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Exam 10: Performance Measurement in Decentralized Organizations

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Question 1

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

A) 11.3 hours
B) 21.7 hours
C) 17.2 hours
D) 4.5 hours

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

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Question 2

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Which of the following would not be included in operating assets in return on investment calculations?

A) Cash.
B) Accounts Receivable.
C) Equipment
D) Factory building rented to (and occupied by) another company.

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

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Question 3

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All other things the same, an increase in unit sales will normally result in an increase in the return on investment.

Selma Inc.reported the following results from last year's operations: Last year's margin was closest to:

Throughput time is the amount of time required to move a completed unit from the factory floor to the warehouse.

If the company pursues the investment opportunity and otherwise performs the same as last year, the combined ROI for the entire company will be closest to:

Familia Inc.reported the following results from last year's operations: At the beginning of this year, the company has a $1,200,000 investment opportunity with the following characteristics: The company's minimum required rate of return is 13%. Required: 1.What was last year's return on investment (ROI)? (Round to the nearest 0.1%.) 2.What is the ROI related to this year's investment opportunity? (Round to the nearest 0.1%.) 3.If the company pursues the investment opportunity and otherwise performs the same as last year, what will be the overall ROI will this year? (Round to the nearest 0.1%.) 4.If Westerville's chief executive officer earns a bonus only if the ROI for this year exceeds the ROI for last year, would the CEO pursue the investment opportunity? Would the owners of the company want the CEO to pursue the investment opportunity?

If the MCE is equal to 0.6, then 60% of the time a unit is in process is spent on activities that add value to the product.

Craycraft Inc.reported the following results from last year's operations: At the beginning of this year, the company has a $800,000 investment opportunity with the following characteristics: Required: 1.What was last year's margin? (Round to the nearest 0.1%.) 2.What was last year's turnover? (Round to the nearest 0.01.) 3.What was last year's return on investment (ROI)? (Round to the nearest 0.1%.) 4.If the company pursues the investment opportunity and otherwise performs the same as last year, what will be the overall margin this year? (Round to the nearest 0.1%.) 5.If the company pursues the investment opportunity and otherwise performs the same as last year, what will be the overall turnover this year? (Round to the nearest 0.01.) 6.If the company pursues the investment opportunity and otherwise performs the same as last year, what will be the overall ROI will this year? (Round to the nearest 0.1%.)

Alghamdi Corporation keeps careful track of the time required to fill orders.The times required for a particular order appear below: Required: a.Determine the throughput time.Show your work! b.Determine the manufacturing cycle efficiency (MCE), Show your work! c.Determine the delivery cycle time.Show your work!

What is the manufacturing cycle efficiency?

A balanced scorecard contains both customer and internal business process performance measures because improvements in internal business process should result in improvements in customer satisfaction.

Chavin Company had the following results during August: net operating income, $220,000; turnover, 5; and ROI 25%.Chavin Company's average operating assets were:

Queue time is considered non-value-added time.

A balanced scorecard consists of a report showing a performance measure such as ROI or residual income for all of the divisions in a company that generate profits.

In essence, a balanced scorecard lays out a theory of how the company can take concrete actions to attain its desired outcomes.The strategy should seem plausible, but it should be regarded as only a theory.

The division's margin is closest to:

Financial data for Beaker Company for last year appear below: The company paid dividends of $2,100 last year.The "Investment in Cedar Company" on the statement of financial position represents an investment in the stock of another company. Required: a.Compute the company's margin, turnover, and return on investment for last year. b.The Board of Directors of Beaker Company has set a minimum required return of 20%.What was the company's residual income last year?

Youns Inc.reported the following results from last year's operations: The company's average operating assets were $5,000,000. At the beginning of this year, the company has a $1,400,000 investment opportunity that involves sales of $2,800,000, fixed expenses of $616,000, and a contribution margin ratio of 30% of sales. If the company pursues the investment opportunity and otherwise performs the same as last year, the combined turnover for the entire company will be closest to:

Last year's turnover was closest to: