Deck 13: The Balanced Scorecard: Strategic-Based Control

Question 1

In order for the balanced scorecard to succeed, the entire organization must be behind it.

Answer 1

True

Question 2

Activity-based responsibility accounting employs dynamic standards and emphasizes and supports continuous improvement.

Answer 2

True

Question 3

The most common form of strategic-based responsibility accounting system is the worksheet.

Answer 3

False

Question 4

Articulation of the balanced scorecard should not be made to individuals within the organization.

Question 5

The balanced scorecard is a strategic-based performance management system that identifies four perspectives.

Question 6

A strategic-based responsibility accounting system transforms the strategy of a company into operational objectives and measures.

Question 7

To link measures to a strategy, they must be derived from management and be balanced.

Question 8

Activity-based responsibility accounting focuses on processes and uses both operational and financial measures.

Question 9

In a strategic-based responsibility accounting system, stretch targets are established for individual performance measures.

Question 10

Double-loop feedback occurs when managers get information about the effectiveness and the validity of the strategy.

Question 11

Incentives must be structured and resources allocated to support the strategy chosen.

Question 12

A testable strategy is a set of linked objectives aimed at an overall goal.

Question 13

Strategy translation means specifying objectives and percentage of revenues from sale of products.

Question 14

Customer value is the sum of realization and sacrifice what the customer gives up and receives.

Question 15

The customer perspective defines the customer and market segments in which the business unit will compete.

Question 16

Performance expectations must be established once objectives and measures have been executed and advertised.

Question 17

Compensation should be based on performance and paid based on percentage of objective achieved.

Question 18

The strategy map connects the balanced scorecard strategy with an organization's administration.

Question 19

Performance measures are derived from a company's vision, strategy, and objectives.

Question 20

Strategic information availability include processes with real-time feedback.

Question 21

In a balanced scorecard, performance expectations are communicated by setting __________ .

Question 22

Which of the following is NOT true about activity-based responsibility accounting?

A) The emphasis changes from cost reduction through change to cost control.
B) The emphasis includes financial results as well as how things are done.
C) Responsibility moves from one dimension to two dimensions.
D) It moves from a control system to a performance management system.

Question 23

Which type of responsibility accounting addresses directed continuous improvement in environments that consist of competitive conditions and dynamic change?

A) activity-based responsibility accounting
B) functional-based responsibility accounting
C) process-based responsibility accounting
D) strategic-based responsibility accounting

Question 24

Training hours is an example of a(n) __________ measure.

Question 25

Which of the following is NOT an advantage of strategic-based responsibility accounting?

A) It includes perspectives that serve as a source of competitive advantage.
B) Responsibility is centralized within the organization.
C) Change efforts are directed by the mission and strategy.
D) All are advantages of strategic-based responsibility accounting.

Question 26

Which of the following is a perspective of strategic-based responsibility accounting but is NOT a perspective of activity-based responsibility accounting?

A) financial perspective
B) process perspective
C) customer perspective
D) all of the above

Question 27

Choosing general goals, customer segment, and nature of a business are all concern of strategy __________ .

Question 28

Activity-based responsibility accounting adds which of the following to the financial-based responsibility accounting perspective?

A) consumer perspective
B) functional perspective
C) process perspective
D) learning perspective

Question 29

Which of the following is NOT a limitation of activity-based responsibility accounting?

A) Change efforts are often fragmented.
B) Change efforts lack connection to mission.
C) Change efforts lack connection to strategy.
D) Change efforts are driven by value-added analysis.

Question 30

Directed continuous improvement is accomplished by linking initiatives to

A) processes.
B) strategy and mission.
C) financial outcomes.
D) measures.

Question 31

A competitive environment means that organizations will be

A) producing increasingly high-volume, low-variety products and services.
B) focused internally on efficiency.
C) managing cause and effect linkages to customer satisfaction.
D) viewing their actions independent of competitors, suppliers, and customers.

Question 32

For strategic alignment, incentive compensation should be based on __________ performance, compared to target values.

Question 33

Outcome measures that are a result of past efforts are called __________ measures.

Question 34

Dissatisfied customers are an example of a __________ measure.

