Deck 12: Evaluation and Control

Question 1

Some takeover specialists look at the amount of money a new owner can take out of the firm without harming the business.This is known as

A) leveraged buyout.
B) operating cash flow.
C) free cash flow.
D) dividends.
E) shareholder measure.

Answer 1

C

Question 2

All of the following are examples of behavior controls EXCEPT

A) monitoring employees' phone calls.
B) monitoring employees' PCs.
C) monitoring employees' Internet usage.
D) using ISO 14000 Standards Series.
E) sales quotas.

Answer 2

E

Question 3

________ is a corporate-wide,integrated process to manage the uncertainties that could negatively or positively influence the achievement of the corporation's objectives.

A) ISO 14000 Series
B) Input controls
C) Activity-based costing
D) Enterprise Risk Management
E) Market Value Added

Answer 3

D

Question 4

Which type of control specifies how something is to be done through policies,rules,standard operating procedures,and orders from a superior?

A) tactical control
B) strategic control
C) output control
D) behavior control
E) functional control

Question 5

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

A) EPS
B) ROE
C) DPS
D) ROI
E) ROVA

Question 6

The ISO 9000 and 14000 Standards Series as a way to objectively document a company's high level of quality operations are examples of

A) tactical control.
B) strategic control.
C) output control.
D) functional control.
E) behavior control.

Question 7

Activity-based costing is a method of accounting which is very useful in making outsourcing decisions by doing

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

Question 8

Corporations will emphasize all types of controls (output,input,and behavior) when they are following a strategy of

A) conglomerate diversification.
B) concentric diversification.
C) retrenchment.
D) divestment.
E) vertical integration.

Question 9

What percent of U.S.employers use some form of electronic monitoring in the workplace as reported in a 2015 study?

A) 0%
B) 17%
C) 30%
D) 47%
E) 67%

Question 10

If performance data and activity reports indicate undesirable performance as a result of inappropriate use of the strategic management process,operational managers must

A) immediately notify the board of directors.
B) change the strategic management model.
C) know about it so that they can correct the employee activity.
D) allow sufficient time to pass to verify if it is the process or just the usage that is the problem.
E) check the performance data to ensure their accuracy and take two more measurements.

Question 11

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 is short range.
D) the business cycle strongly affects ROI performance often despite managerial performance.
E) it is very sensitive to depreciation policy.

Question 12

Corporations will emphasize output controls when they are following a strategy of

A) concentric diversification.
B) conglomerate diversification.
C) retrenchment.
D) divestment.
E) vertical integration.

Question 13

Controls which measure variables that influence future profitability are called

A) steering controls.
B) activity controls.
C) behavior controls.
D) output controls.
E) influencing controls.

Question 14

Which type of control specifies what is to be accomplished by focusing on the end result of behaviors through the use of objectives and performance targets or milestones?

A) tactical control
B) strategic control
C) output control
D) functional control
E) behavior control

Question 15

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

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

Question 16

All of the following are examples of output controls EXCEPT

A) sales quotas.
B) specific cost reduction objectives.
C) profit objectives.
D) getting to work on time.
E) surveys of customer satisfaction.

Question 17

The inventory turnover ratio is an example of a(n)

A) steering control.
B) activity control.
C) behavior control.
D) output control.
E) influencing control.

Question 18

The end result of activity is known as

A) measurement.
B) gratuity.
C) performance.
D) return on equity.
E) achievement.

Question 19

The result of dividing net income before taxes by the total amount invested in the company is

A) ROI.
B) EPS.
C) ROE.
D) operating cash flow.
E) free cash flow.

Question 20

ROI is

A) Repatriation of investments.
B) Return on interest.
C) Repatriation of interest.
D) Return on investment.
E) Return of internationals.

Question 21

The difference between the pre-strategy and post-strategy values for the business is

A) ROI.
B) EPS.
C) ROE.
D) EVA.
E) MVA.

Question 22

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 preferred?

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

Question 23

The present value of the anticipated future stream of cash flows from the business plus the value of the company if liquidated is referred to as

A) return on assets.
B) ROVA.
C) earnings per share.
D) shareholder value.
E) ROI.

Question 24

The ISO 9000 Standards Series,developed by the International Standards Association of Geneva,Switzerland,is an example of a behavior control.

Question 25

Which of the following is not considered an adequate measure by itself of corporate performance?

A) ROI
B) EPS
C) ROE
D) operating cash flow
E) all of the above

Question 26

The evaluation and control process ensures that the company is achieving what it set out to accomplish.

Question 27

Enterprise risk management is being adopted because of the increasing amount of environmental uncertainty that can affect an entire corporation.

Question 28

Activity-based costing (ABC) is an accounting method for allocating indirect and fixed costs to individual products or product lines based on the value-added activities going into that product.

Question 29

Behavior,output,and input controls are all interchangeable.

Question 30

Evaluation and control information consists only of performance data.

Question 31

One example of a steering control used by retail stores is the inventory turnover ratio,which shows how hard an investment in inventory is working.

Question 32

ABC is an accounting method for allocating direct and fixed costs to individual products.

Question 33

ABC accounting allows accountants to charge costs more accurately than the traditional method because it allocates overhead far more precisely.

Question 34

Performance is the end result of activity.

Question 35

One of the obstacles to effective control is the difficulty in developing appropriate measures of important activities and outputs.

Question 36

Behavior controls specify how something is to be done through policies,rules,standard operating procedures,and orders from a superior.

Question 37

ROI stands for return on incentives.

Question 38

One advantage of using ROI is that it is a single comprehensive figure that includes all revenues,costs,and expenses.

