Deck 14: Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Question 1

How can a manager evaluate the success of their strategy?

Answer 1

The manager must trace the sources of its profitability to product differentiation or cost leadership.

Question 2

How can a manager determine which strategy to follow?

Answer 2

Managers can develop a customer preference map to highlight the tradeoffs in any strategy.It shows the advantages of price,scalability,and customer service.

Question 3

________ specifies how an organization matches its own capabilities with the opportunities in the marketplace to accomplish its objectives.

A)Strategy
B)Competition
C)Centralization
D)Consolidation
E)Industry analysis

Answer 3

A

Question 4

Which one of the following is not one of the five forces that managers focus on in industry analysis?

A)Competitors.
B)Potential entrants into the market.
C)Equivalent products.
D)Bargaining power of customers.
E)Product differentiation.

Question 5

________ aid(s)managers in rethinking business practices and improving performance on measures such as cost,quality,service,speed,and customer satisfaction.

A)Designs
B)Schemes
C)Satisfaction
D)Determination
E)Reengineering

Question 6

Why do managers adopt cost strategies?

Question 7

Managers use product differentiation strategies to decrease brand loyalty and charge lower prices.

Question 8

Managers do not need to train workers in quality-management techniques to identify root causes of defects because they do not take action to improve quality.

Question 9

Which of the following is not true about the customer-relationship manager?

A)Responsible for consumers.
B)Negotiates long-term contracts.
C)Negotiates only short-term contracts.
D)Works with others to specify delivery schedules.
E)Works closely with consumers and manufacturing departments.

Question 10

When managers reduce defect rates and improve manufacturing yields,they ________.

A)reduce product quality
B)improve product quality
C)eliminate product quality
D)do not impact product quality
E)encourage waste and profit reductions

Question 11

Which of the following is not true about the success of reengineering processes?

A)Managers focus on one process.
B)Managers use information technology.
C)Managers focus on multiple processes.
D)Managers focus on the change of roles and responsibilities.
E)Managers focus on eliminating unnecessary activities and tasks.

Question 12

Which of the following is not true about the five forces in industry analysis?

A)The collective effect of the forces shapes an organization's profit potential.
B)Profit potential decreases with greater competition.
C)Profit potential decreases with stronger potential entrants.
D)Profit potential decreases with products that are similar.
E)Profit potential increases with products that are similar.

Question 13

An organization's ability to achieve lower costs relative to competitors through productivity and efficiency improvements,elimination of waste,and tight cost control is:

A)cost leadership.
B)consumer relations.
C)product differentiation.
D)bargaining power of consumers.
E)bargaining power of suppliers.

Question 14

What is the purpose of the x-axis and the y-axis on the customer preference map?

Question 15

Managers can achieve cost leadership if they build internal capabilities by reengineering the processes in an organization.

Question 16

An organization's ability to offer products or services its customers perceive to be superior,or unique,relative to products or services of its competitors is:

A)competition.
B)cost leadership.
C)equivalent products.
D)product differentiation.
E)bargaining power of customers.

Question 17

Which of the following is true about cost leadership?

A)Lower cost relative to competitors.
B)Offers different products or services.
C)Differentiation through innovative products.
D)Differentiation through careful development and promotion of brands.
E)Organizational managers can increase brand loyalty and charge higher prices.

Question 18

Small profit margins and high capital costs in organizations can discourage potential new entrants into a market.

Question 19

Managers reduce defect rates and improve manufacturing yields to improve product quality.

Question 20

Reengineering efforts result in all of the following except:

A)improve costs.
B)enhance product quality.
C)improve service operations.
D)improve speed of operations.
E)reduce level of customer service.

Question 21

Which of the following is a perspective the scorecard uses to measure the internal operations that create value for customers?

A)Financial.
B)Customer.
C)Learning and Growth.
D)Internal Business Process.
E)External Business Process.

Question 22

Which of the following is not a result of empowering the workforce and process improvement?