Question 35

The targets aimed at transforming the organization within a period of 3 to 5 years are called __________ targets.

Question 36

Setting balanced objectives, target values, and rewards are steps in developing the __________ .

Question 37

Outcome measures that are expressed in monetary terms are called __________ measures.

Question 38

The most common strategic-based performance management system is

A) variance analysis with standard costs as benchmarks.
B) the balanced scorecard.
C) financial budgets.
D) all of the above.

Question 39

A set of linked objectives aimed at an overall goal is the definition of a __________ strategy.

Question 40

What are the two additional perspectives that are added to the activity-based approach to achieve strategic-based responsibility?

A) a customer perspective and a learning and growth perspective
B) an infrastructure perspective and a process perspective
C) a customer perspective and a financial perspective
D) a financial perspective and a process perspective

Question 41

The outcome measures that relate to customers are called:

A) External measures
B) Objective measures
C) Financial measures
D) Lag measures

Question 42

Which feature is related solely to strategic-based responsibility and not to activity-based responsibility?

A) financial perspective
B) process perspective
C) team accountability
D) customer perspective

Question 43

Lead measures are critical to strategy because

A) they are based on actual activity.
B) they are an independent part of the system.
C) there should be a causal linkage with strategy.
D) they are outcome measures.

Question 44

Which of the following would be a lag measure?

A) budget forecasts
B) sales per employee
C) plant investment
D) employee training hours

Question 45

The outcome measures that are a result of past efforts are called:

A) Objective measures
B) External measures
C) Lag measures
D) Financial measures

Question 46

Which of the following would be a nonfinancial measure?

A) customer profitability
B) dissatisfied customers
C) return on investment
D) cost per unit

Question 47

The outcome measures that can be readily quantified and verified are called:

A) External measures
B) Objective measures
C) Financial measures
D) Lag measures

Question 48

Lead measures

A) are the measures with the highest priority.
B) are generic to different strategies.
C) are based on performance drivers.
D) represent the desired outcomes.

Question 49

For a firm to have balanced measures, the measures selected must be balanced between

A) lag and lead measures.
B) objective and subjective measures.
C) financial and nonfinancial measures.
D) all of the above.

Question 50

Which of the following statements is true regarding lag measures?

A) lag measures are measures that relate to customers
B) lag measures are factors that drive future performance
C) lag measures are performance drivers
D) lag measures include measures such as customer profitability

Question 51

Which of the following would be a lead measure?

A) customer profitability
B) cost per employee
C) return on investment
D) employee training hours

Question 52

Which is a major difference between activity-based measures and strategic-based measures?

A) Strategic-based measures are linked to strategy.
B) Strategic-based measures are used to align objectives.
C) Strategic-based measures are balanced measures.
D) all of the above.

Question 53

Which of the following would NOT be an objective measure?

A) customer profitability
B) employee capabilities
C) return on investment
D) cost per unit

Question 54

Which of the following would be a subjective measure?

A) employee capabilities
B) market share
C) return on investment
D) cost per unit

Question 55

The balanced scorecard

A) is an activity-based responsibility accounting model that measures operating activities.
B) is a financial-based responsibility accounting model that focuses on the financial performance of units, rewarding performance with static financial-oriented standards.
C) is a strategic-based financial reporting system that balances assets with liabilities and owner's equity.
D) is a strategic-based performance management system that identifies objectives and measures from a financial perspective, customer perspective, process perspective, and learning and growth perspective.

Question 56

Which of the following features make stretch targets feasible?

A) The targets are set in isolation by top management.
B) The measures are linked by causal relationships.
C) The measures are based on currently attainable standard costs.
D) The targets are set at desired levels for twenty years to ensure long-term performance.

Question 57

The outcome measures that are expressed in monetary terms are called:

A) Objective measures
B) External measures
C) Lag measures
D) Financial measures

Question 58

A major difference between activity-based responsibility accounting and strategic-based responsibility accounting is

A) only strategic-based responsibility accounting is linked to strategy.
B) only strategic-based responsibility accounting is focused on systemwide efficiency.
C) only strategic-based responsibility accounting includes the process perspective.
D) only strategic-based responsibility accounting reinforces team accountability.

