Deck 14: Decentralisation and Modern Performance Management Systems the Balanced Scorecard

Question 1

Which type of manager would most likely be held responsible for the return on investment (ROI)of his segment?

A) Investment centre
B) Profit centre
C) Cost centre
D) Revenue centre

Answer 1

A

Question 2

A local chain electronics store does not allow its store or district managers to make important decisions about their stores.The main role of store managers is to supervise employees and make sure day-to-day transactions run smoothly while district managers supervise store managers and report profitability data back to top-level management.Not allowing store or district managers decision-making authority is most likely to be found in which type of organisation?

A) Segmented
B) Centralised
C) Desegmented
D) Decentralised

Answer 2

B

Question 3

The manager of a revenue centre has control over:

A) profit and investment decisions.
B) revenues and costs.
C) revenues only.
D) revenues and profit

Answer 3

C

Question 4

A manager of a cost centre would most likely be held responsible for which of the following variances?

A) Flexible budget variance
B) Sales volume variance
C) Sales price variance
D) Direct materials price variance

Question 5

'Responsibility accounting' is the concept that says:

A) Managers should be held entirely responsible for all investment decisions that impact the particular segment in which they are in charge.
B) Managers should be held responsible for only those things under their control.
C) Managers should never be held entirely responsible for things that happen within the particular segment in which they are in charge.
D) Managers should be responsible for both revenues and costs of their particular segment.

Question 6

Which of the following is often not a disadvantage of decentralisation?

A) Decreased job satisfaction for lower-level managers.
B) Lack of coordination and communication between segments.
C) Lack of company focus as lower-level managers may make decisions that benefit their own particular segment.
D) Higher training costs for lower-level managers.

Question 7

A local chain department store grants each of its store managers the authority to make buying decisions for their stores.Granting managers this kind of authority is found in which type of organisation?

A) Segmented
B) Centralised
C) Desegmented
D) Decentralised

Question 8

A decentralised organisation is one in which:

A) each employee in the organisation is given permission to make decisions about their company.
B) only top-level management is given decision-making authority.
C) managers at various levels throughout the organisation are given decision-making authority.
D) each shareholder is given decision-making authority.

Question 9

Which of the following reports provides key financial and non-financial measures of performance?

A) Flexible budget variance report
B) Performance report
C) Production report
D) Common costs report

Question 10

Which of the following is not an advantage of decentralisation?

A) It often creates higher job satisfaction for managers.
B) It allows top-level managers more time to devote to long-range strategic planning.
C) It allows lower-level managers to focus on their own particular goals and objectives without having to consider the overall company's goals and objectives.
D) It permits lower-level managers to gain valuable on-the-job training in order to become better managers.

Question 11

The manager of a cost centre has control over:

A) revenues and costs.
B) costs only.
C) costs and investment decisions.
D) pricing decisions.

Question 12

When a few individuals at the top of an organisation retain decision-making authority,the organisation is referred to as a(n):

A) investment centre.
B) decentralised organisation.
C) profit centre.
D) centralised organisation.

Question 13

Which of the following statements about responsibility accounting is true?

A) Managers should be held responsible for all price variances that occur within their department.
B) Managers should be held responsible for all revenues and costs that occur within their department.
C) Managers should be responsible for all investment decisions that occur within their department.
D) Managers should be held responsible for only those things under their control.

Question 14

Which of the following is an advantage of decentralisation?

A) It allows top-level management who normally work at corporate headquarters to get involved with the day-to-day decisions that need to be made at lower levels.
B) It allows managers to focus on their own area of responsibility rather than what is best for the company as a whole.
C) It allows decisions to be made in a more timely manner.
D) It requires very little as far as manager training costs.

Question 15

Which of the following statements regarding the structure of organisations is false?

A) When decision-making authority is spread among too many managers,managers may become so concerned with their own area of responsibility that they lose sight of the company's overall focus.
B) In a decentralised organisation,decision-making authority is confined to top-level management.
C) In a decentralised organisation,there may be a lack of coordination and communication between segments.
D) Decentralisation may make it difficult for managers to share unique and innovative ideas.

