for the Central Division is
Return on Investment (ROI) = Profit Margin × Investment Turnover = 0.20 × 2.8 = 56%
Which of the following statements regarding strategic objectives in the balanced scorecard is false?
Strategic objectives are the same as the overall mission statement of the company.
Which of the following statements regarding CSR and sustainability reporting is false?
The triple bottom line approach includes financial, social, and entrepreneurial performance components.
Carolina, the accountant for Duke Manufacturing, tells Jacob, who works in customer service for Duke, that that their company's customer satisfaction rating predicts sales revenue in dollars. Carolina's comment indicates that sales revenue is
a lagging indicator
For higher levels of management, responsibility accounting reports
are more summarized than for lower levels of management
The _____ method of analyzing capital investment proposals divides the estimated average annual income by the average investment.
average rate of return
Which of the following is a method of analyzing capital investment proposals that ignores present value?
average rate of return
Which of the following are two methods of analyzing capital investment proposals that both ignore present value?
average rate of return and cash payback
The process by which management plans, evaluates, and controls investments in fixed assets is called _____ analysis.
capital investment
Which of the following would be most effective in a small owner/manager-operated business?
centralization
Alexander and Kristin are executive managers at Safety First Fall Safety Equipment Co. They realize that within the last several quarters, they have been treating the performance metrics from the company's two very distinct divisions the same rather than focusing on the unique aspects of each division. They have inaccurately assessed divisional performance as a result. Alexander and Kristin realize they have fallen prey to a cognitive bias known as
common measures bias
Which of the following price-setting methods considers the price that other providers charge for the same product?
competition based method
Julia and Jaime manage a glass-making company. Their company includes a manufacturing division, a warehouse and logistics division, and a customer care division. To avoid common measures bias when analyzing the performance of each of these unique divisions, Julia and Jaime should
create a unique divisional scorecard for each separate division
An example of a CSR initiative focused on the social performance aspect of the triple bottom line might include which of the following?
developing a CSR initiative tackling human rights issues in countries where raw materials are sourced
The amount of increase or decrease in cost that is expected from a particular course of action as compared with an alternative is
differential cost
The amount of increase or decrease in revenue that is expected from a particular course of action as compared with an alternative is
differential revenue
Which of the following is not a method commonly used in applying the cost-plus approach to product pricing?
fixed cost method
The entity that grants the right or license to another company to market its goods or services is called the
franchisor
Bekah and Rafael, supervisors in the Human Resources Department at James Manufacturing, are tasked with determining appropriate performance metrics for the learning and growth perspective of their company's balanced scorecard. Which of the following is the best metric for this situation?
hours of employee training offered each quarter
Which of the following methods of evaluating capital investment proposals uses the concept of present value to compute a rate of return?
internal rate of return
What additional information is needed to determine the return on investment if operating income is known?
invested assets
The primary advantages of the average rate of return method are its ease of computation and the fact that
it emphasizes the amount of income earned over the life of the proposal
Metrics that are later in the value chain are normally considered to be _____ indicators.
lagging
The production department is proposing the purchase of an automatic insertion machine. It has identified 3 machines and has asked the accountant to analyze them to determine which of the proposals (if any) meet or exceed the company's policy of a minimum desired rate of return of 10% using the net present value method. Each of the assets has an estimated useful life of 10 years. The accountant has identified the following data: Machine AMachine BMachine CPresent value of future cash flows computed using 10% rate of return$305,000 $295,000 $300,000 Amount of initial investment300,000 300,000 300,000 Which of the investments are acceptable?
machines A and C
Alexander and Kristin are executive managers at Safety First Fall Safety Equipment Co. They decide to discontinue gathering data and calculating performance metrics within their organization because the company's balanced scorecard performance metrics have produced several quarters in a row of good news. They assume the positive results will continue. Alexander and Kristin have made this decision as a result of a cognitive bias known as
motivated reasoning
Which of the following would be considered a sunk cost?
net book value of equipment that has no market value
Which of the following is a present value method of analyzing capital investment proposals?
