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Multiple Choice Quiz
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1
Consider the following:

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What is the return on investment (ROI)?
A)5.2%
B)39.6%
C)13.2%
D)8.0%
2
The current return on investment (ROI) of a profit center is 10.0%. Its return on sales (ROS) of $2,000,000 is 20%. What is the average invested capital?
A)$4,000,000
B)$2,000,000
C)$6,000,000
D)$ 200,000
3
Operating earnings are currently $300,000 from sales of $1,500,000. The average invested capital of $5,000,000 is expected to increase $600,000, which is anticipated to increase the return on investment (ROI) to 8%. The return on sales (ROS) is anticipated to increase to 25%. What is the anticipated increase in sales?
A)$ 75,000
B)$120,000
C)$148,000
D)$292,000
4
Which of the following is not a criticism of using ROI and the Dupont system as the only business performance measurements?
A)The short horizon problem
B)Failing to undertake profitable investments
C)Measurement problems
D)The earnings per sales dollar is ignored
5
Consider the following:

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What is the residual income (RI) if the minimum acceptable return is 12%?
A)$720,000
B)$80,000
C)$500,000
D)$800,000
6
Consider the following:

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The residual income (RI) is $100,000. The minimum acceptable return is 14%. Calculate the amount of invested capital.
A)$9,000,000
B)$8,000,000
C)$6,000,000
D)$5,000,000
7
A strategy to improve delivery applies to which perspective under the balanced scorecard lens?
A)Financial perspective
B)Customer perspective
C)Business process perspective
D)Learning and growth perspective
8
Which of the following is a difficulty of using a fully designed and functioning balanced scorecard?
A)Assessing the importance that should be attached to each perspective
B)The technical hurdles of measuring, quantifying and evaluating some of the qualitative components
C)A frequent lack of clarity and sense of direction from considering the large number of measures suggested by the four perspectives
D)All of the above
9
Which of the following applies to the design choice of rewarding local versus companywide performance?
A)“managers are less likely to trade-off increasing current performance at the expense of future performance."
B)“this approach creates too much risk for managers."
C)“might not help the company achieve its overall objectives and goals."
D)“does not usually accommodate a complex system like a balanced scorecard."
10
Consider the following Division information.

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The minimum acceptable return is 12%. The bonus to the manager is 10% of residual income. If the manager has investment authority and invests $500,000 in new equipment that will increase operating income 15%, how much will the manager’s bonus increase or decrease?
A)$2,000 decrease
B)$10,000 increase
C)$6,000 increase
D)$8,000 increase





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