Nonfinancial measures for internal quality performance include all but which of the following

1. (TCO 11) Nonfinancial measures for internal quality performance include all but which of the following? (Points: 3)

2. (TCO 11) _____________________________is a formal means of distinguishing between random and nonrandom variation in an operating process. (Points: 3)

3. (TCO 11) Which of the following is NOT one of the steps in managing bottlenecks under the theory of constraints? (Points: 3)

4. (TCO 11) Design engineering is an example of: (Points: 3)

5. (TCO 11) Regal Products has a budget of $900,000 in 20X6 for prevention costs. If it decides to automate a portion of its prevention activities, it will save $60,000 in variable costs. The new method will require $18,000 in training costs and $120,000 in annual equipment costs. Management is willing to adjust the budget for an amount up to the cost of the new equipment. The budgeted production level is 150,000 units. Appraisal costs for the year are budgeted at $600,000. The new prevention procedures will save appraisal costs of $30,000. Internal failure costs average $15 per failed unit of finished goods. The internal failure rate is expected to be 3% of all completed items. The proposed changes will cut the internal failure rate by one-third. Internal failure units are destroyed. External failure costs average $54 per failed unit. The company's average external failures average 3% of units sold. The new proposal will reduce this rate by 50%. Assume all units produced are sold and there are no ending inventories. How much will internal failure costs change if the internal product failures are reduced by 50% with the new procedures? (Points: 3)

6. (TCO 12) The amount of time between when a customer places an order for a product or requests a service to when the product or service is delivered to that customer is called (Points: 3)

7. (TCO 12) The costs associated with storage are an example of which cost category? (Points: 3)

8. (TCO 12) The economic order quantity ignores: (Points: 3)

9. (TCO 12) ) The ________ describes the flow of goods, services, and information from the initial sources of materials and services to the delivery of products to consumers. (Points: 3)

10. (TCO 12) Liberty Celebrations, Inc., manufactures a line of flags. The annual demand for its flag display is estimated to be 100,000 units. The annual cost of carrying one unit in inventory is $1.60, and the cost to initiate a production run is $30. There are no flag displays on hand but Liberty had scheduled 60 equal production runs of the display sets for the coming year, the first of which is to be run immediately. Liberty Celebrations has 250 business days per year. Assume that sales occur uniformly throughout the year and that production is instantaneous. If Liberty Celebrations does not maintain a safety stock, the estimated total carrying cost for the flag displays for the coming year is the estimated total setup cost for the flag displays for the coming year is (Points: 3)

Click here for the solution: Nonfinancial measures for internal quality performance include all but which of the following

The vice president of operations of Six Layer Computers Inc. is evaluating the performance of two divisions organized as investment centers

PR 24-5B The vice president of operations of Six Layer Computers Inc. is evaluating the performance of two divisions organized as investment centers. Invested assets and condensed income statement data for the past year for each division are as follows:

Network Equipment Division Personal Computing Division
Sales $1,400,000 $1,120,000
Cost of goods sold 845,000 690,000
Operating expenses 345,000 206,000
Invested assets 1,000,000 1,400,000

1. Prepare condensed divisional income statements for the year ended December 31, 2010, assuming that there were no service department charges. Enter all amounts as positive numbers.

2. Using the DuPont formula for rate of return on investment, determine the profit margin, investment turnover, and rate of return on investment for each division. Round investment turnover to one decimal place. Do not enter in the percent sign.

3. If management's minimum acceptable rate of return is 14%, determine the residual income for each division. If required, use the minus sign to indicate a negative.

4. Discuss the evaluation of the two divisions, using the performance measures determined in parts (1), (2), and (3). The input in the box below will not be graded, but may be reviewed and considered by your instructor.

Check: 2. Network Equipment Division ROI, 21%

Click here for the solution: The vice president of operations of Six Layer Computers Inc. is evaluating the performance of two divisions organized as investment centers

The management discussion and Analysis section of an annual report addresses corporate performance for the year

The management discussion and Analysis section of an annual report addresses corporate performance for the year, and sometimes uses financial ratios to support its claims.

Address: www.ibm.com/investor/tools/index,phtml or go to www.wiley.com/college/wegandt

Steps
1. From IBM's Investor Tools, choose Investment Guides.
2. Choose Guide to Annual Reports.
3. Choose Anatomy of an Annual Report.

Instructions
Using the information from the above site, answers the following questions.