Question 16

Which type of manager would be allowed to decide whether or not new manufacturing equipment should be purchased?

A) Production manager
B) Cost centre manager
C) Profit centre manager
D) Investment centre manager

Question 17

The manager of a profit centre should not be responsible for which of the following types of decisions?

A) Deciding which supplier should be used for the purchase of direct materials.
B) Establishing the number of employees that will need to work each day.
C) Deciding whether or not their segment should purchase additional machinery.
D) Deciding whether or not to accept a special order from a customer.

Question 18

Which of the following is a disadvantage of decentralisation?

A) Less timely decisions are able to be made on a day-to-day basis.
B) Decreased job satisfaction for lower-level managers.
C) Lack of coordination and communication between segments.
D) Lower training costs for lower-level managers.

Question 19

Which of the following would be the best measure of performance for a profit centre?

A) Residual income
B) Return on investment (ROI)
C) Segment margin
D) Economic value added (EVA)

Question 20

Hillary Todd,a manager for BEO Inc. ,has been told that her bonus this year will be based on the segment margin of her department.Hillary is most likely a:

A) revenue centre manager.
B) profit centre manager.
C) production manager.
D) cost centre manager.

Question 21

In the decision-making process,which of the following situations would be best addressed by managers using a segmented income statement rather than a contribution margin format income statement?

A) The decision on whether or not a one-time special order for a customer should be accepted
B) The calculation of the break-even point for the upcoming month
C) The decision on whether or not an entire product line should be discontinued
D) The decision on whether or not to process a product further or sell 'as is'

Question 22

Return on investment (ROI)is calculated by:

A) multiplying the margin by the turnover.
B) dividing the margin by the turnover.
C) dividing the turnover by the margin.
D) adding the margin and the turnover.

Question 23

Pennington Products
Pennington Products has two product lines: R-100 and R-200. Revenue and cost information for each of the product lines are as follows:
$\begin{array}{lrr}&\underline{\text { R-100 }}&\underline{\text { R-200 }}\\\text { Selling price per unit } & \$ 45 & \$ 60 \\\text { Variable costs per unit } & 15 & 24 \\\text { Traceable fixed expenses } & \$ 250000 & \$ 360000\end{array}$

Pennington has common fixed expenses of $250 000 per year. Last year, the company produced and sold 30 000 units of R-100 and 20 000 units of R-200.

-What is the segment margin of the R-100 product line?

A) $650 000
B) $900 000
C) $525 000
D) $400 000

Question 24

The term 'strategic business unit' is often used to describe a(n):

A) investment centre.
B) revenue centre.
C) profit centre.
D) cost centre.

Question 25

Which of the following items is often most difficult to allocate to a particular segment?

A) Traceable fixed costs
B) Sales revenue
C) Common fixed costs
D) Variable costs

Question 26

WSR Inc.
WSR Inc. sells a variety of drink and food products including potato chips and soft drink. The segmented income statements for these two products are as follows:
$\begin{array}{lrr}&\underline{\text { Soft drink}}&\underline{\text { Chips}}\\\text { Sales } & \$ 800000 & \$ 900000 \\\text { Variable expenses } &\underline{ 200000} &\underline{ 315000} \\\text { Contribution margin } & 600000 & 585000 \\\text { Traceable fixed expense } & \underline{120000} & \underline{160000} \\\text { Segment margin } & \underline{\$ 480000} & \underline{\$ 425000}\end{array}$
WSR’s management is considering a special advertising campaign that will run during a major sporting event. The advertising campaign is expected to cost $30 000 and only one product can be featured. In-house marketing studies show that the campaign could increase sales of the soft drink division by $200 000 or increase sales of the chips division by $275 000.

-What will be the overall net effect on the company's total profits if the advertising focuses on chips?

