21) What are Clothing and Footwear's return on investment based on book values, respectively? 21)

A) 0.42; 0.52 B) 0.22; 0.67 C) 0.52; 0.42 D) 0.67; 0.22

22) The question 'Should assets be measured at historical cost or current cost?' is considered to be part

of which step in designing an accounting-based performance measure?

22)

A) Choose performance measures that align with top management's financial goals.

B) Choose the time period of each performance measure.

C) Choose a definition for each performance measure.

D) Choose a measurement alternative for each performance measure.

 

23) If a company is a multinational company with operations in several different countries, one way to

achieve comparability of historical-cost based ROIs for facilities in different countries is to:

23)

A) restate the results of all operations in the currency of the home country

B) use GAAP for all reporting and calculations

C) restate the results of operations using the cash basis method of accounting

D) All of these answers are correct.

 

24) A part of a control system that describes standards of behaviour and codes of conduct expected of

all employees, especially actions that are off-limits, is known as a(n):

24)

A) diagnostic control system B) boundary system

C) belief system D) interactive control system

 

25) ________ describes contexts in which an employee prefers to exert less effort than the effort that the

owner wants because the employee's effort cannot be accurately monitored and enforced.

25)

A) Moral hazard B) Incentive compensation

C) Goal congruence D) Management compensation

 

Answer the following questions using the information below:

The top management at Watersport Company, a manufacturer of watersport equipment, is attempting to recover from a fire

that destroyed some of their accounting records. The main computer system was also severely damaged. The following

information was salvaged:

Jetski Division Boat Division Surfboard Division

Sales $7 500 000 (a) $1 800 000

Net operating profit $750 000 $1 080 000 $450 000

Operating assets (b) (c) $1 500 000

Return on investment 0.20 0.10 (d)

Return on sales (e) 0.12 0.25

Investment turnover (f) (g) 1.2

26) What is the value of the operating assets belonging to the Boat Division? 26)

A) $9 000 000 B) $7 500 000 C) $10 800 000 D) $11 650 000

 

27) During the past 12 months, the Platypus Corporation had a net profit of $50 000. What is the

amount of the investment if the return on investment is 20%?

27)

A) $100 000 B) $200 000 C) $250 000 D) $500 000

 

28) The ________ method of profitability analysis recognises the two basic ingredients in

profit-making: increasing profit per dollar of revenues and using assets to generate more revenues.

28)

A) balanced scorecard B) DuPont

C) economic value added D) residual-income

 

Answer the following questions using the information below:

Coldbrook Company has two sources of funds: long-term debt with a market and book value of $15 million issued at an

interest rate of 10%, and equity capital that has a market value of $9 million (book value of $5 million). Coldbrook Company

has profit centres in the following locations with the following operating profits, total assets, and current liabilities. The cost

of equity capital is 15%, while the tax rate is 30%.

Operating Profit Assets Current Liabilities

Darwin $815 000 $3 750 000 $800 000

Hobart $1 100 000 $5 000 000 $1 200 000

Newcastle $2 450 000 $9 250 000 $3 180 000

29) What is the EVA for Hobart? 29)

A) $476 250 B) $415 525 C) $428 000 D) $390 000

 

30) 'Levers of control,' in addition to a diagnostic control system, are needed in an organisation

because:

30)

A) pressure to perform on diagnostic controls may lead to unethical behaviour

B) diagnostic controls have been found to lead to poor financial performance

C) they are mandated by the Financial Accounting Standards Board

D) diagnostic controls have no place in a Balanced Scorecard system

 

 

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