Deck 11: Performance Evaluation and the Balanced Scorecard

Question 1

The taxation department for department store chain is likely to be classified as a(n)

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

Answer 1

A

Question 2

Decentralization helps keep a company's costs down since each business unit may have its own purchasing department.

Answer 2

False

Question 3

Small companies tend to use centralized decision making.

Answer 3

True

Question 4

The human resources department for car dealership is likely to be classified as a(n)

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

Question 5

Decentralization allows top management to hire workers with expert knowledge for each business unit.

Question 6

Duplication of costs is a disadvantage of decentralized organizations.

Question 7

Companies that decentralize split their operations into different divisions or operating units.

Question 8

Which of the following is a potential advantage of decentralization?

A)Benchmarking
B)Promotes goal congruence and coordination
C)Provides feedback
D)Provides training

Question 9

The laundry department for a Ritz-Carlton hotel is likely to be classified as a(n)

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

Question 10

The reservations department for a hotel chain is likely to be classified as a(n)

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

Question 11

Goal incongruence frequently exists in centralized organizations.

Question 12

Goal congruence is more likely to be achieved at a decentralized organization rather than a centralized organization.

Question 13

Pillsbury produces cookies,pizza,bread,and other food items.Pillsbury was acquired by General Mills in 2001 for $10.4 billion.Pillsbury is likely to be classified as a(n)

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

Question 14

An amusement park's games department which reports revenues and expenses is likely to be classified as a(n)

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

Question 15

The accounting department for a department store chain is likely to be considered an investment centre.

Question 16

Which of the following is a disadvantage of decentralization?

A)Management does not have time to concentrate on long-term strategic planning.
B)Unit managers may not understand the big picture of the company.
C)Unit managers have decreased motivation and retention.
D)Managers receive training and experience to allow advancement in the organization.

Question 17

The convenience store owned by a national chain is likely to be classified as a(n)

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

Question 18

The local McDonald's restaurant is likely to be considered to be an investment centre.

Question 19

Which of the following is a potential disadvantage of decentralization?

A)Benchmarking
B)Duplication of costs
C)Provides feedback
D)Provides training

Question 20

Decentralization allows top management to concentrate on long-term strategic planning.

Question 21

The manager of the Midwest sales region at Pace Food would be in charge of a(n)

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

Question 22

Which of the following aspects of a performance evaluation system best describes when targets are compared to actual results?

A)Communicating company's expectations
B)Motivating managers
C)Promoting goal congruence
D)Providing feedback

Question 23

Financial measures are lead indicators for companies.

Question 24

A product line at Coca-Cola (such as the Diet Coke product line)is most likely treated as a(n)

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

Question 25

The manager of the corporate division of Hollister would be in charge of a(n)

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

Question 26

Comparing company results against industry benchmarks is often less useful than comparing actual results against budget amount.

Question 27

The Frito-Lay division of PepsiCo is most likely treated as a(n)

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

Question 28

Performance evaluation systems provide top management with a framework for maintaining control over the organization.

Question 29

The central reservation office at American Airlines is most likely treated as a(n)

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

Question 30

The manager of the accounting department at Nike would be in charge of a(n)

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

Question 31

What is a limitation of financial performance measurements?

A)They are not useful for benchmarking.
B)They do not motivate managers.
C)They tend to focus on long-term performance.
D)They tend to be lag indicators.

Question 32

The manager of the Walt Disney World Resorts (a corporate division)would be in charge of a(n)

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

Question 33

Performance evaluation systems are a way for management to control the organization.

Question 34

The manager of a local Walmart would be in charge of a(n)

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

Question 35

Companies benchmark their performance against the performance of their competitors and against their own past performance.

Question 36

The production line at Dell Computers is most likely treated as a(n)

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

Question 37

Discuss two potential problems associated with decentralization.

Question 38

List and describe five reasons why a company might choose to decentralize.

Question 39

Comparing a company's achievements against best practices in the industry is called benchmarking.

Question 40

Which of the following aspects of a performance evaluation system best describes when a company's actual results are compared to the results of competitors?

A)Motivating unit managers
B)Promoting goal congruence
C)Benchmarking
D)Communicating expectations

Question 41

Which of the following aspects of a performance evaluation system best describes when subunit managers are provided with performance targets?

A)Benchmarking
B)Communicating company's expectations
C)Promoting goal congruence
D)Providing feedback

Question 42

KPI in the Balanced Scorecard stands for Key Performance Indicator.

Question 43

Which of the following aspects of a performance evaluation system best describes when subunit performance targets are aligned with company strategy?

A)Benchmarking
B)Communicating expectations
C)Promoting goal congruence
D)Providing feedback

Question 44

The balanced scorecard considers both financial and operational performance measures.