A) Increase of $148 750
B) Increase of $275 000
C) Increase of $178 750
D) Increase of $245 000

Question 27

Pennington Products
Pennington Products has two product lines: R-100 and R-200. Revenue and cost information for each of the product lines are as follows:
$\begin{array}{lrr}&\underline{\text { R-100 }}&\underline{\text { R-200 }}\\\text { Selling price per unit } & \$ 45 & \$ 60 \\\text { Variable costs per unit } & 15 & 24 \\\text { Traceable fixed expenses } & \$ 250000 & \$ 360000\end{array}$

Pennington has common fixed expenses of $250 000 per year. Last year, the company produced and sold 30 000 units of R-100 and 20 000 units of R-200.

-What is the company's overall net income?

A) $1 260 000
B) $ 510 000
C) $1 010 000
D) $ 760 000

Question 28

Fun-Town Amusement Centre
Fun-Town Amusement Centre offers a variety of family entertainment. The amusement centre consists of three separate divisions: miniature golf, arcade, and laser tag. The following information in available regarding each of these divisions for the year just ended:
$\begin{array}{lrrr}&\text { Miniature } \\&\underline{\text { Golf }}&\underline{\text { Arcade }} &\underline{ \text { Laser Tag} }\\\text { Revenues } & \$ 225000 & \$ 500000 & \$ 300000 \\\text { Variable expenses } & 50000 & 100000 & 75000 \\\text { Traceable fixed expenses } & 30000 & 40000 & 35000\end{array}$

Common fixed costs of $60 000 are divided equally among the divisions.

-The segment margin for the arcade division is:

A) $300 000
B) $400 000
C) $360 000
D) $340 000

Question 29

The rate of return generated by an investment centre's assets is called:

A) residual income.
B) economic value added.
C) return on investment.
D) segment margin ratio.

Question 30

A company has computed that their 'margin' is .18.Which of the following statements is the best interpretation of these results?

A) $.18 of every $1 invested in assets is net profit.
B) $.18 of every $1 made in sales is profit.
C) Every $1 invested in assets generates $.18 in sales revenue.
D) Every $1 invested in assets generates $.18 of segment margin.

Question 31

Fun-Town Amusement Centre
Fun-Town Amusement Centre offers a variety of family entertainment. The amusement centre consists of three separate divisions: miniature golf, arcade, and laser tag. The following information in available regarding each of these divisions for the year just ended:
$\begin{array}{lrrr}&\text { Miniature } \\&\underline{\text { Golf }}&\underline{\text { Arcade }} &\underline{ \text { Laser Tag} }\\\text { Revenues } & \$ 225000 & \$ 500000 & \$ 300000 \\\text { Variable expenses } & 50000 & 100000 & 75000 \\\text { Traceable fixed expenses } & 30000 & 40000 & 35000\end{array}$

Common fixed costs of $60 000 are divided equally among the divisions.

-The segment margin for the miniature golf division is:

A) $175 000
B) $145 000
C) $125 000
D) $ 85 000

Question 32

Which of the following items is not part of the calculation for segment margin?

A) Contribution margin
B) Traceable fixed expenses
C) Common costs
D) Variable costs

Question 33

Costs that can not be traced or reasonably allocated to a particular segment are called:

A) variable costs.
B) common costs.
C) segment costs.
D) fixed costs.

Question 34

Which of the following statements is true regarding which product the advertising campaign should feature?

A) Overall company profits will be higher by $45 000 if the campaign features chips rather than soft drink.
B) Overall company profits will be higher by $28 750 if the campaign features chips rather than soft drink.
C) Overall company profits will be higher by $13 750 if the campaign features chips rather than soft drink.
D) Overall company profits will be higher by $26 250 if the campaign features soft drink rather than chips.

Question 35

Which of the following statements is true regarding the allocation of a company's indirect fixed costs?

A) Indirect fixed costs should always be traced to a particular segment.
B) If the indirect fixed cost would go away should a particular segment be eliminated,then the indirect fixed cost should be traced to that particular segment.
C) Indirect fixed costs should never be allocated to a particular segment.
D) Indirect fixed costs should not benefit more than one particular segment.

