Deck 18: Performance Measurement to Support Business Strategy

Question 1

Partial factor productivity is the ratio of the value of output to the value of all key inputs.This is total factor productivity.

Answer 1

False

Question 2

The number of defective units is an example of a subjective performance measure.This is an objective measure.

Answer 2

False

Question 3

Improving the efficiency of the manufacturing cycle involves decreasing the time spent processing a good.Efficiency is improved by reducing the time spent moving,storing,and inspecting the product.

Answer 3

False

Question 4

A balanced scorecard uses only nonfinancial measures to determine how well the organization is doing in view of competing stakeholder concerns.Financial and nonfinancial measures are used.

Question 5

A balanced scorecard is basically a balance sheet prepared using nonfinancial measures.A balanced scorecard is more than multiple performance measures.

Question 6

The concept of a balanced scorecard is to measure how well the organization is doing from the view of employees,suppliers,customers,business partners,and the community,as well as the shareholders.This is the basic idea behind the balanced scorecard.

Question 7

Employees empowered with real decision-making authority are more likely to be more responsive to customer concerns.They have the ability to satisfy customer demands.

Question 8

A business model is a description of how different levels and employees in the organization must perform for the organization to achieve its goals and objectives.This is the definition of a business model.

Question 9

One question that an organization's mission statement should answer is how the organization will evaluate its performance relative to its competitors.A mission statement describes internal values and responsibilities.

Question 10

One disadvantage of using nonfinancial measures to evaluate performance is that they are only available on a monthly,quarterly,or annual basis.They are available in shorter time periods or in real-time.

Question 11

In general,the use of multiple measures to evaluate performance is better than the use of a single performance measure.Single measures can only reflect a single characteristic while a manager's job is multi-faceted.

Question 12

Continuous improvement involves the search for and implementation of the best way to do something as practiced by other organizations or in other parts of one's own organization.This is benchmarking.

Question 13

Employee involvement in setting performance objectives is likely to increase the employee's commitment to the organization.The employee has a sense of ownership.

Question 14

One reason financial measures are used to evaluate performance is that they are easily quantifiable.Financial measures by definition are quantitative.

Question 15

In general,performance measures-financial and nonfinancial-should relate to what managers at different levels control.Managers should be measured on what they can control.

Question 16

One advantage of nonfinancial measures is that managers directly involved in operations are likely to understand them.The managers understand the components of the measures.

Question 17

One of the important guidelines of benchmarking is to not benchmark everything at the best-in-the-business level;no organization can be the best at everything.This is a true concept.

Question 18

Manufacturing cycle time is the total time involved in processing,moving,storing,and inspecting a good or providing a service.This is the definition of manufacturing cycle time.

Question 19

The primary objective of benchmarking is to evaluate performance of an activity,operation,or organization relative to the performance by other companies.This is a basic definition of benchmarking.

Question 20

In general,all managers in a given organization are responsible for the same things and should be evaluated using the same financial and nonfinancial measures.Managers are responsible for diverse operations and need specialized measures.

Question 21

In the balanced scorecard,the financial perspective addresses which of the following questions?

A)"To achieve our mission,how will we sustain our ability to change and improve?"
B)"To succeed financially,how should we appear to our shareholders?"
C)"To satisfy our shareholders and customers,in what business process must we excel?"
D)"To achieve our mission,how should we appear to our customers?"

Question 22

A balanced scorecard is a set of:

A)performance measures.
B)financial statements.
C)budget schedules.
D)annual reports.

Question 23

In the balanced scorecard,the customer perspective addresses which of the following questions?

A)"To achieve our mission,how will we sustain our ability to change and improve?"
B)"To succeed financially,how should we appear to our shareholders?"
C)"To satisfy our shareholders and customers,in what business process must we excel?"
D)"To achieve our mission,how should we appear to our customers?"

Question 24

In general,a balanced scorecard is used to evaluate an organization's performance using:

A)standard costs and variance analysis.
B)multiple financial and nonfinancial measures.
C)financial statements and ratio analysis.
D)the Board of Director's audit committee.