(a) What are the optional elements that are often included in an annual report?
(b) What are the elements of an annual report that are required by the SEC?
(c) Describe the contents of the Management Discussion.
(d) Describe the contents of the Auditors' Report.
(e) Describe the contents of the selected Financial Data.


Click here for the solution: The management discussion and Analysis section of an annual report addresses corporate performance for the year

Maggie Sharrer, a recent graduate of Rolling's accounting program, evaluated the operating performance of Poway Company's six divisions

Exercise 6-10 (E6-10) Make incremental analysis concerning elimination of division.
Maggie Sharrer, a recent graduate of Rolling's accounting program, evaluated the operating performance of Poway Company's six divisions. Maggie made the following presentation to Poway's Board of Directors and suggested the Erie Division be eliminated. “If the Erie Division is eliminated,” she said, “our total profits would increase by $24,500.”
The Other Five Divisions Erie Division Total
Sales $1,664,200 $100,000 $1,764,200
Cost of goods sold 978,520 76,500 1,055,020
Gross profit 685,680 23,500 709,180
Operating expenses 527,940 48,000 575,940
Net income $ 157,740 $(24,500) $ 133,240

In the Erie Division, cost of goods sold is $60,000 variable and $16,500 fixed, and operating expenses are $25,000 variable and $23,000 fixed. None of the Erie Division' fixed costs will be eliminated if the division is discontinued.

Instructions
Is Maggie right about eliminating the Erie Division? Prepare a schedule to support your answer.


Click here for the solution: Maggie Sharrer, a recent graduate of Rolling's accounting program, evaluated the operating performance of Poway Company's six divisions

The executive officers of Coach Corp have a performance-based compensation plan

CA16-2 (Ethical issues—compensation plan) The executive officers of Coach Corp have a performance-based compensation plan. The performance criteria of this plan is linked to growth in earnings per share. When annual EPS growth is 12%, the Coach executives earn 100% of the shares; ifgrowth is 16%, they earn 125%. If EPS growth is lower than 8%, the executives receive no additonal compensation.

In 2006, Joanna Becker, the controller of Coach, reviews year-end estimates of bad debt expense and warranty expense. She calculates the EPS growth at 15%. Peter Reiser, a member of the executive group, remarks over lunch one day that the estimate of bad debt expense might be decreased, increasing EPS growth to 16.1%. Becker is not sure she should do this because she believes that the current estimate of bad debts is sound. On the other hand, she recognizes that a great deal of subjectivity is involved in the computation.

Answer the following:
a) What, if any, is the ethical dilemma for Becker?
b) Should Becker's knowledge of the compensation plan be a factor that influences her estimate?
c) How should Becker respond to Reiser's request?


Click here for the solution: The executive officers of Coach Corp have a performance-based compensation plan

Sometimes compensation packages include bonuses designed to provide performance incentives to employees

P 13-5 Bonus compensation; algebra

Sometimes compensation packages include bonuses designed to provide performance incentives to employees. The difficulty a bonus can cause accountants is not an accounting problem, but a math problem. The complication is that the bonus formula sometimes specifies that the calculation of the bonus is based in part on the bonus itself. This occurs anytime the bonus is a percentage of income because expenses are components of income, and the bonus is an expense.

Regalia Fashions has an incentive compensation plan through which a division manager receives a bonus equal to 10% of the division’s net income. Division income in 2011 before the bonus and income tax was $150,000. The tax rate is 30%.


Click here for the solution: Sometimes compensation packages include bonuses designed to provide performance incentives to employees

Sapsora Company uses ROI to measure the performance of its operating divisions and to reward division managers

Sapsora Company uses ROI to measure the performance of its operating divisions and to reward division managers. A summary of the annual reports from two divisions is shown below. The company’s weighted-average cost of capital is 12 percent.

Division A Division B

Total Assets $6,000,000 $8,750,000

Current Liabilities 500,000 1,750,000

After-Tax Operating Income 1,000,000 1,180,000

ROI 25% 14%

a. Which division is more profitable?

b. Would EVA more clearly show the relative contribution of the two divisions to the company as a whole? Show the computations.

c. Suppose the manager of Division A was offered a one-year project that would increase his investment base by $250,000 and show a profit of $37,500. Would the manager choose to invest in the new project?

Click here for the solution: Sapsora Company uses ROI to measure the performance of its operating divisions and to reward division managers