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EA 1.

LO 12.1For the following situations, identify whether the description is probably a centralized or decentralized organization.

  1. Seaside Furniture, a small builder of side tables managed solely by its sole proprietor
  2. Harbor Marketing, which wants Advertising Team Leaders to be able to respond quickly to needs of potential clients so Team Leaders have the authority to make decisions about advertising and pricing
  3. Couture’s Creations, with a single owner who manages the production, accounting, engineering, sales, and other administrative functions
  4. British Navy
  5. McDonalds franchise #3101 in Canton, Ohio
  6. United States Army
EA 2.

LO 12.1For the following descriptions state whether the cost is controllable or uncontrollable by responsibility center managers.

  1. property tax of an existing manufacturing facility
  2. research and development of a product
  3. advertising of a product
  4. insurance cost of the existing manufacturing facility
  5. design of a product
EA 3.

LO 12.1Identify the type of responsibility center (revenue center, cost center, profit center, or investment center) for each of the following situations.

  1. the accounting department for Tubelite Inc.
  2. the Best Buy in Traverse City, Michigan
  3. the reservation department of Allegiant airlines
  4. the sales department of Four Winns
  5. the Kohl’s store in Mount Pleasant, Michigan
  6. The Hershey Company
  7. Procter and Gamble
  8. the shoe department in the Kohl’s store in Mount Pleasant, Michigan
EA 4.

LO 12.2Sara has just taken a job as the middle school assistant principal for an area school district. Prior to this, she was a teacher. She has received the following performance measurements for her first administrative job. Her first order of business is to determine if these performance measurements are short-term goals or long-term goals based on her individual situation. She has completed her administrative degree but has not yet worked as an administrator. Identify each of the following goals as short term or long term.

  1. Conduct teacher walk-throughs/observations/evaluations for teachers of grades 6 and 7.
  2. Assist the district’s mission in seeking to educate all youth in the school district.
  3. Train to become a building instructional leader. Act as building administrator in the absence of the principal.
  4. Attend meetings with building principals and the administrative team when called to do so.
  5. Engage all students in a meaningful way, and support teachers and staff in providing rigor and relevance. Success of school-wide discipline and attendance policies and enforcement depends on a combination of creativity and sound pedagogy while adhering to district, state, and federal law, guidelines, and regulations.
  6. Facilitate and supervise all federal- and state-mandated drills (fire, lockdowns, tornado, others).
  7. Dress professionally.
  8. Assist the building principal in all job duties and responsibilities.
EA 5.

LO 12.3During the current year, Sokowski Manufacturing earned income of $350,000 from total sales of $5,500,000 and average capital assets of $12,000,000. What is the sales margin?

EA 6.

LO 12.3During the current year, Sokowski Manufacturing earned income of $350,000 from total sales of $5,500,000 and average capital assets of $12,000,000.

  1. Based on this information, calculate asset turnover.
  2. Using the sales margin from the previous exercise, what is the total ROI for the company during the current year?
EA 7.

LO 12.3Assume Skyler Industries has debt of $4,500,000 with a cost of capital of 7.5% and equity of $5,500,000 with a cost of capital of 10.5%. What is Skyler’s weighted average cost of capital?

EA 8.

LO 12.3Why do managers want a high ROI, and how would they strive to increase their ROI?

EA 9.

LO 12.4Classify each of the following performance measures into the balanced scorecard perspective to which it relates: financial perspective, internal operations perspective, learning and growth perspective, or customer perspective.

  1. Number of improved products
  2. Time from packaging to delivery or display
  3. Production costs
  4. Number of customer suggestions
  5. Sales mix revenues
  6. Number of repeat customers
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