A)A process that improves delivery dates.
B)A process that improves post-sale services.
C)An improvement in manufacturing quality and productivity.
D)A reduction in the amount of time it takes to deliver products to consumers.
E)An increase in the amount of time it takes to deliver products to consumers.

Question 23

Which of the following is not an initiative of the internal-business-process perspective?

A)Improve customer-service process.
B)Identify root causes of problems and improve quality.
C)Reengineer order-delivery process.
D)Supervisors act as coaches rather than decision makers.
E)Organize from manufacturing and sales to modify processes.

Question 24

An increase in customer satisfaction,as measured by customer surveys and repeat purchases,signals ________.

A)a well implemented marketing plan
B)a successful quality control program
C)an efficient and capable organization
D)an economic up-turn in the market
E)a strong likelihood of higher sales and income in the future

Question 25

What is reengineering?

Question 26

Not only does the balanced scorecard focus on achieving financial objectives,it also highlights ________.

A)individual recognition
B)personal responsibility
C)nonfinancial objectives
D)progressive hiring practices
E)successful marketing measures

Question 27

Why do managers choose to form cross-functional teams?

Question 28

Why do managers at organizations build internal capabilities by reengineering processes?

Question 29

Which of the following is a perspective the scorecard uses to measure the success of the company in its target market?

A)Financial.
B)Customer.
C)Learning and Growth.
D)Internal Business Process.
E)External Business Process.

Question 30

The financial perspective of the balanced scorecard focuses on which of the following ideas?

A)The profits and value created for shareholders.
B)The success of the company in its target market.
C)The people and system capabilities that support operations.
D)The internal operations that create value for customers.
E)The debt associated with the organization.

Question 31

Which of the following is not true about benchmarking data in the internal-business-process perspective?

A)The data is gathered from published financial statements.
B)The data is gathered from information about prevailing prices.
C)The data is gathered from suppliers.
D)The data is gathered from former employees.
E)The data is gathered from a random research group.

Question 32

Which of the following is not an internal business-process perspective at Chipset,Inc.?

A)Improve processes.
B)Improve post-sales service.
C)Improve manufacturing capability.
D)Meet specified delivery dates.
E)Eliminate profits in 2013.

Question 33

The managers at Continental Classics,a women's specialty clothing store,lost customers because the quality of their products and the cycle time for orders became less predictable.Consumers received late orders,and damaged packages,and some orders were not received by the consumers.What should the manager do to improve the business process?

Question 34

The balanced scorecard reduces managers' emphasis on ________,such as quarterly earnings.

A)internal conflicts
B)incentive driven success
C)organizational awareness
D)short-run financial performance
E)long-run financial performance

Question 35

Which of the following is a perspective the scorecard uses to measure the profits and value created for the shareholder?

A)Financial.
B)Customer.
C)Learning and Growth.
D)Internal Business Process.
E)External Business Process.

Question 36

The ________ translates an organization's mission and strategy into a set of performance measures that provide the framework for implementing its strategy.

A)agenda
B)program
C)mission statement
D)balanced scorecard
E)equivalence scorecard

Question 37

A useful first step in designing a balanced scorecard is a ________.

A)financial map
B)strategy map
C)mission statement
D)thorough inventory
E)company prospectus

Question 38

A ________ is a diagram that describes how an organization creates value by connecting strategic objectives in explicit cause-and-effect relationships with each other in the financial,customer,internal business process,and learning and growth perspectives.

A)financial map
B)strategy map
C)mission statement
D)company prospectus
E)balanced scorecard

Question 39

Which of the following is not one of the four perspectives of the balanced scorecard?

A)Financial perspective.
B)Customer perspective.
C)External control perspective.
D)Learning and growth perspective.
E)Internal business process perspective.

Question 40

Which of the following is a perspective the scorecard uses to measure the people and system capabilities that support operations?

A)Financial.
B)Customer.
C)Learning and Growth.
D)Internal Business Processes.
E)External Business Processes.

