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Exam 14: Decentralisation and Modern Performance Management Systems the Balanced Scorecard

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Question 31

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Hedding Inc.has two divisions: classic and modern.In the most recent year,the classic division reported sales of $900 000 and an asset turnover of 4.0.The rate of return on average invested assets was 16 per cent. Required: What was the classic division's margin?

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The margin is 4 per cent calcu...

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Question 32

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The manager of a profit centre should not be responsible for which of the following types of decisions?

A) Deciding which supplier should be used for the purchase of direct materials.
B) Establishing the number of employees that will need to work each day.
C) Deciding whether or not their segment should purchase additional machinery.
D) Deciding whether or not to accept a special order from a customer.

E) A) and D)
F) None of the above

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Question 33

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The manager of a local department store,Nelda Smith,has just been informed that she will start being evaluated on the basis of her segment's ROI in relation to the ROI values of other department stores owned by her employer.Give three ways she can increase her segment's ROI?

How do the roles of cost centre managers,revenue centre managers,profit centre managers,and investment centre managers differ?

Astin Ltd.requires all of its divisions to maintain a return on investment (ROI) of at least 25 per cent.Over the past several years,one of Astin's divisions has consistently had the following information: $\begin{array}{lr} \text {Sales } &\$2000000\\ \text {Net operating income } &500000\\\end{array}$ In order to achieve the company's ROI goals,this division should do which of the following?

Which of the following items is often most difficult to allocate to a particular segment?

Graham Pottery Inc. Graham Pottery Inc. produces an item that gives rise to the following activities: $\begin{array} { l c } \text { Activity } & \text { Hours } \\\hline \text { Processing (two departments) } & 25 \\\text { Inspecting } & 2 \\\text { Rework } & 1 \\\text { Moving (three moves) } & 6 \\\text { Waiting (for the second process) } & 18 \\\text { Storage (before delivery to the customer) } & 24\end{array}$ -The manufacturing cycle efficiency is:

Which two items are typically omitted from 'net operating income' for return on investment (ROI)purposes.Why are these two items omitted?

What is the main idea underlying responsibility accounting?

Which of the following is an advantage of decentralisation?

The manager of a local retail store tells you that,'An unprofitable segment should always close'.Do you agree or disagree with this statement and why?

Which of the following is often not a disadvantage of decentralisation?

Both traditional financial measures of performance and the balanced scorecard approach examine financial factors,but how does their appraisal of financial factors differ?

Ramsey Automotive Ltd.had sales of $2 000 000 and net operating income of $600 000 last year.Operating assets last year averaged $1 000 000.The company's manager is considering the purchase of a new machine which is expected to increase average operating assets by 6 per cent. Required: Calculate the company's new ROI if the new machine is purchased.

As a new manager of a production division,you have made the decision to incur more quality costs than the previous manager of the division incurred.How can you defend quality costs to executive management?

Boone Manufacturing Boone Manufacturing produces a variety of lamp shades which it sells to retail stores throughout the country. The following data is available for the year: -What is the total throughput per production hour?

Which of the following would be the best measure of performance for a profit centre?

Picture Puzzle Company The Picture Puzzle Company has the following estimates for producing a single batch of 500 custom-made puzzles: $\begin{array}{lc}\text { Wait time } & 10 \text { days } \\\text { Inspection time } & 1 \text { hour } \\\text { Processing time } & 3 \text { days } \\\text { Move time } & 1 \text { day }\end{array}$ -The total non-value-added time is:

Which of the following statements about the balanced scorecard approach is true?

Under what type of situation would return on investment (ROI)be a better performance measure than residual income and vice versa?