Question 1

List the five-step feedback model of the evaluation and control process.

Accepted Answer

The answer of List the five-step feedback model of the...

Question 2

Stickiness and eyeballs are two non-financial performance measures used by Internet business ventures.

Accepted Answer

Stickiness refers to the ability of a website to keep visitors engaged and on the site for longer periods of time, while eyeballs refers to the number of people who visit a website. Both are commonly used non-financial performance measures in the world of Internet business.

Question 3

A responsibility center which measures performance in terms of the difference between revenues (which measure production) and expenditures (which measure resources) is a(n)
A) investment center.
B) revenue center.
C) expense center.
D) profit center.
E) standard cost center.

Accepted Answer

A profit center measures its performance in terms of the difference between revenues and expenditures, which is profit. Therefore, a profit center is the responsibility center that is being described in this question.

Question 4

A responsibility center which measures resources in dollars without consideration of service or product costs is called a(n)
A) investment center.
B) revenue center.
C) expense center.
D) profit center.
E) standard cost center.

Accepted Answer

An expense center is focused on measuring and controlling costs (resources in dollars) without directly considering the costs of services or products produced. It is primarily concerned with minimizing expenses or staying within budgetary constraints.

Question 5

What is the most commonly used measure of corporate performance (in terms of profits)? Discuss the limitations of using this measure.

Accepted Answer

The answer of What is the most commonly used measure...

Question 6

The revenue center is measured in terms of efficiency.

Accepted Answer

The revenue center is measured in terms of profitability, not efficiency.

Question 7

Management audits have been developed to evaluate activities such as corporate social responsibility,functional areas such as the marketing department,and divisions such as the international division.

Accepted Answer

Management audits can be used to evaluate various areas and activities within an organization, including corporate social responsibility, marketing, and international divisions. Therefore, the statement is true.

Question 8

What is the difference between EVA and MVA?

Accepted Answer

The answer of What is the difference between EVA and...

Question 9

Distinguish between behavior and output controls.Provide examples of each.

Accepted Answer

The answer of Distinguish between behavior and output controls.Provide examples...

Question 10

Unlike ROI,managers cannot manipulate the numbers of EVA.

Accepted Answer

EVA (Economic Value Added) calculations can also be subject to manipulation through the choice of capital charge rate, adjustments in capital employed, and operating income adjustments, similar to how ROI (Return on Investment) figures can be influenced by managerial decisions and accounting practices.

Question 11

Return on investment (ROI) is the most widely used measure of performance in what responsibility center?
A) revenue center
B) expense center
C) investment center
D) profit center
E) standard cost center

Accepted Answer

ROI is used to evaluate the performance of an investment center, which is responsible for managing investments in long-term assets or projects that generate revenue for the organization. A revenue center is responsible for generating revenue, an expense center is responsible for managing costs, a profit center is responsible for generating profit, and a standard cost center is responsible for managing and controlling costs based on standard costs.

Question 12

The balanced scorecard approach to evaluation and control assigns to each goal/objective in an area one or more measures that are each essential for achieving a desired strategic option.These measures are called
A) critical success factors.
B) strategic factors.
C) key performance measures.
D) behavioral measures.
E) responsibility centers.

Accepted Answer

The measures assigned to each goal/objective in the balanced scorecard approach are referred to as key performance measures. These measures are considered essential for achieving the desired strategic option and help to evaluate and control the success of the organization's performance. Option A (critical success factors) and Option B (strategic factors) are related concepts but do not specifically refer to the measures assigned in the balanced scorecard approach. Option D (behavioral measures) and Option E (responsibility centers) are not relevant to the balanced scorecard approach to evaluation and control.

Question 13

Which of the following is not descriptive of responsibility centers?
A) They are used to the extent that they can isolate specific functional units such as R&D.
B) Each responsibility center has its own budget and is evaluated on its use of budgeted resources.
C) The responsibility center coordinates all the functional areas and project developments to implement the strategic decision plan.
D) The center uses resources to produce a service or a product.
E) A responsibility center is headed by the manager responsible for the center's performance.

Accepted Answer

Responsibility centers are typically not responsible for coordinating all functional areas and project developments. Instead, they are focused on a specific area within the organization and are evaluated based on their budgeted resources and performance in delivering products or services.

Question 14

The comparison of the expected cost of production against the actual cost of production typically occurs in the
A) investment center.
B) revenue center.
C) standard cost center.
D) profit center.
E) expense center.