net present value
Which of the following are present value methods of analyzing capital investment proposals?
net present value and internal rate of return
AnaCarolina and Jaco, executive managers at Duke Manufacturing, are tasked with determining appropriate performance metrics for the customer perspective of Duke's balanced scorecard. Which of the following is the best metric for this situation?
number of returns due to incorrect products shipped in response to orders
Waterfield Company is looking for a way to help its executive managers assess how its three divisions are meeting the company's goals and objectives for financial performance. Which of the following metrics might be used for this purpose?
operating income and cash flows
The revenue that is forgone from an alternative use of an asset, such as cash, is called
opportunity cost
Waterfield Company is looking for a way to help its executive managers assess how the three divisions within the company are meeting the company's overall goals and objectives. The company is looking for a(n)
performance measurement system
Which of the following methods of applying the cost-plus approach to product pricing includes only total manufacturing costs in the cost amount to which the markup is added?
product cost method
Which of the following methods of applying the cost-plus approach to product pricing includes selling expenses, administrative expenses, and desired profit in the markup?
product cost method
Performance targets
provide goals for employees
Beaver Valley Oil Refinery produces various grades of petroleum products at its refinery operations. All of the following may be considered an initiative undertaken as a part of the company's CSR efforts except
providing training to the accounting staff so they better understand FASB requirements for applying accounting standards for financial reporting
AnaCarolina and Jaco, accountants for Duke Manufacturing, are tasked with determining appropriate performance metrics for the financial perspective of Duke's balanced scorecard. Which of the following is the best metric for this situation?
return on investment
Alexander and Kristin are reviewing the statistical analysis for the performance metrics at their company, SafeChild Toys. Unfortunately, there is a lack of evidence that automating the warehouse has led to better inventory controls thereby providing better customer service. Alexander and Kristin should
review the performance metrics to make sure they are accurately measuring the strategic objectives
Which of the following equations best describes target costing?
selling price - desired profit = target cost
A cost that has been incurred in the past, cannot be recouped, and is not relevant to future decisions is termed a
sunk cost
All of the following are factors that may complicate capital investment analysis except
sunk costs
Which of the following reasons would cause a company to reject an offer to accept business at a special price?
the additional sales will increase fixed expenses
A company is contemplating investing in a new piece of manufacturing machinery. The amount to be invested is $100,000. The present value of the future cash flows at the company's desired rate of return is $100,000. The IRR on the project is 12%. Which of the following statements is true?
the desired rate of return used to compute the present value of the future cash flows is equal to 12%.
The target cost is determined by taking
the expected selling price and subtracting the desired profit
A company is contemplating investing in a new piece of manufacturing machinery. The amount to be invested is $210,000. The present value of the future cash flows is $225,000. The company's desired rate of return used in the present value computations was 12%. Which of the following statements is true?
the internal rate of return of the project is more than 12%
Waterfield Company has three decentralized segments. Executive managers are looking for a way to measure the performance of each segment. Which of the following metrics might be used for this purpose?
the return on investment of each segment
The target costing method assumes that
the selling price is set by the marketplace
The expected relationships among performance metrics in the measure map are based on
the strategy map links strategic objectives
When using the product cost method of applying the cost-plus approach to product pricing, which of the following is included in the markup?
total selling and administrative expenses plus desired profits
Discontinuing a product or segment is a huge decision that must be carefully analyzed. Which of the following would be a valid reason not to discontinue an operation?
variable costs are less than revenues
All of the following should be considered in a make-or-buy decision except
whether the supplier will make a profit that would no longer belong to the business
Heart Company has two divisions. Division A is interested in purchasing 10,000 units from Division B. Capacity is available for Division B to produce these units. The per-unit market price is $30 per unit, with a variable cost of $25. The manager of Division A has offered to purchase the units at $22 per unit. In an effort to make this transfer price beneficial for the company as a whole, the range of prices that should be used during negotiations between the two divisions is
$25 to $30
Nelson Company's Radio Division currently is purchasing transistors from Charlotte Co. for $3.50 each. The total number of transistors needed is 8,000 per month. Nelson Company's Electronics Division can produce the transistors for a cost of $4.00 each, and it has plenty of capacity to manufacture the units. The $4.00 is made up of $3.25 in variable costs, and $0.75 in allocated fixed costs. The range of a possible transfer price should be
$3.25 to $3.50
T-Bone Company is contemplating investing in a new piece of manufacturing machinery. The amount to be invested is $150,000. The present value of the future cash flows is $141,000. Should the company invest in this project?