Question 25

Which of the following balanced scorecard perspectives focuses on shareholder's interests?

A)Financial.
B)Customer.
C)Internal Business Process.
D)Learning and growth.

Question 26

In the balanced scorecard,the learning and growth perspective addresses which of the following questions?

A)"To achieve our mission,how will we sustain our ability to change and improve?"
B)"To succeed financially,how should we appear to our shareholders?"
C)"To satisfy our shareholders and customers,in what business process must we excel?"
D)"To achieve our mission,how should we appear to our customers?"

Question 27

Which of the following statements is (are)false regarding financial measures? (A)In general,the use of multiple measures to evaluate performance is better than the use of a single performance measure.(B)Managers evaluated using multiple measures will most likely act differently than managers evaluated using single measures.

A)Only A is false.
B)Only B is false.
C)Both A and B are false.
D)Neither A nor B is false.

Question 28

Which of the following balanced scorecard perspectives focuses on quality and process improvement?

A)Financial.
B)Customer.
C)Internal Business Process.
D)Learning and growth.

Question 29

Which of the following statements is (are)true regarding financial measures? (A)One disadvantage of using financial measures to evaluate performance is that they are typically reported on a monthly,quarterly,or annual basis.(B)One reason financial measures are used to evaluate performance is that they are easily quantifiable.

A)Only A is true.
B)Only B is true.
C)Both A and B are true.
D)Neither A nor B is true.

Question 30

Which of the following balanced scorecard perspectives focuses on employee development?

A)Financial.
B)Customer.
C)Internal Business Process.
D)Learning and growth.

Question 31

Which of the following balanced scorecard perspectives focuses on customer service issues?

A)Financial.
B)Customer.
C)Internal Business Process.
D)Learning and growth.

Question 32

Which of the following statements is (are)false? (A)Internal,regional,and local benchmarks should be used for the most important processes and activities in an organization.(B)In general,the use of multiple measures to evaluate performance is better than the use of a single performance measure.

A)Only A is false.
B)Only B is false.
C)Both A and B are false.
D)Neither A nor B is false.

Question 33

In the balanced scorecard,the internal business process perspective addresses which of the following questions?

A)"To achieve our mission,how will we sustain our ability to change and improve?"
B)"To succeed financially,how should we appear to our shareholders?"
C)"To satisfy our shareholders and customers,in what business process must we excel?"
D)"To achieve our mission,how should we appear to our customers?"

Question 34

Benchmarks are used to evaluate the performance of an activity or operation relative to other organizations or other parts of one's own organization.Which of the following is not a guideline for using benchmarks to evaluate performance?

A)Benchmarks should only be used for nonfinancial measures.
B)Do not benchmark everything at the best-in-the-business level.
C)Benchmark only best-in-the-business activities that are important.
D)Use internal benchmarks for less important activities or operations.

Question 35

A business model attempts to minimize problems associated with:

A)decentralization.
B)divisional autonomy.
C)goal congruence.
D)maximizing profits.

Question 36

One of the results in using balanced scorecards is a shift from a focus on financial results to a focus on:

A)maximizing market share.
B)minimizing budgetary slack.
C)eliminating fraudulent behavior.
D)increasing customer satisfaction.

Question 37

A description of an organization's values,definition of its responsibilities to stakeholders,and identification of its major strategies is called its:

A)business-level strategy.
B)mission statement.
C)performance objectives.
D)master budget.

Question 38

Which of the following items is not part of the continuous improvement philosophy?

A)Eliminate activities that are nonvalue-added.
B)Improve the efficiency of activities that are value-added.
C)Use benchmarking to identify activities that need improvement.
D)Provide bonus incentives to managers for accurate performance reports.

Question 39

Which of the following nonfinancial measures would not be used to evaluate a middle manager's performance?

A)Frequency of meeting customer delivery requirements.
B)Amount of unwanted employee turnover.
C)Success in dealing with suppliers.
D)Fulfilling responsibilities to company shareholders.