Question 36

Fun-Town Amusement Centre
Fun-Town Amusement Centre offers a variety of family entertainment. The amusement centre consists of three separate divisions: miniature golf, arcade, and laser tag. The following information in available regarding each of these divisions for the year just ended:
$\begin{array}{lrrr}&\text { Miniature } \\&\underline{\text { Golf }}&\underline{\text { Arcade }} &\underline{ \text { Laser Tag} }\\\text { Revenues } & \$ 225000 & \$ 500000 & \$ 300000 \\\text { Variable expenses } & 50000 & 100000 & 75000 \\\text { Traceable fixed expenses } & 30000 & 40000 & 35000\end{array}$

Common fixed costs of $60 000 are divided equally among the divisions.

-The segment margin ratio for the laser tag division is:

A) 63.33 per cent
B) 56.67 per cent
C) 75.00 per cent
D) 84.44 per cent

Question 37

Finley Company has its company headquarters based in Raleigh,North Carolina,and has six individual retail stores spread throughout North Carolina and Virginia.Which of the following costs would most likely be treated as a common cost for segmented reporting purposes?

A) Lease costs for the company headquarters
B) Property tax costs for the Virginia stores
C) Direct labour costs for the North Carolina stores
D) Utilities costs for the both the Virginia and North Carolina stores

Question 38

Which of the following statements is true regarding a company's segment margin?

A) It is primarily used to make short-term decisions such as cost-volume-profit (CVP)analysis and special order decisions.
B) It ignores all fixed costs.
C) It is primarily a measure of long-term profitability.
D) It should not be used to make decisions on whether or not to drop a product line.

Question 39

WSR Inc.
WSR Inc. sells a variety of drink and food products including potato chips and soft drink. The segmented income statements for these two products are as follows:
$\begin{array}{lrr}&\underline{\text { Soft drink}}&\underline{\text { Chips}}\\\text { Sales } & \$ 800000 & \$ 900000 \\\text { Variable expenses } &\underline{ 200000} &\underline{ 315000} \\\text { Contribution margin } & 600000 & 585000 \\\text { Traceable fixed expense } & \underline{120000} & \underline{160000} \\\text { Segment margin } & \underline{\$ 480000} & \underline{\$ 425000}\end{array}$
WSR’s management is considering a special advertising campaign that will run during a major sporting event. The advertising campaign is expected to cost $30 000 and only one product can be featured. In-house marketing studies show that the campaign could increase sales of the soft drink division by $200 000 or increase sales of the chips division by $275 000.


-What will be the overall net effect on the company's total profits if the advertising focuses on soft drink?

A) Increase of $170 000
B) Increase of $150 000
C) Increase of $120 000
D) Increase of $200 000

Question 40

Pennington Products
Pennington Products has two product lines: R-100 and R-200. Revenue and cost information for each of the product lines are as follows:
$\begin{array}{lrr}&\underline{\text { R-100 }}&\underline{\text { R-200 }}\\\text { Selling price per unit } & \$ 45 & \$ 60 \\\text { Variable costs per unit } & 15 & 24 \\\text { Traceable fixed expenses } & \$ 250000 & \$ 360000\end{array}$

Pennington has common fixed expenses of $250 000 per year. Last year, the company produced and sold 30 000 units of R-100 and 20 000 units of R-200.

-What is the segment margin ratio of the R-200 product line?

A) 50 per cent
B) 30 per cent
C) 60 per cent
D) 20 per cent

Question 41

A company has computed that their 'asset turnover' is 3.Which of the following statements is the best interpretation of these results?

A) For every $3 of sales,$1 of net profit is generated.
B) For every $3 invested in assets,$1 in net profit is generated.
C) For every $1 invested in assets,$3 in sales are generated.
D) For every $3 invested in assets,$1 in sales are generated.

Question 42

Which of the following statements regarding ROI computations is true?

A) Net income after interest and taxes is most frequently used as the measure of income in the ROI formula.
B) The fair market value of assets without regard to depreciation is used as a measure of operating assets in the ROI formula.
C) Assets used in the ROI formula are generally measured as an average of beginning and end of period numbers.
D) All assets,including those that are idle or held for resale,are included in the ROI formula.

