ACCT 241 Week 11 Assignment Help 1

ACCT 241 Week 11 Assignment Help 1 | American University 

1.

Required information

We will learn to compute return on investment (ROI). ROI is defined as net operating income divided by average operating assets. ROI can also be expressed in terms of margin and turnover. Margin and turnover are important concepts in understanding how a manager can affect ROI. Increasing selling prices and reducing operating expenses both increase net operating income and therefore margin. Excessive funds tied up in operating assets depress turnover and lower ROI.

Knowledge Check 01

When a manager has control over and is accountable for cost, profit or investments of an organization, it is called ________.

margin center

responsibility center

net operating income

cost center

2.

Required information

We will learn to compute return on investment (ROI). ROI is defined as net operating income divided by average operating assets. ROI can also be expressed in terms of margin and turnover. Margin and turnover are important concepts in understanding how a manager can affect ROI. Increasing selling prices and reducing operating expenses both increase net operating income and therefore margin. Excessive funds tied up in operating assets depress turnover and lower ROI.

Knowledge Check 01

For the year 2015, Systems Corporation earned a net operating income of $2 million on sales of $6 million. Assume that the company's average operating assets were $20 million. What is the company’s ROI?

10%

1%

33%

30%

3.

Required information

We will learn to compute return on investment (ROI). ROI is defined as net operating income divided by average operating assets. ROI can also be expressed in terms of margin and turnover. Margin and turnover are important concepts in understanding how a manager can affect ROI. Increasing selling prices and reducing operating expenses both increase net operating income and therefore margin. Excessive funds tied up in operating assets depress turnover and lower ROI.

Knowledge Check 01

Return on Investment can be calculated by each of the following formulas except ________.

Margin/Turnover

Margin x Turnover

Net Operating Income/Average Operating Assets

4.

Required information

We will learn to compute residual income. Residual income is the net operating income that an investment center earns above the minimum required return on its operating assets.The residual income approach has one major disadvantage. It cannot be used to compare the performances of divisions of different sizes. So, when comparing investment centers, it is better to focus on the percentage change in residual income from year to year rather than on the absolute amount of residual income.

Knowledge Check 01

Residual income = Net operating income less ________.

Average operating assets

(Sales x Minimum required rate of return)

(Average operating assets x Minimum required rate of return)

Cost of goods sold

5.

Required information

We will learn to compute residual income. Residual income is the net operating income that an investment center earns above the minimum required return on its operating assets.The residual income approach has one major disadvantage. It cannot be used to compare the performances of divisions of different sizes. So, when comparing investment centers, it is better to focus on the percentage change in residual income from year to year rather than on the absolute amount of residual income.

Knowledge Check 01

Axis Corporation's Division A has average operating assets of $500,000 and the division earned $100,000 as net operating income during a period. The company expects a minimum required rate of return of 15% on its investments. What is the residual income for Division A?

$75,000

$100,000

$25,000

$500,000

6.

Required information

We will learn to compute residual income. Residual income is the net operating income that an investment center earns above the minimum required return on its operating assets.The residual income approach has one major disadvantage. It cannot be used to compare the performances of divisions of different sizes. So, when comparing investment centers, it is better to focus on the percentage change in residual income from year to year rather than on the absolute amount of residual income.

Knowledge Check 01

Residual income is a better measure for performance evaluation of an investment center manager than return on investment because ________.

it encourages managers to make investments that are profitable for the entire company

it can be used to compare the performances of divisions of different sizes

it does not measure performance based on operating assets

the problems with measuring the asset base are eliminated

7

Required information

We will learn to compute residual income. Residual income is the net operating income that an investment center earns above the minimum required return on its operating assets.The residual income approach has one major disadvantage. It cannot be used to compare the performances of divisions of different sizes. So, when comparing investment centers, it is better to focus on the percentage change in residual income from year to year rather than on the absolute amount of residual income.

Knowledge Check 01

A major drawback of residual income is that ________.

it encourages managers to make investments that are profitable for the entire company

 it cannot be used to compare the performances of divisions of different sizes

it measures performance based on operating assets

it is too complex to calculate

8.

Required information

We will learn to compute throughput time, delivery time, and manufacturing cycle efficiency. Throughput time or manufacturing cycle time includes process time, inspection time, move time, and queue time. Delivery time includes waiting time and throughput time. The manufacturing cycle efficiency (MCE) is computed by relating the value-added time to the throughput time.

Vertis Corporation is interested in cutting the amount of time between when a customer places an order and when the order is completed. Details for the first quarter of the year are provided here. Choose the correct answer from the options provided.

Knowledge Check 01

What is the throughput time?

26 days

6 days

12 days

5 days

9.

Required information

We will learn to compute throughput time, delivery time, and manufacturing cycle efficiency. Throughput time or manufacturing cycle time includes process time, inspection time, move time, and queue time. Delivery time includes waiting time and throughput time. The manufacturing cycle efficiency (MCE) is computed by relating the value-added time to the throughput time.

Knowledge Check 01

_________ is the elapsed time from receipt of a customer order to when the completed goods are shipped to the customer.

Throughput time

Process time

Manufacturing cycle efficiency

Delivery cycle time

10.

Required information

We will learn to compute throughput time, delivery time, and manufacturing cycle efficiency. Throughput time or manufacturing cycle time includes process time, inspection time, move time, and queue time. Delivery time includes waiting time and throughput time. The manufacturing cycle efficiency (MCE) is computed by relating the value-added time to the throughput time.

Vertis Corporation is interested in cutting the amount of time between when a customer places an order and when the order is completed. Details for the first quarter of the year are provided here. Choose the correct answer from the options provided.

Knowledge Check 01

Compute the manufacturing cycle efficiency (MCE).

0.60

4.00

0.40

0.30

11.

Required information

We will learn that a balanced scorecard is an integrated system of performance measures designed to support an organization's strategy. Performance measures used in the balanced scorecard approach tend to fall into four groups: financial, customer, internal business processes, and learning and growth. The balanced scorecard is a dynamic measurement system that evolves as an organization learns more about what works and what doesn't work and refines its strategy accordingly.

Knowledge Check 01

Which is not one of the four most commonly used performance measures on a balanced scorecard?

Financial

Customer

External business processes

Learning and growth

12

Required information

We will learn that a balanced scorecard is an integrated system of performance measures designed to support an organization's strategy. Performance measures used in the balanced scorecard approach tend to fall into four groups: financial, customer, internal business processes, and learning and growth. The balanced scorecard is a dynamic measurement system that evolves as an organization learns more about what works and what doesn't work and refines its strategy accordingly.

Knowledge Check 01

Which of the following is used for measuring internal business process performance?

Training

Reducing waste

Satisfied product user

Customer satisfaction