Question 40

Which of the following is typically not considered an objective of quality control?

A)Reduce costs associated with customer complaints.
B)Reduce costs of honoring product or service warranty.
C)Increase customer satisfaction with product or service.
D)Increase the number of deliveries made when promiseD.Quality control is normally addressing product quality rather than delivery quality.

Question 41

Partial productivity measures are most closely related to what type of variances?

A)Price variances.
B)Sales mix variances.
C)Efficiency variances.
D)Production volume variances.

Question 42

An objective performance measure is one where:

A)different people will agree as to the appropriateness of a measure.
B)different people will agree as to the method to calculate the measure.
C)different managers will calculate a measure differently.
D)different managers will view the facts and come to different conclusion.

Question 43

Which of the following performance measures would be used to evaluate the personnel department performance?

A)Number of product recalls.
B)Percentage of late deliveries.
C)Number of requests for transfers.
D)Length of time to fill vacant positions.

Question 44

Manufacturing cycle efficiency is computed by dividing process time by:

A)moving time + storage time.
B)storage time + inspection time.
C)moving time + storage time + inspection time.
D)process time + inspection time + moving time.
E)process time + moving time + storage time + inspection time.

Question 45

Which of the following is a total factor productivity measure?

A)Tons output/tons of material used.
B)Units produced/machine hour.
C)Sales value/total cost.
D)Gallons output/direct labor hour.

Question 46

Which of the following is not a mistake often made when measuring nonfinancial performance?

A)Using subjective rather than objective measures.
B)Not linking measure to strategy.
C)Not validating links between activities and strategies.
D)Not setting appropriate performance targets.

Question 47

Functional performance measures differ from customer satisfaction performance measures in that they are used primarily to evaluate:

A)internal processes.
B)external processes.
C)benchmark processes.
D)continuous improvement processes.

Question 48

Employee involvement is important in an effective performance measurement system because it:

A)increases the employee's commitment to the organization and its objectives.
B)decreases the employee's reliance on financial performance measures.
C)increases the likelihood that goal congruence problems will occur.
D)decreases the chances of an unfavorable manufacturing cycle time.

Question 49

Partial productivity:

A)is a ratio of the value of output to the value of all key inputs.
B)is the same thing as the production volume variance.
C)focuses on an individual input.
D)includes materials and labor but not overheaD.Partial productivity looks at single inputs;total factor productivity includes a number of inputs rather than just one.

Question 50

Which of the following statements is(are)true regarding performance measures? (A)In general,objective performance measures are better than subjective performance measures.(B)In general,the use of multiple performance measures is better than the use of single performance measures.

A)Only A is true.
B)Only B is true.
C)Both A and B are true.
D)Neither A nor B is true.

Question 51

The ABC Manufacturing Company collected the following information (in days): What is the manufacturing cycle time?

A)14.0 days.
B)16.0 days.
C)22.0 days.
D)22.5 days.

Question 52

The ABC Manufacturing Company collected the following information (in days): What is the manufacturing cycle efficiency?

A)87.5%.
B)63.6%.
C)62.2%.
D)42.9%.

Question 53

Which of the following is not a partial productivity measure?

A)tons output/tons of material used.
B)sales value/total cost.
C)gallons output/direct labor hour.
D)units produced/machine hour.

Question 54

The Pepin Company collected the following information (in days): What is the manufacturing cycle efficiency?

A)28.6%.
B)64.5%.
C)71.4%.
D)90.9%.

Question 55

Which of the following is not a difficulty in implementing nonfinancial performance measurement systems?

A)Fixation on financial measures.
B)Reliability of the nonfinancial measures.
C)Nonfinancial measures decrease goal congruence.
D)Lack of correlation between nonfinancial measures and financial results.

Question 56

Total factor productivity:

A)is a ratio of the value of output to the value of all key inputs.
B)is the same thing as the production volume variance.
C)focuses on an individual input.
D)includes materials and labor but not overheaD.Total factor productivity includes a number of inputs rather than just one.