Question 59

Which of the following would be an external measure?

A) return on investments
B) employee satisfaction
C) process efficiency
D) all of the above

Question 60

Communicating strategy through measurements requires both scope and flexibility. Which of the following statements is true?

A) Flexibility requires subjective and objective measurement as well as nonfinancial measures.
B) Flexibility requires that measures be optimal and dynamic.
C) Scope implies that internal and external measures are needed.
D) Both a and c are true.

Question 61

Which of the following statements comparing activity-based performance and strategic-based performance evaluation is NOT true?

A) Strategic-based performance evaluation expands the set of metrics.
B) Only strategic-based performance evaluation leads to cost reductions.
C) Only strategic-based performance standards set stretch targets for all four perspectives.
D) Both systems encourage quality improvements.

Question 62

From the customer perspective, which of the following might be an appropriate measure for improving product quality?

A) customer profitability
B) cost per customer
C) percentage of returns
D) number of patents pending

Question 63

Increasing customer value occurs when

A) the customer receives more benefits.
B) the customer perceives a greater gap between benefits and sacrifice.
C) customer costs are reduced.
D) none of the above.

Question 64

On-time delivery performance is calculated as

A) orders delivered on time/total number of orders delivered.
B) orders delivered on time/total sales dollars.
C) orders delivered on time/total production.
D) orders delivered/orders delivered on time.

Question 65

The formula for computing Manufacturing Cycle Efficiency (MCE) is

A) Processing Time / (Processing time + Move time + Inspection time + Waiting time + Other non-value-added time).
B) Theoretical Capacity / Production hours available.
C) Cycle time per unit ´ velocity.
D) none of the above.

Question 66

Diversifying customers and product lines are initiatives important to

A) revenue growth.
B) cost reduction.
C) asset utilization.
D) risk management.

Question 67

In the customer perspective, objectives and measures that drive the creation of customer value are

A) customer survey ratings.
B) post-purchase cost.
C) on-time deliveries.
D) all of the above.

Question 68

Which of the following is NOT a step in developing the Balanced Scorecard?

A) setting balanced objectives
B) outlining control procedures
C) setting target values
D) rewards

Question 69

Which of the following is NOT a measure commonly used to evaluate asset utilization?

A) return on investment
B) economic value added
C) market share
D) all of the above

Question 70

In the financial perspective, economic value added would be an appropriate measure for

A) revenue growth.
B) cost reduction.
C) improving asset utilization.
D) risk management.

Question 71

In the Balanced Scorecard system, core objectives and measures

A) are common across all organizations.
B) are common across all scorecard perspectives.
C) are common across departments.
D) none of the above.

Question 72

Stretch targets are

A) aimed at stretching the firm's resources.
B) aimed at static standards.
C) aimed at transforming the organization within three to five years if achieved.
D) aimed at transforming the organization immediately.

Question 73

An operational measure of quality is

A) defects per unit.
B) number of defective units.
C) pounds of scrap.
D) all of the above.

Question 74

Cycle time is

A) the time it takes to collect the account after the sale.
B) the time it takes to turn inventory over.
C) the time it takes to deliver the product after it is sold.
D) the time it takes to produce one unit of product.

Question 75

Strategy translation is concerned with

A) choosing general goals.
B) choosing the customer segments.
C) identifying measures, targets, and initiatives.
D) choosing the nature of the business.

Question 76

Which of the following is not a strategic theme of the financial perspective?

A) revenue growth
B) asset utilization
C) employee capability
D) risk management

Question 77

Business strategy is concerned with

A) choosing market and customer segments.
B) identifying critical internal and business processes.
C) selecting individual and organizational properties required.
D) all of the above.

Question 78

The time it takes to produce one unit of product is called

A) velocity.
B) delivery time.
C) cycle time.
D) turnover.

Question 79

Objectives for increasing revenue growth include

A) adopting a new pricing strategy.
B) reducing the cost per unit.
C) eliminating non-value-added activities.
D) reducing distribution channel cost.

Question 80

From the customer perspective, which of the following might be considered a core objective rather than a performance value?

A) decrease price
B) increase customer retention
C) improve image
D) improve product quality