Question 43

Hardcastle Ltd.had sales of $3 000 000 and net operating income of $800 000.Operating assets during the year averaged $1 500 000.The manager of Hardcastle is considering the purchase of a new machine which is expected to increase average operating assets by 5 per cent.If the new machine is purchased,the company's new return on investment (ROI)would be:

A) 190.5 per cent
B) 52.5 per cent
C) 196.9 per cent
D) 50.8 per cent

Question 44

Carson Inc.
Carson Inc. had the following information available at the end of its current year:
$\begin{array}{lr}\text { Sales } & \$ 2000000 \\\text { Net operating income } & 500000 \\\text { Average operating assets } & 1200000\end{array}$


-What was Carson's asset turnover for the year?

A) 2.4
B) .417
C) .25
D) 1.7

Question 45

Which of the following statements comparing ROI and residual income is correct?

A) ROI is more useful as a performance measure for a single investment centre.
B) Residual income is a better comparative measure than ROI.
C) ROI and residual income are equally good performance measures for a single investment centre.
D) Residual income is more useful as a performance measure for a single investment centre.

Question 46

Duncan Ltd.has the following information available for one of its divisions in the current year:
$\begin{array}{lr}\text { Sales revenue } & \$ 6000000 \\\text { Operating expenses } & 3800000 \\\text { Average operating assets } & 2000000\end{array}$
Duncan requires each of its divisions to generate a minimum return of 25 per cent.What is this division's residual income?

A) $ 200 000
B) $1 450 000
C) $1 700 000
D) $5 500 000

Question 47

Residual income:

A) is an alternative to ROI for manager performance evaluation..
B) is the amount of income earned in excess of a predetermined minimum level of return on assets.
C) is equal to ROI - (Average operating assets * Minimum required rate of return).
D) both A and B.

Question 48

Which of the following is the correct formula to compute residual income?

A) Average operating assets - Net operating income
B) Average operating assets -(Net operating income *Minimum required rate of return)
C) Net operating income * Minimum required rate of return
D) Net operating income - (Average operating assets * Minimum required rate of return)

Question 49

For the current year,Winston Inc.reported sales of $800 000 and an asset turnover of 2.The rate of return on average invested assets was 20 per cent.The company's margin for the year was:

A) 10 per cent
B) 40 per cent
C) 25 per cent
D) 50 per cent

Question 50

Grayson & Sons,a local car dealership,has three separate divisions: car repair,new car sales,and used car sales.The company has decided to implement a new system for evaluating the performance of its three division managers and the bonuses they receive.The following information is available with respect to each division for the current year:
$\begin{array}{lrrr}& \underline{\text { Car Repair} } & \underline{ \text { New Car Sales} }& \underline{\text { Used Car Sales }}\\\text { Operating income } & \$ 2000000 & \$ 8000000 & \$ 3000000 \\\text { Operating assets } & 3000000 & 18000000 & 8000000\end{array}$

In order to receive a bonus,a division manager must have an ROI greater than 50 per cent and residual income in excess of $1 400 000.If management uses a minimum required rate of return of 18 per cent,which division manager(s)would be eligible to receive a bonus?

A) Car repair only
B) New car only
C) Used car only
D) Car repair,new car,and used car

Question 51

Residual income:

A) is most useful as a way to compare individual divisions of different sizes.
B) is the amount of income earned in excess of a predetermined minimum rate of return on assets.
C) should not be used as a way to evaluate the manager of an investment centre.
D) is often called economic value added (EVA).

Question 52

Carson Inc.
Carson Inc. had the following information available at the end of its current year:
$\begin{array}{lr}\text { Sales } & \$ 2000000 \\\text { Net operating income } & 500000 \\\text { Average operating assets } & 1200000\end{array}$


-What was Carson's return on investment (ROI)for the year?

A) 2.4 per cent
B) 41.7 per cent
C) 25.0 per cent
D) 166.7 per cent

Question 53

ABC Inc.has the following information available for one of its divisions:
$\begin{array}{lr} \text { Average operating assets} &\$5000000\\ \text { Return on investment (ROI)} &4\%\\ \text { Sales } &\$8000000\\\end{array}$

If ABC requires a minimum return on its investments of 25 per cent,what is their residual income?

