QUESTION 16

The manager of Synergy Company's Stock Division projects the following for next year:

Sales $195,000

Operating income 70,000

Operating assets 385,000

The manager can invest in an additional project that would require $50,000 investment in additional assets and would generate $9,000 of additional income. The company's minimum rate of return is 15%. What is the residual income for the Stock Division with the additional project?

a.$40,000

b.$6,000

c.$13,750

d.$4,200

e.$25,600

QUESTION 17

Last week, Davis worked for 50 hours and produced 250 business card boxes. What is the cycle time for producing one business card box?

a.4 minutes

b.90 minute

c.12 minutes

d.10 minutes

e.6 minutes

QUESTION 20

Planet Company had total sales of $15,000,000 for the fiscal year ending on December 31, 20X1.

Planet's costs of quality are as follows:

Warranties $600,000

Scrap $450,000

Prototype inspection 90,000

Repairs 300,000

Quality audits 15,000

Product acceptance 150,000

Calculate Planet's prevention cost for the year.

a.$105,000

b.$510,000

c.$600,000

d.$710,000

QUESTION 21

A segment of Mega Inc., manufactures and sells blankets. The various models of blankets are produced in a single factory using stable technology. They are sold by the sales department, also located in the factory. The segment is most probably accounted for as a(n)

a.cost center.

b.revenue center.

c.profit center.

d.investment center.

e.None of these.

QUESTION 22

Division A had ROI of 15% last year. The manager of Division A is considering an additional investment for the coming year. What step will the manager likely choose to take?

a.Accept the investment as long as it provides positive operating income.

b.Accept the investment as long as its ROI is positive.

c.Reject the investment if it returns more than 15% ROI.

d.Reject the investment if it returns less than 15% ROI.

e.Reject the investment if it returns an ROI equal to 15%.

QUESTION 24

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

A.Geographical

B.types of goods or services produced

C.type of responsibility given to divisional manager

D.All of these answers are correct.

E.None of these answers are correct.

QUESTION 25

Which of the following is true of a value stream?

A. A value stream reflects all that is done to bring the product to a customer.

B. A value stream includes only value-added activities.

C. A value stream reflects only the nonvalue-added activities.

D. A value stream is never created for groups of products that use common processes