-Managerial performance can be measured in various ways, including return on investment (ROI) and residual income (RI). A good reason for using RI rather than ROI is:

Select one:

a. RI can be computed without regard to identifying an investment base

b. Goal congruence is more likely to be promoted by using RI

c. RI is well understood and often used and discussed in the financial press

d. ROI does not take into consideration both the asset turnover (AT) ratio and the return-on-sales (ROS) percentage

e. An imputed interest rate (minimum rate of return) does not have to be specified

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-Which of the following items would most likely not be incorporated into the calculation of a division's investment base when using the residual income (RI) or the return on investment (ROI) approach for performance measurement and evaluation?

Select one:

a. Fixed assets used in divisional operations

b. Land being held by the division as a site for a new plant in the future

c. Division inventories when division management exercises control over the inventory levels

d. Division accounts payable when division management exercises control over the amount of short-term credit utilized

e. Division accounts receivable with division management exercises control over credit policy and credit terms

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-Luanna Inc. manufactures game consoles. Some of the company's data was misplaced. Use the following information to replace the lost data.

	Actual Results	Flexible Budget Variance		Flexible Budget	Sales Volume Variance	Master Budget
Units	1,760					1,700
Revenues	$103,840	$1,760	U	A		B
Variable costs	C					$47,600
Fixed Costs	$20,700
Operating Income	$44,350			D		$25,000

Select one:

a. $100,300

b. $102,000

c. $103,440

d. $105,600

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-Residual income (RI) may be a better measure for performance evaluation of an investment center manager than is the return on investment (ROI) metric because:

Select one:

a. Problems associated with measuring the asset base are eliminated

b. Desirable investment decisions will not likely be neglected by high-return divisions of the company

c. Only the gross book value (GBV) of assets needs to be calculated

d. Returns do not increase as assets are depreciated

e. Arguments over the implicit cost of capital are eliminated

-A final step in the SWOT analysis is to identify quantitative measures for the:

Select one:

a. Value propositions.

b. Competitor analyses.

c. Critical success factors.

d. Value propositions and also critical success factors.

e. Competitor analyses and also critical success factors.

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-Machine Builders Inc. adopted a standard cost system several years ago that it uses in conjunction with its process cost system. The per-unit standard costs for direct materials and direct labor for its single product are as follows:

Materials:	(4 kilograms $10.00 per kilogram)	$40.00
Labor:	(4 hours $18.00 per hour)	72.00

All materials are issued at the beginning of processing. The operating data shown below were taken from the records for July:

In-process beginning inventory	none
In-process ending inventory90% complete as to labor	1,000 units
Units completed during the month	7,200 units
Budgeted output	8,000 units
Purchases of materials, in kilograms (AQ)	30,000
Total actual labor costs incurred	$525,000
Direct labor hours worked (AQ)	28,000 hours
Materials purchase-price variance	$3,000 unfavorable
Increase in materials inventory in July	1,500 kilograms
Beginning inventory of materials	0 kg.

-The actual direct materials purchase price (AP) per kilogram in July (to two decimal places) was:

Select one:

a. $8.80

b. $9.90

c. $10.00

d. $10.10

e. $11.80

Question text

-Machine Builders Inc. adopted a standard cost system several years ago that it uses in conjunction with its process cost system. The per-unit standard costs for direct materials and direct labor for its single product are as follows:

Materials:	(4 kilograms $10.00 per kilogram)	$40.00
Labor:	(4 hours $18.00 per hour)	72.00

All materials are issued at the beginning of processing. The operating data shown below were taken from the records for July:

In-process beginning inventory	none
In-process ending inventory90% complete as to labor	1,000 units
Units completed during the month	7,200 units
Budgeted output	8,000 units
Purchases of materials, in kilograms (AQ)	30,000
Total actual labor costs incurred	$525,000
Direct labor hours worked (AQ)	28,000 hours
Materials purchase-price variance	$3,000 unfavorable
Increase in materials inventory in July	1,500 kilograms
Beginning inventory of materials	0 kg.

-The direct labor efficiency variance for July was:

Select one:

a. $6,600 favorable.

b. $7,200 unfavorable.

c. $8,000 unfavorable

d. $14,400 favorable

e. $79,200 favorable

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-XYZ Corporation's capital structure consists of 60% debt with a pretax cost of 10%, and the balance of common equity, with a cost of 15%. The company's income tax rate (federal and state combined) is 40%. XYZ's weighted-average cost of capital (WACC), to one decimal point, is:

Select one:

a. 8.4%

b. 9.0%

c. 9.6%

d. 11.4%

e. 12.0%