141,000-150,000 = -9,000,no, because net present value is $(9,000)
Materials used by Jefferson Company in producing Division C's product are currently purchased from outside suppliers at a cost of $10.00 per unit. However, the same materials are available from Division A. Division A has unused capacity and can produce the materials needed by Division C at a variable cost of $8.50 per unit. A transfer price of $9.50 per unit is negotiated and 25,000 units of material are transferred, with no reduction in Division A's current sales. Division A's operating income will increase by
Increase in Operating Income = (Transfer Price - Variable Cost per Unit) × Units Transferred = ($9.50 - $8.50) × 25,000 = $25,000
Clydesdale Company has sales of $4,500,000, invested assets of $2,000,000, and operating expenses of $3,600,000. The company has established a minimum return on investment of 7%. Clydesdale Company's investment turnover is
Investment Turnover = Sales ÷ Invested Assets = $4,500,000 ÷ $2,000,000 = 2.25
Mason Corporation had $1,080,000 in invested assets, sales of $1,240,000, operating income amounting to $244,000, and a desired minimum return on investment of 13%.
Investment turnover = Sales ÷ Invested assets = $1,240,000 ÷ $1,080,000 = 1.15
Which of the following is not an example of a capital investment project that focuses on minimizing resource waste and environmental degradation as a CSR objective?
Iron Mills Event Planning invests in an employee wellness and fitness center.
Which of the following statements about performance metrics is false?
Performance metrics are needed for 80% of the strategic objectives
Which of the following statements about performance targets is true?
Performance targets are levels of improvement that management wants to achieve for performance metrics.
Division A of Chacha Company has sales of $140,000, cost of goods sold of $83,000, operating expenses of $43,000, and invested assets of $150,000.
Profit Margin = (Sales - Cost of Goods Sold - Operating Expenses) ÷ Sales = ($140,000 - $83,000 - $43,000) ÷ $140,000 = 10.0%
Mason Corporation had $1,028,000 in invested assets, sales of $1,208,000, operating income amounting to $241,000, and a desired minimum return on investment of 14%. The profit margin for Mason Corporation is
Profit Margin = Operating Income ÷ Sales = $241,000 ÷ $1,208,000 = 20.0%
Chicks Corporation had $1,100,000 in invested assets, sales of $1,210,000, operating income amounting to $302,500, and a desired minimum return on investment of 15%. The profit margin for Chicks Corporation is
Profit Margin = Operating Income ÷ Sales = $302,500 ÷ $1,210,000 = 25%
The Central Division for Chemical Company has a return on investment of 23% and an investment turnover of 1.89. The profit margin is
Profit Margin = Return on Investment ÷ Investment Turnover = 0.23 ÷ 1.89 = 12.17%
Flyer Company sells a product in a competitive marketplace. Market analysis indicates that its product would probably sell at $48 per unit. Flyer management desires a 12.5% profit margin on sales. Flyer's current full cost for the product is $44 per unit. In order to meet the new target cost, how much will the company have to cut costs per unit, if any?
Target Cost = Expected Selling Price - Desired Profit = $48 - (12.5% × $48) = $48 - $6 = $42 Current Costs - Target Cost = $44 - $42 = $2
Flyer Company sells a product in a competitive marketplace. Market analysis indicates that its product would probably sell at $48 per unit. Flyer management desires a 12.5% profit margin on sales. Flyer's current full cost for the product is $44 per unit. The target cost of the company's product is
Target Cost = Expected Selling Price − Desired Profit = $48 - (12.5% × $48) = $48 - $6 = $42
