Summer Exam 3 Review

Number of new products developed would be a key performance indicator for which of the balanced scorecard perspectives?

• Learning and Growth

• Financial

• Customer

• Internal Business

Calculate Non-Snow Sport's capital turnover.

• 1.29

• 1.38

• 1.34

• 1.52

Answer explanation

Calculate Snow Sport's sales margin

• 19%

• 15%

• 18%

• 20%

Answer explanation

Andrew​ Taylor, a production line worker at Yani​ Yogurt, spilled an entire vat of milk. The milk must be discarded rather than used in yogurt. Which variance is directly​ impacted?

• Direct materials price variance

• Direct materials quantity variance

• Direct labor efficiency variance

• Direct labor rate variance

Calculate DM Price Variance and DL Rate Variance respectively

• $9,000 U; $3,250 F

• 1,750 U; $4,000 U

• $9,000 F; $3,250 U

• 1,750 F; $4,000 F

Answer explanation

Which performance measurement tool is most likely to cause goal incongruence between division managers and the corporate​ headquarters?

• Balanced scorecard

• Residual income

• Return on investment​ (ROI)

• All of the choices are equally likely to cause goal incongruence

A dentist office budgeted for 4,385 patient visits a year. They actually saw 4,500 patients during the year and have provided the data in the image. Based on the given information, what is the flexible budget variance for personnel expenses?

• $3,000 unfavorable

• $0 favorable

• $3,000 favorable

• $0 unfavorable

Answer explanation

Robinson Hardware is adding a new product line that will require an investment of $1,550,000. Managers estimate that this investment will have a 10-year life and generate net cash inflows of $330,000 the first year, $275,000 the second year, and $250,000 each year thereafter for eight years. The investment has no residual value. Compute the payback period.

• 5.0 years

• 5.63 years

• 5.81 years

• 5.78 years

Answer explanation

Star Golf Products is considering whether to upgrade its equipment. Managers are con- sidering two options. Equipment manufactured by Heatherwood Inc. costs $900,000 and will last six years and have no residual value. The Heatherwood equipment will generate annual operating income of $153,000. Equipment manufactured by Riverland Limited costs $1,350,000 and will remain useful for seven years. It promises annual operating

income of $249,750, and its expected residual value is $100,000.

Which equipment offers the higher ARR?

• Riverland

• Heatherwood

Answer explanation

Walker Industries is deciding whether to automate one phase of its production process. The manufacturing equipment has a six-year life and will cost $905,000. Projected net cash inflows are depicted in the image. Compute this project's NPV using Walker Industries' 14% hurdle rate. Should the company invest in the equipment?

• $886,153; should not invest in equipment

• -$886,153; should invest in equipment

• -$18,847; should not invest in equipment

• $18,847; should invest in equipment

Answer explanation