A) $1 950 000
B) $4 500 000
C) $6 750 000
D) $ 750 000

Question 54

When comparing two different investment alternatives,which of the following measures for each alternative would be the best to use?

A) Return on investment
B) Residual income
C) Net income
D) Contribution margin ratio

Question 55

When defining net operating income for return on investment (ROI)purposes,which of the following items should not be included?

A) Sales revenue
B) Cost of goods sold
C) Interest expense
D) Salaries expense

Question 56

Astin Ltd.requires all of its divisions to maintain a return on investment (ROI)of at least 25 per cent.Over the past several years,one of Astin's divisions has consistently had the following information:
$\begin{array}{lr} \text {Sales } &\$2000000\\ \text {Net operating income } &500000\\\end{array}$

In order to achieve the company's ROI goals,this division should do which of the following?

A) Maintain average operating assets of $2 000 000 or more.
B) Maintain average operating assets of $2 000 000 or less.
C) Maintain average operating assets of $125 000 or more.
D) Maintain average operating assets of $125 000 or less.

Question 57

Carson Inc.
Carson Inc. had the following information available at the end of its current year:
$\begin{array}{lr}\text { Sales } & \$ 2000000 \\\text { Net operating income } & 500000 \\\text { Average operating assets } & 1200000\end{array}$


-What was Carson's margin for the year?

A) 2.4 per cent
B) 41.7 per cent
C) 25.0 per cent
D) 166.7 per cent

Question 58

Bryan Manufacturing had sales of $4 000 000 and net operating income of $700 000.Operating assets during the year averaged $600 000.The manager of Hardcastle is considering the purchase of a new machine which is expected to increase average operating assets by 8 per cent.If the new machine is purchased,the company's new return on investment (ROI)would be:

A) 126.0 per cent
B) 16.2 per cent
C) 108.0 per cent
D) 92.6 per cent

Question 59

Shannon Pharmaceuticals has the following information available for one of its divisions in the current year:
$\begin{array}{lr} \text { Sales revenue} &\$10000000\\ \text { Operating expenses } &4500000\\ \text { Average operating assets} &4000000\\\end{array}$

The company requires each of its divisions to generate a minimum return of 30 per cent.What is this division's residual income?

A) $1 500 000
B) $4 300 000
C) $2 350 000
D) $8 800 000

Question 60

All else being equal,which of the following items would increase a company's return on investment (ROI)?

A) A decrease in net income
B) An increase in fixed costs
C) A decrease in average operating assets
D) A decrease in sales volume

Question 61

Which of the following forms of manager compensation most likely encourages managers to take a long-term view of how their performance ties in with the long-term goals of a company?

A) Year-end cash bonus
B) Base salary
C) Share options
D) Use of a company car

Question 62

Determining customer loyalty would be a measure of performance under which perspective of the balanced scorecard?

A) Internal business
B) Customer
C) Financial
D) Learning and growth

Question 63

Return on investment (ROI)is a measure of performance under which perspective of the balanced scorecard?

A) Internal business
B) Customer
C) Financial
D) Learning and growth

Question 64

Which of the following statements regarding the balanced scorecard approach is false?

A) Because of changing technology,global competition,and an increased awareness of the need to focus on customer needs,non-financial and qualitative performance measures have become an integral component of effective managerial decision making.
B) The balance scorecard approach integrates both financial and non-financial performance measures.
C) The balanced scorecard approach requires looking at performance from four different but related perspectives: financial,customer,internal business,and learning and growth.
D) The balance scorecard approach is not as useful for performance measurement as traditional accounting measures.

Question 65

Which of the following statements about the balanced scorecard approach is true?

A) It helps management focus on only non-financial measures of performance.
B) It helps management focus on critical success factors which may be financial and non-financial in nature.
C) It helps management ignore short-term operating performance in favour of long-term operating performance.
D) It helps management focus on only financial measures of performance.

Question 66

Which of the following statements about the balanced scorecard approach is false?

