13. The manager of a division is displeased with the ROI of the division. One step that would increase ROI (holding everything else constant) is

a.increasing costs.

b.increasing sales.

c.increasing investment.

d.decreasing operating income.

e.None of these choices are correct.

14. Which of the following is true of economic value added (EVA)?

a.Economic value added is calculated by multiplying margin ratio and average operating assets.

b.Economic value added is calculated by deducting the dollar cost of capital employed from after-tax operating income.

c.Economic value added is calculated by adding revenue to operating profit.

d.Economic value added is calculated by dividing operating income by sales.

15. The number of units of output that can be produced in a given period of time is called

a.responsiveness.

b.unit process time.

c.velocity.

d.cell conversion time.

e.cycle time.

16. The following information pertains to the three divisions of Marlow Company:

	Division X		Division Y		Division Z
Sales	?		?		$1,250,000
Net operating income	$36,000		$25,000		$75,000
Average operating assets	$300,000		?		?
Return on investment	?		20%		15%
Margin	0.10		0.05		?
Turnover	1.2		?		?
Target ROI	15%		12%		10%

What is the residual income for Division X?

a.$(9,000)

b.$45,000

c.$(36,000)

d.$36,000

17. Divisions in a decentralized company can be created along which of the following lines?

a.geographical

b.type of responsibility given to divisional manager

c.types of goods or services produced

d.All of these answers are correct.

e.None of these answers are correct.

18. The Balanced Scorecard perspective that defines the customer and market segments in which the business unit will compete is the ____ perspective.

a.financial

b.internal business process

c.learning and growth

d.customer

e.None of these choices are correct.

19. Planet Company had the following historical accounting data per unit:

Direct materials	$70
Direct labor	40
Variable overhead	20
Fixed overhead	30
Variable selling expenses	50
Fixed selling expenses	12

The units are normally transferred internally from Division A to Division B. The units also may be sold externally for $220 per unit. The minimum profit level accepted by the company is a markup of 35%. There were no beginning or ending inventories. What would be the transfer price if Division A uses full cost plus markup?

a.$136

b.$216

c.$129

d.$198

20. MCE (manufacturing cycle efficiency) is calculated using the following formula:

a.nonprocessing time / processing time.

b.total time / processing time.

c.processing time / nonprocessing time.

d.total time / nonprocessing time.

e.processing time / total time.