What does ROI measure?
ROI measures percentage return earned on the average total assets of the business entity.
ROI, or return on investment, is a pivotal budgetary measurement that gauges an investment's benefit or loss about its starting outlay. It measures how effectively business’s utilize the assets.
ROI is measured by dividing operating income by average total assets. Alternatively, profit margin ratio and asset turnover ratio can be multiplied to calculate it.
Consider the following key performance indicators, and classify each according to the balanced scorecard perspective it addresses. Choose from financial perspective, customer perspective, internal business perspective, or learning and growth perspective.
a. Number of employee suggestions implemented
b. Revenue growth
c. Number of on-time deliveries
d. Percentage of sales force with access to real-time inventory levels
e. Customer satisfaction ratings
f. Number of defects found during manufacturing
g. Number of warranty claims
h. Return on investment
i. Variable cost per unit
j. Percentage of market share
k. Number of hours of employee training
l. Number of new products developed
m. Yield rate (number of units produced per hour)
n. Average repair time
o. Employee satisfaction
p. Number of repeat customers
Each of the following managers works for a national chain of hotels and has been given certain decision-making authority. Classify each of the managers according to the type of responsibility center he or she probably manages.
a. Manager of the Central Reservation Office
b. Managers of various corporate-owned hotel locations
c. Managers of the Northeast and Southeast Corporate Divisions
d. Manager of the Housekeeping Department at one hotel
e. Manager of the complimentary breakfast buffet at one hotel
Match the responsibility center to the correct responsibility report.
14. Cost center
a. Includes flexible budget variances for revenues and costs.
15. Revenue center
b. Includes flexible budget variances for costs.
16. Profit center
c. Includes flexible budget variances and sales volume variances for revenues.
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