Question 41

Financial measures simply serve as leading indicators for the hard-to-measure short-run financial performance.

Question 42

Why do companies consider a balanced scorecard a linked,or causal,scorecard?

Question 43

Which of the following is not a pitfall to avoid in implementing a balanced scorecard?

A)Managers always assume the cause-and-effect linkages are precise.
B)Manages should not assume the cause-and-effect linkages are precise.
C)Managers should not seek improvements across all of the measures all of the time.
D)Managers should not use only objective measures in the balanced scorecard.
E)Despite challenges of measurement,top management should not ignore nonfinancial measures when evaluating managers and other employees.

Question 44

Which of the following components measures the change in costs attributable to a change in the quantity of inputs used?

A)Growth.
B)Strategy.
C)Organic.
D)Productivity.
E)Price recovery.

Question 45

The measures that a company uses to track performance depend on its strategy;this is called a "balanced scorecard."

Question 46

The growth component of the change in operating income measures the increase in revenues minus the increase in costs of selling more units.

Question 47

How do managers evaluate the success or failure of their strategy and its implementation?

Question 48

Which of the following is not a measure of the internal-business process perspective?

A)Yield.
B)On-time delivery.
C)Order-delivery time.
D)Service response time.
E)Employee-satisfaction ratings.

Question 49

Which of the following components measures the change in operating income attributable solely to the change in the quality of output sold?

A)Growth.
B)Strategy.
C)Organic.
D)Productivity.
E)Price recovery.

Question 50

To evaluate the success of a strategy,managers and management accountants need to link ________ to the sources of operating-income increases?

A)goals
B)strategy
C)functions
D)fiscal cliff
E)debt ceilings

Question 51

Which of the following components measures the change in operating income attributable solely to changes in prices of inputs and outputs?

A)Growth.
B)Strategy.
C)Organic.
D)Productivity.
E)Price recovery.

Question 52

Companies frequently use balanced scorecards to evaluate and reward managerial performance and to influence managerial behavior.

Question 53

In for-profit companies,the primary goal of the balanced scorecard is to implement short-run successful financial performance.

Question 54

The growth component measures change in output prices compared with changes in input prices.

Question 55

Which of the following is not a measure of the learning-and-growth perspective?

A)Employee-satisfaction ratings.
B)Percentage of line workers empowered to manage processes.
C)Percentage of employees trained in process and quality management.
D)Percentage of processes with advanced controls.
E)Percentage of manufacturing processes with real-time feedback.

Question 56

Which of the following is not an initiative of the learning-and-growth perspective?

A)Employee training programs.
B)Improve online and offline data gathering.
C)Have supervisors act as coaches rather than decision makers.
D)Organize teams from manufacturing and sales to modify processes.
E)Employee participation and suggestions program to build teamwork.

Question 57

Which of the following is not a feature of a good balanced scorecard?

A)It tells the story of a company's strategy.
B)The balanced scorecard helps to communicate strategy to all members of the organization.
C)In for-profit companies,the balanced scorecard must motivate managers to take actions that eventually result in improvements in financial performance.
D)The balanced scorecard increases the number of measures,identifying smaller measures.
E)The balanced scorecard highlights less-than-optimal tradeoffs that managers may make when they fail to consider operational and financial measures together.

Question 58

How do gains in the learning-and-growth perspective lead to superior financial performance?

Question 59

One difference between variance analysis and subdividing the change in operating income is that management accountants compare actual operating performance ________,not actual to budgeted numbers in the same period as in variance analysis.

A)over one period
B)over two different periods
C)in one fiscal year
D)in two fiscal years
E)over three different periods

Question 60

Why are more companies in the manufacturing,merchandising,and service sectors giving greater weight to nonfinancial measures when employees are promoted?

Question 61

The managerial accountant at Consumer Candy Company is assessing a sales volume variance between fiscal years 2011 and 2012.In 2011,sales volume was 1,670,000 cases of mixed candy;and,in 2012,a sales volume of 1,495,000 was recorded.The price per case of Candid Candy Mixed Candy was $68.42 for both years.
Required
Compute the revenue effect of growth in 2011 and 2012.Identify whether the variance is favorable,F,or unfavorable,U.