Question 39

Which of the following is a way in which managers can improve their company's or business unit's EVA?

A) earning more profit without using more capital
B) using more capital
C) investing capital in multiple low-return projects
D) extending their line of credit
E) divest a unit

Question 40

Operating cash flow is also known as free cash flow.

Question 41

List the five-step feedback model of the evaluation and control process.

Question 42

Stickiness and eyeballs are two non-financial performance measures used by Internet business ventures.

Question 43

A responsibility center which measures performance in terms of the difference between revenues (which measure production) and expenditures (which measure resources) is a(n)

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

Question 44

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

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

Question 45

What is the most commonly used measure of corporate performance (in terms of profits)? Discuss the limitations of using this measure.

Question 46

The revenue center is measured in terms of efficiency.

Question 47

Management audits have been developed to evaluate activities such as corporate social responsibility,functional areas such as the marketing department,and divisions such as the international division.

Question 48

What is the difference between EVA and MVA?

Question 49

Distinguish between behavior and output controls.Provide examples of each.

Question 50

Unlike ROI,managers cannot manipulate the numbers of EVA.

Question 51

Return on investment (ROI) is the most widely used measure of performance in what responsibility center?

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

Question 52

The balanced scorecard approach to evaluation and control assigns to each goal/objective in an area one or more measures that are each essential for achieving a desired strategic option.These measures are called

A) critical success factors.
B) strategic factors.
C) key performance measures.
D) behavioral measures.
E) responsibility centers.

Question 53

Which of the following is not descriptive of responsibility centers?

A) They are used to the extent that they can isolate specific functional units such as R&D.
B) Each responsibility center has its own budget and is evaluated on its use of budgeted resources.
C) The responsibility center coordinates all the functional areas and project developments to implement the strategic decision plan.
D) The center uses resources to produce a service or a product.
E) A responsibility center is headed by the manager responsible for the center's performance.

Question 54

The comparison of the expected cost of production against the actual cost of production typically occurs in the

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

Question 55

EVA may eventually replace ROI as the standard performance measure.

Question 56

What responsibility center is judged for effectiveness rather than efficiency?

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

Question 57

Which of the following is not one of the areas in which goals or objectives should be developed for use in the balanced scorecard approach?

A) customer
B) innovation and learning
C) financial
D) stakeholder
E) internal business perspective

Question 58

The balanced scorecard combines financial measures that tell the results of actions already taken with operational measures on customer satisfaction,internal processes,and the corporation's innovation and improvement activities.

Question 59

A type of responsibility center which is typically established whenever an organizational unit has control over both its resources and its products or services is a(n)

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

Question 60

A multidivisional corporation like GE would tend to use what type of responsibility center?

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

Question 61

Discuss the benchmarking process.

Question 62

What is the balanced scorecard? What are the four areas to be addressed?

Question 63

A profit center is typically established whenever an organizational unit has control over both its resources and its products or services.

Question 64

The union of all of a company's major business activities from order processing to production within a single family of software modules is known as

A) enterprise resource planning.
B) enterprise strategic planning.
C) information system planning.
D) united resource planning.
E) united strategic planning.

Question 65

Benchmarking has been decreasing in popularity as companies emphasize uniqueness.

Question 66

A study by Bain & Company revealed what percentage of companies using benchmarking in some manner?

A) 10%
B) 30%
C) 50%
D) 65%
E) 90%

Question 67

The German company SAP AG originated the concept of ERP with its

A) activity-based costing.
B) transfer pricing.
C) spreadsheet software.
D) R/3 software system.
E) transnational software integrator.

Question 68

The worldwide cost of software piracy is estimated to be about $63 billion.

Question 69

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 70

An electronic tagging technology used in a number of companies to improve supply-chain efficiency with contactless communication between devices is

A) RFID.
B) ERP.
C) MBO.
D) TQM.
E) ROE.

Question 71

Benchmarking has been found to produce the best results in companies that are already well managed.

Question 72

The worldwide cost of software piracy in 2016 was estimated to be approximately

A) $3 million.
B) $30 million.
C) $3 billion.
D) 63 billion.
E) over $100 billion.

Question 73

An odd twist to benchmarking in the arena of international trade is

A) counterfeiting/piracy.
B) repatriation of profits.
C) freakonomics.
D) RFID.
E) transfer pricing.

Question 74

RFID

A) is radio frequency identification.
B) replaces cell phones.
C) replaces wireless barcodes.
D) has not currently been widely implemented.
E) is not permitted by government contractors.

Question 75

What is becoming the business information system's global standard?

A) ERP
B) SAP
C) GDP
D) TQM
E) ISO 9000

Question 76

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 the results, and compare the results with those of the best-in-class company.
C) Implement activity-based costing.
D) Identify the area or process to be examined.
E) Calculate the differences among the company's performance measurements and those of the best-in-class company.

Question 77

Which of the following is not a reason ERP could fail?

A) insufficient tailoring of the software to fit the company
B) inadequate training
C) simplicity of system
D) insufficient implementation support
E) demands a high level of standardization

Question 78

Benchmarking involves openly learning how others do something better than one's own company so that one not only can imitate,but perhaps even improve on their current techniques.

Question 79

What company pioneered the concept of benchmarking in the United States?

A) Walmart
B) Boeing
C) PepsiCo
D) Xerox Corp
E) Coca Cola

Question 80

The concept that suggest it makes no sense to reinvent something that someone else is already using is

A) benchmarking.
B) ERP.
C) RFID.
D) TQM.
E) MBO.