Question 57

If a manager wants to assess performance relative to the industry,it is best to use:

A)partial productivity measures.
B)production volume variances.
C)sales price variances.
D)total factor productivity.

Question 58

The Alma Company collected the following information (in days): What is the manufacturing cycle time?

A)61.5%.
B)72.7%.
C)87.0%.
D)27.3%.

Question 59

The Pepin Company collected the following information (in days): What is the manufacturing cycle time?

A)10 days.
B)31 days.
C)28 days.
D)22 days.

Question 60

A subjective performance measure is one where:

A)different people will agree as to the appropriateness of a measure.
B)different people will agree as to the method to calculate the measure.
C)different managers will calculate a measure the same.
D)different managers will view the facts and come to different conclusion.

Question 61

Brimson Forging Co.has provided the following information for last year: The total factor productivity measure is:

A)$480,000.
B)$375,000.
C)1.28.
D)0.78.

Question 62

The QRT Company collected the following information (in days): What is the manufacturing cycle efficiency?

A)87.5%.
B)82.4%.
C)70.9%.
D)17.6%.

Question 63

The Nelson Company collected the following information (in days): What is the manufacturing cycle efficiency?

A)100.0%.
B)82.2%.
C)63.1%.
D)76.5%.

Question 64

The Alma Company collected the following information (in days): What is the manufacturing cycle time?

A)21 days.
B)65 days.
C)55 days.
D)46 days.

Question 65

The Albertville Co.has the following information for last year: The partial productivity for material is:

A)1.136.
B)0.288.
C)0.263.
D)3.802.

Question 66

The Lutsen Machining Co.has the following information for last year: The partial productivity for metal is:

A)2.800.
B)1.400.
C)0.714.
D)0.526.

Question 67

Paro Products Co.has provided the following information for last year: The total factor productivity measure is:

A)$150,000.
B)$312,000.
C)1.154.
D)0.832.

Question 68

Palo Products has provided the following information for last year: The total factor productivity measure is:

A)1.25.
B)1.60.
C)15.63.
D)1.17.

Question 69

Scottso Enterprises has provided the following information for last year: The total factor productivity measure is:

A)1.003.
B)1.134.
C)0.882.
D)0.362.

Question 70

The Baxter Milling Co.has the following information for last year: The partial productivity for materials is:

A)0.131.
B)0.191.
C)0.686.
D)5.236.

Question 71

The QRT Company collected the following information (in days): What is the manufacturing cycle time?

A)39.5 days.
B)34.0 days.
C)32.0 days.
D)10.0 days.

Question 72

The Brindle Milling Co has the following information for last year The partial productivity for materials is

A)0.12
B)1.31
C)8.33
D)15.75

Question 73

The Albertville Co.has the following information for last year: The partial productivity for labor is:

A)0.097.
B)0.256.
C)3.906.
D)10.313.

Question 74

The Berdle Mining Co.has the following information for last year: The partial productivity for labor is:

A)1.120.
B)0.071.
C)14.06.
D)112.00.

Question 75

The Nelson Company collected the following information (in days): What is the manufacturing cycle time?

A)65 days.
B)34 days.
C)103 days.
D)85 days.

Question 76

Toimi Toolworks Co.has provided the following information for last year: The total factor productivity measure is:

A)1.231.
B)1.600.
C)2.167.
D)3.250.

Question 77

The Lutsen Machining Co.has the following information for last year: The partial productivity for labor is:

A)2.800.
B)2.000.
C)0.526.
D)0.500.

Question 78

The Cascade Machining Co.has the following information for last year: The partial productivity for labor is:

A)12.500.
B)2.000.
C)0.500.
D)0.120.

Question 79

The Cascade Machining Co.has the following information for last year: The partial productivity for metal is:

A)0.040.
B)0.080.
C)12.500.
D)25.000.

Question 80

The Thunder Mining Co.has the following information for last year: The partial productivity for labor is:

A)1.000.
B)0.069.
C)14.58.
D)12.00.