A)$4,973,000 F
B)$11,973,500 U
C)$9,785,000 F
D)$11,973,500 F
E)$9,785,000 U

Question 62

Engineered costs result from a cause-and-effect relationship between the cost driver and the ________.

A)resources used to produce that output
B)unused capacity of productivity
C)operating performance
D)sales-volume variance
E)variable cost per unit

Question 63

Sun-Bright Fixtures Company is evaluating a change in operating income between 2012 and 2013.Management has compiled the following data:

Required
Compute the operating incomes for 2012 and 2013 and the change in operating income.Identify whether the change is a favorable change,F,or an unfavorable,U,variance.

A)2011=$2,890,000 and 2012=$4,360,200;$985,000;U
B)2011=$3,725,000 and 2012=$4,360,000;$635,000;U
C)2011=$3,940,000 and 2012=$4,500,000;$1,850,00;F
D)2011=$1,030,000 and 2012=$1,000,000;$30,000;U
E)2011=$1,000,000 and 2012=$1,030,000;$30,000;F

Question 64

Why is it important for managers to further analyze the changes in operating income?

Question 65

Andes Ski Company management is considering the cost effect of growth for conversion costs if they produce the same amount of products in 2013 as they did in 2012.In 2012,the company produced 580,000 pairs of skis at a cost of $180 per pair.
Required
Compute the cost effect of growth for conversion costs at Andes Ski Company for an identical output between 2012 and 2013.

A)$0
B)$40,630
C)$980,250
D)$630,000
E)$2,566,300

Question 66

Wilderness Travels Bicycle Company's had a change in management.The new managerial accountant reviews the variance in units sold in 2011 compared to 2012 to assess the revenue effect of growth that occurred in sales volume.In 2011,2,460,000 units were sold;and,2,632,000 were sold in 2012,while the price per unit is set at $69.99.
Required
Compute the revenue effect of growth in 2011 and 2012.Indicate whether the difference is a favorable,or unfavorable,U,variance.

A)$12,038,280 F
B)$9,045,254 U
C)$3,695,250 F
D)$14,982,000 U
E)$2,358,000 F

Question 67

In which step of the five-step decision-making framework does a manager conclude he/she cannot develop new and innovative products in a cost-effective way?

A)Step 1: Identify the Problem and Uncertainties.
B)Step 2: Obtain Information.
C)Step 3: Make Predictions About the Future.
D)Step 4: Make Decisions by Choosing Among the Alternatives.
E)Step 5: Implement the Decision,Evaluate Performance and Learn.

Question 68

In which step of the five-step decision-making framework does a manager develop a customer preference map and gather data on the internal capabilities of the company?

A)Step 1: Identify the Problem and Uncertainties.
B)Step 2: Obtain Information.
C)Step 3: Make Predictions About the Future.
D)Step 4: Make Decisions by Choosing Among Alternatives.
E)Step 5: Implement the Decision,Evaluate Performance and Learn.

Question 69

Discretionary costs have two important features.The first feature arises from periodic decisions regarding the maximum amount to be incurred.The second feature is it has no measurable cause-and-effect relationship between output and ________.

A)resources available
B)discrete differences in sales volume
C)market costs
D)budgetary estimates
E)resources used

Question 70

To understand unused capacity,it is necessary to distinguish engineered costs and ________.

A)elective costs
B)facultative costs
C)optional costs
D)unrestricted costs
E)discretionary costs

Question 71

The managerial accountant at Oklahoma Aqua-Systems needs to compute the change in operating income from 2011 to 2012.The operating income of 2011 was $2,356,000,and the revenues were $4,000,000.In 2012 the operating income was calculated to be $2,246,000 while the revenues totaled $4,200,000.
Required
Compute the change in operating income in 2011 and 2012.Identify whether the variance is favorable,F,or unfavorable,U.

