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| 1 | |
How is a company's return on investment computed? |
| | A) | Margin divided by turnover |
| | B) | Turnover divided by average operating assets |
| | C) | Margin times turnover |
| | D) | Margin times average operating assets |
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| 2 | |
Which of the following is not considered an operating asset for purposes of calculating return on investment? |
| | A) | Cash |
| | B) | Investment in common stock |
| | C) | Inventory |
| | D) | Plant equipment |
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| 3 | |
Assuming that sales and net income remain the same, a company's return on investment will: |
| | A) | increase if its operating assets increase. |
| | B) | decrease if its operating assets decrease. |
| | C) | decrease if its turnover decreases. |
| | D) | decrease if its turnover increases. |
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| 4 | |
The Central Division of Burlington Company reported the following operating data for the past year:
 <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0027162757/1029179/ch11_q4.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (49.0K)</a>]]>
What was the division's margin? |
| | A) | 12.50% |
| | B) | 13.00% |
| | C) | 14.75% |
| | D) | 15.00% |
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| 5 | |
The Central Division of Burlington Company reported the following operating data for the past year:
 <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0027162757/1029179/ch11_q5.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (49.0K)</a>]]>
(Note that this is the same data that was provided for the previous question.) What was the division's turnover? |
| | A) | 2 |
| | B) | 4 |
| | C) | 10 |
| | D) | 25 |
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| 6 | |
The following data are available for the Appliance Division of Homeware Company and the single product it sells:
 <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0027162757/1029179/ch11_q6.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (44.0K)</a>]]>
How many units must the division sell each year to achieve an ROI of 16%? |
| | A) | 52,000 |
| | B) | 65,000 |
| | C) | 240,000 |
| | D) | 1,300,000 |
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| 7 | |
The Great Lakes Company reported the following operating data for the past year:
 <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0027162757/1029179/ch11_q7.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (49.0K)</a>]]>
What was the company's minimum required rate of return? |
| | A) | 11% |
| | B) | 12% |
| | C) | 13% |
| | D) | 14% |
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| 8 | |
The D'Azure Company uses residual income to measure the performance of one of its divisional managers. Which of the following would increase the division manager's performance measure? |
| | A) | A decrease in the division's average operating assets |
| | B) | A decrease in the division's net operating income |
| | C) | An increase in the division's average operating assets |
| | D) | An increase in the minimum required return |
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| 9 | |
Which of the following statements is not correct? |
| | A) | Delivery cycle time is a key concern to many customers. |
| | B) | Manufacturing cycle time is made up of wait time, process time, inspection time, move time, and queue time. |
| | C) | Non-value-added activities include inspecting, moving, and queuing. |
| | D) | Manufacturing cycle efficiency is computed by dividing value-added time by throughout time. |
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| 10 | |
Which of the following statements is not correct? |
| | A) | Financial measures such as ROI and residual income may be included in a balanced scorecard. |
| | B) | Operating measures such as delivery cycle time may be included in a balanced scorecard. |
| | C) | Top managers who translate strategy into performance measures that employees understand and influence are following a balanced scorecard approach. |
| | D) | Incentive compensation for employees, such as bonuses, should not be tied to balanced scorecard performance measures. |
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