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Questions # 11:

Identify one external factor that provides opportunity for the Food-To-Go division.

Essay

Food Depot Ltd (FDD is a privately-held company that provides catering services to airlines and operates several restaurant chains including fast food, casual dining, and fine dining restaurants FDL has been profitable m recent years and has a very strong cash position FDL's newest division. Food-To-Go. is an online meal ordering and delivery platform acquired by FDL two years ago.

In 20X7. sales for the entire company were SI billion, with 50% of the business coming from the Airline Catering division. FDL is the country's leading airline catering services provider and controls 60% of the market share. However, the outlook of the airline catering industry is gloomy. The compound annual growth rate of the industry for the past five years was only 0.5% as airline networks have increasingly dropped catering on short domestic flights.

The Food-To-Go division only contributed 5% of FDL's total sales in 20X7 and is far behind in competing for market share of the online meal ordering and deliver, industry. It is estimated that Food-To-Go's sales were only 20% of the industry leader's sales However, the outlook for the online meal ordering and delivery services industry is bright. The compound annual growth rate of the industry since it started three years ago was 50%. It is estimated the rapid growth of the industry will continue in the foreseeable future.

The costs of shared corporate services are allocated based on each division s revenue FDL usually caps its capital expenditure budget to 4% of budgeted sales revenue In a recent capital budget coordination meeting. Smith Whitney, the head of the Airline Catering division. complained that his division is underfunded on capital projects . The budgeted capital expenditure had been much less than 4 % of the division’s budgeted sales in the past three years He argued that his division is the company's best-performing division, and it needs more funds to maintain its market share m the industry Whitney wants to reduce the capital expenditure budget for Food-To-Go and reallocate those funds to his division.

Susan Wiley, the bead of Food-To-Go, does not agree that the Airline Catering division is the best-performing division in the company Wiley argues that her division had the highest ROI in 20X7. and it deserves more capital funding FDL's required rate of return is 12%. The selected financial data for the Airline Catering division and Food-To-Go division in 20X7 are as follows (in $ millions).

Question # 11

Options:

Questions # 12:

Explain the difference between the ROI method and the Rl method in performance evaluation

Essay

Food Depot Ltd (FDD is a privately-held company that provides catering services to airlines and operates several restaurant chains including fast food, casual dining, and fine dining restaurants FDL has been profitable m recent years and has a very strong cash position FDL's newest division. Food-To-Go. is an online meal ordering and delivery platform acquired by FDL two years ago.

In 20X7. sales for the entire company were SI billion, with 50% of the business coming from the Airline Catering division. FDL is the country's leading airline catering services provider and controls 60% of the market share. However, the outlook of the airline catering industry is gloomy. The compound annual growth rate of the industry for the past five years was only 0.5% as airline networks have increasingly dropped catering on short domestic flights.

The Food-To-Go division only contributed 5% of FDL's total sales in 20X7 and is far behind in competing for market share of the online meal ordering and deliver, industry. It is estimated that Food-To-Go's sales were only 20% of the industry leader's sales However, the outlook for the online meal ordering and delivery services industry is bright. The compound annual growth rate of the industry since it started three years ago was 50%. It is estimated the rapid growth of the industry will continue in the foreseeable future.

The costs of shared corporate services are allocated based on each division s revenue FDL usually caps its capital expenditure budget to 4% of budgeted sales revenue In a recent capital budget coordination meeting. Smith Whitney, the head of the Airline Catering division. complained that his division is underfunded on capital projects . The budgeted capital expenditure had been much less than 4 % of the division’s budgeted sales in the past three years He argued that his division is the company's best-performing division, and it needs more funds to maintain its market share m the industry Whitney wants to reduce the capital expenditure budget for Food-To-Go and reallocate those funds to his division.

Susan Wiley, the bead of Food-To-Go, does not agree that the Airline Catering division is the best-performing division in the company Wiley argues that her division had the highest ROI in 20X7. and it deserves more capital funding FDL's required rate of return is 12%. The selected financial data for the Airline Catering division and Food-To-Go division in 20X7 are as follows (in $ millions).

Question # 12

Options:

Questions # 13:

For a manufacturing company what is the most Important advantage of using variable costing rather than absorption costing?

Options:

A.

Variable costing includes only variable direct and indirect costs in inventory which makes it more useful for short-term decision making and performance evaluation.

B.

Variable costing is the required inventory method for external reporting in most countries and therefore is less costly to implement

C.

Variable costing is cost-effective and Jess confusing to managers and is therefore more useful in performance evaluation.

D.

Variable costing measures the cost of all manufacturing resources, whether variable or fixed and thus provides the most complete cost.

Questions # 14:

Edward Pane is an external auditor who is seeking an understanding of the cash receipts process at his new client Pane decides to use a flowchart to analyze the operations for efficiency and control. Which one of the following statements is true with respect to the decision to use a flowchart for this purpose?

Options:

A.

Pane should not use a flowchart as it is used primarily after the risks have been identified

B.

Pane should not have selected a flowchart as it is better suited to help with compliance testing of existing controls

C.

Pane property selected the flowchart as a tool to match each of the risks to the corresponding primary control

D.

Pane properly selected the flowchart as it will help to depict the process and identify any missing or inadequate controls

Questions # 15:

Redstone, inc’s budget indicated that it expected to sell 30.000 units of Product A and 90.000 units of Product B Budgeted unit contribution margins were $4 for Product A and $22 for Product B Redstone's actual sales were 28.000 units of Product A and 72.000 units of Product B with actual unit contribution margins of $3 25 and S23 50. respectively. Redstone's sales-mix variance was

Options:

A.

$54,000 unfavorable

B.

$60,750 unfavorable

C.

$64,800 unfavorable

D.

$78,000 unfavorable.

Questions # 16:

Which one of the following statements best describes data governance?

Options:

A.

The union of data quality, data management, data policies, and risk management

B.

A process of securing all company data points, both structured and unstructured

C.

The convergence of accounting data, finance data and information technology

D.

Performance of data-based audits on a continuous basis

Questions # 17:

Which one of the following represents a temporary difference under U.S GAAP?

Options:

A.

Accrued liabilities

B.

interest received in municipal bonds

C.

Percentage depletion of natural resources

D.

Fines and expenses resulting from violation of the law

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