Accepted Answer

The comparison of expected cost of production against actual cost of production is typically done in a standard cost center. Standard costs are predetermined in these centers which help in comparing expected costs to actual costs for controlling and analysis purposes. The other options mentioned such as revenue center, investment center, profit center, and expense center are not directly related to cost comparison analysis.

Question 15

EVA may eventually replace ROI as the standard performance measure.

Accepted Answer

EVA (Economic Value Added) is considered a more comprehensive measure of performance as it takes into account both the cost of capital and the return on investment. This means that it provides a more accurate picture of the value added by a company's operations, and is therefore becoming increasingly popular as a performance measure. ROI (Return on Investment), on the other hand, only measures the return earned on an investment relative to its cost, and does not consider the cost of capital. While ROI will likely remain a widely used performance measure, EVA may eventually replace it as the standard due to its more comprehensive nature.

Question 16

What responsibility center is judged for effectiveness rather than efficiency?
A) investment center
B) revenue center
C) standard cost center
D) profit center
E) expense center

Accepted Answer

Revenue centers are primarily judged based on their effectiveness in generating sales or revenue, rather than on their efficiency in using resources. Efficiency is more closely associated with cost or expense management, which is not the primary focus of a revenue center.

Question 17

Which of the following is not one of the areas in which goals or objectives should be developed for use in the balanced scorecard approach?
A) customer
B) innovation and learning
C) financial
D) stakeholder
E) internal business perspective

Accepted Answer

Stakeholder is not one of the areas in which goals or objectives should be developed for use in the balanced scorecard approach. The other four areas - customer, innovation and learning, financial, and internal business perspective - are key components of the balanced scorecard approach.

Question 18

The balanced scorecard combines financial measures that tell the results of actions already taken with operational measures on customer satisfaction,internal processes,and the corporation's innovation and improvement activities.

Accepted Answer

This statement accurately describes the concept of the balanced scorecard, which involves using a variety of metrics to evaluate and manage a company's performance across multiple dimensions. These metrics include both financial and non-financial measures, and are typically organized into four categories: financial, customer, internal business processes, and learning and growth. By considering each of these areas in a balanced and integrated way, companies can gain a more comprehensive understanding of their performance and identify opportunities for improvement.

Question 19

A type of responsibility center which is typically established whenever an organizational unit has control over both its resources and its products or services is a(n)
A) investment center.
B) revenue center.
C) expense center.
D) profit center.
E) standard cost center.

Accepted Answer

A profit center is responsible for generating revenues and controlling costs, including the resources used to produce goods or services. This type of center has the authority to make decisions and is responsible for its own profits or losses. This type of center is suitable for an organizational unit that has both control over its resources and produces goods or services.

Question 20

A multidivisional corporation like GE would tend to use what type of responsibility center?
A) expense center
B) investment center
C) profit center
D) standard cost center
E) revenue center

Accepted Answer

A multidivisional corporation like GE would use an investment center as it allows each division to be evaluated based on its ability to generate profits and efficiently use its assets, aligning with the corporation's overall strategic goals.

Quiz 12: Evaluation and Control

List the five-step feedback model of the evaluation and control process.

Stickiness and eyeballs are two non-financial performance measures used by Internet business ventures.

A responsibility center which measures performance in terms of the difference between revenues (which measure production) and expenditures (which measure resources) is a(n)

A responsibility center which measures resources in dollars without consideration of service or product costs is called a(n)

What is the most commonly used measure of corporate performance (in terms of profits)? Discuss the limitations of using this measure.

The revenue center is measured in terms of efficiency.

Management audits have been developed to evaluate activities such as corporate social responsibility,functional areas such as the marketing department,and divisions such as the international division.

What is the difference between EVA and MVA?

Distinguish between behavior and output controls.Provide examples of each.

Unlike ROI,managers cannot manipulate the numbers of EVA.

Return on investment (ROI) is the most widely used measure of performance in what responsibility center?

The balanced scorecard approach to evaluation and control assigns to each goal/objective in an area one or more measures that are each essential for achieving a desired strategic option.These measures are called

Which of the following is not descriptive of responsibility centers?

The comparison of the expected cost of production against the actual cost of production typically occurs in the

EVA may eventually replace ROI as the standard performance measure.

What responsibility center is judged for effectiveness rather than efficiency?

Which of the following is not one of the areas in which goals or objectives should be developed for use in the balanced scorecard approach?

The balanced scorecard combines financial measures that tell the results of actions already taken with operational measures on customer satisfaction,internal processes,and the corporation's innovation and improvement activities.

A type of responsibility center which is typically established whenever an organizational unit has control over both its resources and its products or services is a(n)

A multidivisional corporation like GE would tend to use what type of responsibility center?