Question 45

Operations is one factor of the internal business perspective of the Balanced Scorecard.

Question 46

Providing subunit managers with performance results and comparing targets to actual results would be an example of

A)promoting goal congruence and coordination.
B)motivating managers.
C)providing feedback.
D)benchmarking.

Question 47

The number of on-time deliveries would be an example of measuring which perspective?

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

Question 48

Comparing actual results to the results of competitors and comparing actual results to industry standards would be an example of

A)promoting goal congruence and coordination.
B)motivating managers.
C)providing feedback.
D)benchmarking.

Question 49

Corrective actions are sometimes taken as a result of which of the following goals of a performance evaluation system?

A)Benchmarking
B)Communicating expectations
C)Promoting goal congruence
D)Providing feedback

Question 50

The ultimate purpose of the balanced scorecard is to give management a balanced view of the company's performance.

Question 51

Customer satisfaction,operational efficiency,and employee excellence are often measured as part of the balanced scorecard approach.

Question 52

Aligning subunit performance targets with company strategy would be an example of

A)promoting goal congruence and coordination.
B)motivating managers.
C)providing feedback.
D)benchmarking.

Question 53

Employee satisfaction would be an example of measuring which perspective?

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

Question 54

Describe the limitations of financial performance measurement.

Question 55

Key Performance Indicators are used to assess how well a company's objectives have been achieved.

Question 56

Which of the following goals of a performance evaluation system is accomplished when bonuses are provided to subunit managers who achieve performance targets?

A)Benchmarking
B)Motivating unit managers
C)Promoting goal congruence
D)Communicating expectations

Question 57

Which of the following aspects of a performance evaluation system best describes when the company's actual results are compared to industry standards?

A)Benchmarking
B)Motivating unit managers
C)Promoting goal congruence
D)Providing feedback

Question 58

Providing bonuses to subunit managers who achieve performance targets would be an example of

A)promoting goal congruence and coordination.
B)motivating managers.
C)providing feedback.
D)benchmarking.

Question 59

List and describe the goals of performance evaluation systems.

Question 60

The percentage of market share would be an example of measuring which perspective?

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

Question 61

Cash flows from operations and gross margin growth would be examples of the

A)financial perspective.
B)customer perspective.
C)internal business perspective.
D)learning and growth perspective.

Question 62

New product development time would be an example of the

A)financial perspective.
B)customer perspective.
C)internal business perspective.
D)learning and growth perspective.

Question 63

Which of the following perspectives from the balanced scorecard focuses on continuing to improve and create value?

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

Question 64

Which of the following perspectives from the balanced scorecard focuses on determining if customers are happy after the sale takes place?

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

Question 65

The percentage of products with on-line help manuals would be an example of measuring which perspective?

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

Question 66

Customer satisfaction ratings would be an example of the

A)financial perspective.
B)customer perspective.
C)internal business perspective.
D)learning and growth perspective.

Question 67

Return on investment and revenue growth would be examples of

A)financial perspective.
B)customer perspective.
C)internal business perspective.
D)learning and growth perspective.

Question 68

The number of defects found during the manufacturing process would be an example of measuring which perspective?

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

Question 69

The number of new products developed would be an example of measuring which perspective?

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

Question 70

The number of employee suggestions implemented and percentage of the sales force with access to real-time inventory levels would be examples of the

A)financial perspective.
B)customer perspective.
C)internal business perspective.
D)learning and growth perspective.

Question 71

Which of the following perspectives from the balanced scorecard focuses on determining the company's "climate for action?"

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

Question 72

Which of the following perspectives from the balanced scorecard helps managers answer the question,"How do we look to shareholders?"

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

Question 73

The number of warranty claims would be an example of the

A)financial perspective.
B)customer perspective.
C)internal business perspective.
D)learning and growth perspective.

Question 74

List the four areas of a balanced scorecard.Describe each area.Define "key performance indicator" (KPI).Give an example of a KPI for each balanced scorecard area

Question 75

The number of repeat customers would be an example of measuring which perspective?

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

Question 76

Which of the following is the name given to the approach that recognizes that both financial and operational performance measures should be considered when evaluating company performance?

A)The financial and operational approach
B)The total approach
C)The balanced scorecard approach
D)The complete approach

Question 77

Responsibility accounting performance reports capture the financial performance of cost,revenue and profit centres.

Question 78

Gretzel had the following financial results for last month.Which type of responsibility centre do these financial results reflect?

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

Question 79

The difference between actual results and budgeted amounts is called a variance.

Question 80

The difference in dollars between amounts in the static budget and the flexible budget is called the

A)flexible budget variance.
B)sales volume variance.
C)static budget variance.
D)actual variance.