A)$420,000 U
B)$310,000 F
C)$1,352,000 F
D)$805,000 F
E)$648,000 U

Question 72

Why is it beneficial for managers to master the strategic analysis of operating income?

Question 73

The management accountant at Arlington Hills,a transcontinental private school company,is assessing the change in operating incomes for 2011 and 2012.The revenue in 2011 was $34,000,000 while the operating income was $17,564,000.The revenue in 2012 was $36,000,000,and the operating income was $14,100,000.
Required
Compute the change in operating income in 2000 and 2011.Identify whether the change is a favorable,F,or unfavorable,U,variance.

A)$5,464,000 F
B)$5,624,000 U
C)$3,985,202 F
D)$103,030 U
E)$106,200 F

Question 74

In which step of the five-step decision-making framework does a manager compare actual performance to targeted performance on the balanced scorecard?

A)Step 1: Identify the Problem and Uncertainties.
B)Step 2: Obtain Information.
C)Step 3: Make Predictions About the Future.
D)Step 4: Make Decisions by Choosing Among the Alternatives.
E)Step 5: Implement the Decision,Evaluate Performance and Learn.

Question 75

In 2011,Double-Time Motor Company sold 60,000 exhaust system enhancement brackets at $43.25 per bracket.In 2012,when an equal amount is ordered,the cost of the same bracket has increased to $118.60 because there is limited supply on the market.
Required
Compute the revenue effect of price recovery in the brackets in 2011 and 2012.Indicate whether the variance is favorable,F,or unfavorable,U.

A)$1,220,452 U
B)$4,521,000 F
C)$3,220,000 F
D)$4,521,000 U
E)$3,220,000 U

Question 76

Downsizing,also called ________,is an integrated approach of configuring processes,products and people to match cost to the activities that need to be performed to operate effectively and efficiently in the present and future.

A)retrenching
B)trimming
C)rightsizing
D)curtailing
E)out-phasing

Question 77

The following data was compiled for Hard-Rock Concrete Company:

Required
Compute the operating income for 2011 and 2012.Next,compute the revenue effect in growth and indicate whether the growth in favorable,F,or unfavorable,U.

A)2011=$3,960,000;2012=$236,000;$2,974,000 F
B)2011=$2,856,000;2012=$1,360,000;$3,025,000 U
C)2011=$4,105,000;2012=$131,000;$4,236,000 U
D)2011=$3,241,000;2012=$126,000;$4,250,000 U
E)2011=$3,025,000;2012=$125,000;$4,250,000 F

Question 78

In which step of the five-step decision-making framework does a manager realize that strategy choice depends on resolving whether the company can add value to its customers that its competitors cannot and whether the organization can develop needed internal capabilities to add value to the firm?

A)Step 1: Identify the Problem and Uncertainties.
B)Step 2: Obtain Information.
C)Step 3: Make Predictions About the Future.
D)Step 4: Make Decisions by Choosing Among Alternatives.
E)Step 5: Implement the Decision,Evaluate Performance,and Learn.

Question 79

In 2011,Monarch Aircraft Company sold 36,000 jet panels at $8,000 per panel.In 2012,Monarch lowered the price per panel as a result of unforeseen market forces to $6,000,but sold an equal number of panels.
Required
Compute the revenue effect of price recovery in 2011 and 2012.Was the variance favorable,F,or unfavorable,U?

A)$72,000,000 F
B)$7,200,000 F
C)$72,000,000 U
D)$7,200,000 U
E)$720,000 U

Question 80

In which step of the five-step decision-making framework does a manager decide to follow a cost-leadership rather than a product-differentiation strategy?

A)Step 1: Identify the Problem and Uncertainties.
B)Step 2: Obtain Information.
C)Step 3: Make Predictions About the Future.
D)Step 4: Make Decisions by Choosing Among the Alternatives.
E)Step 5: Implement the Decision,Evaluate Performance and Learn.