Deck 11: Performance Evaluation and the Balanced Scorecard

Question 1

1-9 The local McDonald's restaurant is likely to be considered to be an investment center.

Answer 1

True

Question 2

1-8 The accounting department for a department store chain is likely to be considered an investment center.

Answer 2

False

Question 3

1-10 Goal congruence is more likely to be achieved at a decentralized organization rather than a centralized organization.

Answer 3

False

Question 4

1-5 Decentralization helps keep a company's costs down since each business unit may have its own purchasing department.

Question 5

1-14 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 center.
B)investment center.
C)profit center.
D)revenue center.

Question 6

1-18 The human resources department for car dealership is likely to be classified as a(n):

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

Question 7

1-4 Decentralization allows top management to hire workers with expert knowledge for each business unit.

Question 8

1-1 Small companies tend to use centralized decision making.

Question 9

1-17 An amusement park's games department which reports revenues and expenses is likely to be classified as a(n):

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

Question 10

1-7 Duplication of costs is a disadvantage of decentralized organizations.

Question 11

1-19 Which of the following is a potential disadvantage of decentralization?

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

Question 12

1-2 Companies that decentralize split their operations into different divisions or operating units.

Question 13

1-11 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 14

1-16 The convenience store owned by a national chain is likely to be classified as a(n):

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

Question 15

1-6 Goal incongruence frequently exists in centralized organizations.

Question 16

1-3 Decentralization allows top management to concentrate on long-term strategic planning.

Question 17

1-13 The taxation department for department store chain is likely to be classified as a(n):

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

Question 18

1-20 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 19

1-15 The reservations department for a hotel chain is likely to be classified as a(n):

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

Question 20

1-12 The laundry department for a Ritz-Carlton hotel is likely to be classified as a(n):

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

Question 21

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

Question 22

1-27 The manager of a local Wal-Mart would be in charge of a(n):

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

Question 23

2-9 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 24

1-24 A product line at Coca-Cola (such as the Diet Coke product line)is most likely treated as a(n):

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

Question 25

1-31 Discuss potential problems associated with decentralization.

Question 26

2-8 Performance evaluation systems have all of the following goals EXCEPT:

A)motivating unit managers.
B)communicating goals throughout the organization.
C)assuring profit goals are achieved.
D)promoting goal congruence between subunits.

Question 27

1-22 The production line at Dell Computers is most likely treated as a(n):

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

Question 28

1-23 The central reservation office at American Airlines is most likely treated as a(n):

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

Question 29

2-6 Performance evaluation systems are a way for management to control the organization.

Question 30

2-5 Companies benchmark their performance against the performance of their competitors and against their own past performance.

Question 31

1-29 The manager of the Walt Disney World Resorts (a corporate division)would be in charge of a(n):

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

Question 32

2-3 Comparing a company's achievements against best practices in the industry is called benchmarking.

Question 33

1-25 The manager of the Midwest sales region at Pace Food would be in charge of a(n):

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

Question 34

2-4 Financial measures are lead indicators for companies.

Question 35

1-28 The manager of the accounting department at Nike would be in charge of a(n):

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

Question 36

2-1 Performance evaluation systems provide top management with a framework for maintaining control over the organization.

Question 37

1-26 The manager of the corporate division of Hollister would be in charge of a(n):

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

Question 38

2-7 Financial performance measures are lead indicators.

Question 39

1-21 The Frito-Lay division of PepsiCo is most likely treated as a(n):

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

Question 40

2-2 Comparing company results against industry benchmarks is often less useful than comparing actual results against budget amount.

Question 41

2-23 Describe the limitations of financial performance measurement.

Question 42

2-21 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)none of the above.

Question 43

2-16 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 44

2-11 Which of the following goals of a performance evaluation system is accomplished when subunit managers are provided with performance targets?

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

Question 45

2-20 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 46

2-12 Which of the following goals of a performance evaluation system is accomplished 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 47

2-10 Which of the following goals of a performance evaluation system is accomplished when targets are compared to actual results?

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

Question 48

3-4 KPI in the Balanced Scorecard stands for Key Performance Indicator.

Question 49

3-2 Customer satisfaction,operational efficiency,and employee excellence are often measured as part of the balanced scorecard approach.

Question 50

2-18 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 51

3-3 The ultimate purpose of the balanced scorecard is to give management a balanced view of the company's performance.

Question 52

2-19 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 53

2-13 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 54

2-17 When measuring a company's performance,which of the following is a lag indicator?

A)Operational measures
B)Financial measures
C)Outcome measures
D)Both A and B

Question 55

3-1 The balanced scorecard considers both financial and operational performance measures.

Question 56

2-14 Which of the following goals of a performance evaluation system is accomplished when subunit performance targets are aligned with company strategy?

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

Question 57

List and describe the goals of performance evaluation systems.

Question 58

3-6 All four perspectives must be included on each individual company's balanced scorecard.

Question 59

2-15 Which of the following goals of a performance evaluation system is accomplished 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 60

3-5 Operations is one factor of the internal business perspective of the Balanced Scorecard.

Question 61

3-7 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 62

3-9 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 63

3-15 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 64

3-8 Employee satisfaction would be an example of measuring which perspective?

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

Question 65

3-13 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 66

3-18 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 67

3-25 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 68

3-20 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 69

3-14 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 70

3-22 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 71

3-16 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 72

3-12 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 73

3-21 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

3-19 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 75

3-24 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 76

4-1 Responsibility accounting performance reports capture the financial performance of cost,revenue and profit centers.

Question 77

3-11 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 78

3-10 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 79

3-23 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 80

3-17 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