A) It requires managers to focus on financial measures more than non-financial measures.
B) It looks at performance from the following perspectives: financial,customer,internal business,and learning and growth.
C) It helps balance short-term operating performance with long-term strategies.
D) It recognises that traditional measures of performance are often not adequate to fully assess a company's performance.

Question 67

Which of the following statements about managerial compensation is correct?

A) Compensating managers with year-end cash bonuses always motivates managers to do what is best for the company as a whole.
B) From a manager's standpoint,cash compensation is always preferable over share-based compensation.
C) Manager compensation should always be either cash-based or share-based.
D) Share-based manager compensation does not guarantee a future cash benefit to managers.

Question 68

Which of the following questions would the internal business perspective of the balanced scorecard attempt to answer?

A) How does the company continue to improve,learn,and grow?
B) How do customers view the company?
C) Which business processes must the company excel in?
D) How does the company create value for its stakeholders?

Question 69

Throughput would be a measure of performance under which perspective of the balanced scorecard?

A) Internal business
B) Customer
C) Financial
D) Learning and growth

Question 70

Which of the following statements about the balanced scorecard approach is true?

A) The four perspectives of the balanced scorecard revolve around measures of quality,productivity,efficiency and timeliness,and marketing success.
B) The balanced scorecard approach requires looking at performance from four different but related perspectives: financial,customer,internal business,and learning and growth.
C) The balanced scorecard approach integrates financial and non-financial performance measures.
D) All of these are true.

Question 71

Determining the market share for a company's product would be a measure of performance under which perspective of the balanced scorecard?

A) Internal business
B) Customer
C) Financial
D) Learning and growth

Question 72

Which of the following statements about share-based managerial compensation is correct?

A) It may cause dysfunctional behaviour in the short-run as managers try to drive up the company's share price.
B) Exercising the option as soon as it is granted will leave the manager better off from a cash standpoint.
C) Share options are always guaranteed to increase in value over time.
D) Managers always prefer to receive share options instead of year-end bonuses.

Question 73

Which of the following questions would the customer perspective of the balanced scorecard attempt to answer?

A) How does the company continue to improve and learn?
B) How do customers view the company?
C) Which business processes must the company excel in?
D) How does the company create value for its stakeholders?

Question 74

Which of the following statements is true regarding more traditional measures of financial performance?

A) They often look at a company's performance from four different but related perspectives: financial,customer,internal business,and learning and growth.
B) They are often superior to measuring a company's performance than the balanced scorecard approach.
C) Performance problems are often not captured in as timely a fashion as with the balanced scorecard approach.
D) They tend to focus on non-financial rather than financial measures of performance.

Question 75

Which of the following situations is most likely to pose a problem for companies that use return on investment (ROI)as a measure of a manager's performance?

A) Managers may be encouraged to purchase more operating assets than they otherwise should.
B) Managers may be discouraged from purchasing operating assets that could improve overall profitability.
C) Managers may be discouraged from reducing their division's costs.
D) Managers may be discouraged from paying off debt in order to reduce interest costs.

Question 76

Which of the following questions would the financial perspective of the balanced scorecard attempt to answer?

A) How does the company continue to improve,learn,and grow?
B) How do customers view the company?
C) Which business processes must the company excel in?
D) How does the company create value for its stakeholders?

Question 77

Which of the following questions would the learning and growth perspective of the balanced scorecard attempt to answer?

A) How does the company continue to improve and learn?
B) How do customers view the company?
C) Which business processes must the company excel in?
D) How does the company create value for its stakeholders?

Question 78

The balanced scorecard approach looks at a company's performance from four perspectives.Those perspectives are:

A) prevention,appraisal,internal,and external.
B) customer,creditor,shareholder,and manager.
C) financial,customer,internal business,and learning and growth.
D) manufacturing cycle time,throughput,appraisal,and environmental.

Question 79

Residual income would be a measure of performance under which perspective of the balanced scorecard?

A) Internal business
B) Customer
C) Financial
D) Learning and growth

Question 80

Which of the following is not one of the perspectives that is usually examined under the balanced scorecard approach?

A) Learning and growth perspective
B) Internal business perspective
C) Creditor perspective
D) Customer perspective