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Exam 11: Segment Reporting,decentralization,and the Balanced Scorecard

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Question 31

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Niesen Corporation has two major business segments-Consumer and Commercial.Data for the segment and for the company for August appear below: In addition,common fixed expenses totaled $282,000 and were allocated as follows: $127,000 to the Consumer business segment and $155,000 to the Commercial business segment. -The contribution margin of the Commercial business segment is:

A) $146,000
B) $169,000
C) $546,000
D) $296,000

E) A) and D)
F) C) and D)

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Question 32

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The emphasis in the balanced scorecard is on improvement rather than meeting a preset standard.

A) True
B) False

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Question 33

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Ceder Products is a division of a major corporation.Last year the division had total sales of $21,520,000,net operating income of $538,000,and average operating assets of $8,000,000.The company's minimum required rate of return is 18%. -The division's return on investment (ROI) is closest to:

Ahina Industries is a division of a major corporation.Data concerning the most recent year appears below: -The division's turnover is closest to:

Delmar Corporation is considering the use of residual income as a measure of the performance of its divisions.What major disadvantage of this method should the company consider before deciding to institute it?

Beak Industries is a division of a major corporation.Last year the division had total sales of $10,600,000,net operating income of $1,070,600,and average operating assets of $4,000,000. -The division's return on investment (ROI) is closest to:

Data for September for Mossman Corporation and its two major business segments,North and South,appear below: In addition,common fixed expenses totaled $319,000 and were allocated as follows: $160,000 to the North business segment and $159,000 to the South business segment. -A properly constructed segmented income statement in a contribution format would show that the segment margin of the North business segment is:

The Axle Division of LaBate Company makes and sells only one product.Annual data on the Axle Division's single product follow: -If Axle sells 16,000 units per year,the return on investment should be:

Deano Products is a division of a major corporation.The following data are for the last year of operations: -The division's return on investment (ROI) is closest to:

The Winter Products Division of American Sports Corporation produces and markets two products for use in the snow: Sleds and Saucers.The following data were gathered on activities last month: Required: Prepare a segmented income statement in the contribution format for last month.

If improvement in a performance measure on a balanced scorecard should lead to improvement in another performance measure,but does not,then management should reexamine its strategy.

All other things the same,a decrease in average operating assets will increase return on investment (ROI).

Harstin Corporation has provided the following data: -The minimum required rate of return for the past year was:

Deano Products is a division of a major corporation.The following data are for the last year of operations: -The division's residual income is closest to:

Data for September for Mossman Corporation and its two major business segments,North and South,appear below: In addition,common fixed expenses totaled $319,000 and were allocated as follows: $160,000 to the North business segment and $159,000 to the South business segment. -The contribution margin of the South business segment is:

A company's average operating assets are $220,000 and its net operating income is $44,000.The company invested in a new project,increasing average assets to $250,000 and increasing its net operating income to $49,550.What is the project's residual income if the required rate of return is 20%?

Residual income is primarily useful because it helps to compare the performance of divisions of different sizes.

The Consumer Products Division of Garafalo Corporation had average operating assets of $300,000 and net operating income of $46,900 in March.The minimum required rate of return for performance evaluation purposes is 16%. -What was the Consumer Products Division's residual income in March?

Financial data for Beaker Company for last year appear below: The company paid dividends of $2,100 last year.The "Investment in Cedar Company" on the statement of financial position represents an investment in the stock of another company. Required: a.Compute the company's margin,turnover,and return on investment for last year. b.The Board of Directors of Beaker Company has set a minimum required return of 20%. What was the company's residual income last year?

Ieso Company has two stores: J and K.During November,Ieso Company reported a net operating income of $30,000 and sales of $450,000.The contribution margin in Store J was $100,000,or 40% of sales.The segment margin in Store K was $30,000,or 15% of sales.Traceable fixed expenses are $60,000 in Store J,and $40,000 in Store K. -Variable expenses in Store K totaled: