Deck 10: Evaluation and Control

Question 1

A responsibility center which measures resources in dollars without consideration of service or product costs is called aan)

A) investment center.
B) revenue center.
C) expense center.
D) profit center.
E) standard cost center.

Answer 1

C

Question 2

Return on investment ROI) is appropriate for evaluating the corporation's or division's

A) level of social responsibility commitment.
B) ability to achieve a profitability objective.
C) present profitability potential
D) prospects for favorable future earnings.
E) commitment to employee development.

Answer 2

B

Question 3

Activity-Based Costing is very useful in making outsourcing decisions by doing

A) total quality management.
B) reengineering.
C) value-chain analysis.
D) MBO.
E) benchmarking.

Answer 3

C

Question 4

The measure of corporate performance in which financial measures are combined with operational measures of customer satisfaction, internal processes, and innovation and improvement activities is called

A) activity based costing.
B) market value-added.
C) the shareholder value.
D) the balanced scorecard.
E) the return on investment.

Question 5

A type of responsibility center which is used primarily in manufacturing facilities based on historical cost data is aan)

A) investment center.
B) revenue center.
C) expense center.
D) profit center.
E) standard cost center.

Question 6

Because of the belief that accounting-based numbers such as ROI, ROE, and EPS are not reliable indicators of a corporation's economic value, which method of corporate performance is now touted?

A) shareholder value
B) basic earning power
C) price/earnings ratio
D) profit margin on sales
E) return on assets

Question 7

Which of the following is NOT a guideline for proper control?

A) Control should involve only a minimum of information.
B) Long-term as well as short-term controls should be used.
C) Controls should be timely so that corrective actions can be taken before it is too late.
D) Controls should measure all activities in order to be comprehensive.
E) Emphasize the reward of meeting or exceeding standards rather than punishment for failing to meet standards.

Question 8

Which is the MOST commonly used measure of corporate performance in terms of profit?

A) EVA
B) Gross Margin
C) DPS
D) ROI
E) ROVA

Question 9

A type of responsibility center which is primarily used in sales regions is aan)

A) investment center.
B) revenue center.
C) expense center.
D) profit center.
E) standard cost center.

Question 10

Which one of the following is NOT a part of the evaluation and control of performance?

A) Establish objectives and strategies.
B) Determine what to measure.
C) Establish standards for performance.
D) Measure actual performance.
E) Take corrective actions.

Question 11

The type of multinational corporation which should use loose controls on its foreign units is a

A) global MNC.
B) a company which primarily exports.
C) purely domestic company.
D) multidomestic MNC.
E) not-for-profit MNC.

Question 12

A type of responsibility center which is typically established whenever an organizational unit has control over both its resource costs and the selling price of its products or services is aan)

A) investment center.
B) revenue center.
C) expense center.
D) profit center.
E) standard cost center.

Question 13

A limitation of ROI as a measure of performance is that

A) it is a single comprehensive figure examining only one facet of the firm.
B) it provides an disincentive to use existing assets efficiently.
C) it provides a disincentive to acquire new assets.
D) it can be computed only after profits are totaled for a period.
E) it does not provide the basis for common comparison.

Question 14

Which type of responsibility center will a stage III company with multiple product lines emphasize?

A) investment center.
B) revenue center.
C) expense center.
D) profit center.
E) standard cost center.

Question 15

The continual process of measuring products, services, and practices against the toughest competitors or those companies recognized as industry leaders is

A) total quality management.
B) benchmarking.
C) action planning.
D) reengineering.
E) management by objectives.

Question 16

Transfer pricing is heavily used by multinational corporations not only to calculate ROI, but also

A) to reduce taxes.
B) to locate suppliers.
C) for marketing reasons.
D) for manufacturing location decisions.
E) for outsourcing.

Question 17

An advantage of ROI as a measure of performance is that

A) it is sensitive to book value.
B) it provides an incentive to use existing assets efficiently.
C) the time span of concern in short range.
D) the business cycle strongly affects ROI performance often despite managerial performance.
E) it is a steering control.

Question 18

Which method of matching rewards to the accomplishment of strategic objectives is particularly appropriate for measuring and rewarding the performance of top SBU managers and group-level executives when performance factors and their importance vary from one SBU to another?

A) strategic-funds method
B) segmentation method
C) long-term evaluation method
D) individual evaluation method
E) weighted-factor method

Question 19

Which method of matching rewards to the accomplishment of strategic objectives compensates managers for achieving objectives set over a multi-year period?

A) strategic-funds method
B) segmentation method
C) long-term evaluation method
D) individual evaluation method
E) weighted-factor method

Question 20

Which of the following is NOT one of the steps followed in the benchmarking process?

A) Develop tactical programs for closing performance gaps.
B) Implement tactical programs, measure and compare the results with the best-in-class company.
C) Link parallel activities instead of integrating their results.
D) Identify the area or process to be examined.
E) Calculate the differences among the company's measurements with those of the best-in-class company.

Question 21

Which method of matching rewards to the accomplishment of strategic objectives encourages executives to look at developmental expenses as being different from those expenses required for current operations?

A) strategic-funds method
B) segmentation method
C) long-term evaluation method
D) individual evaluation method
E) weighted-factor method