Question 1

Which of the following statements BEST describes the purpose of the balanced scorecard approach?

Accepted Answer

The balanced scorecard approach is a strategic management tool that helps organizations to develop a set of performance measures in four key areas: customer, financial, internal business processes, and learning and growth. The purpose of this approach is to assist the organization in implementing its strategies, not just maximizing profits, operational efficiency, or shareholder wealth.

Question 2

Based on the variances shown on responsibility performance reports, management must take corrective action on all variances, including favorable, unfavorable, controllable, and uncontrollable variances.

Accepted Answer

Not all variances require corrective action. Favorable variances may not require action, and uncontrollable variances may not be able to be addressed by management. Only unfavorable, controllable variances should be addressed with corrective action.

Question 3

Which of the following is NOT a relevant performance indicator for the balanced scorecard's financial perspective?

Accepted Answer

Number of repeat customers is not a financial performance indicator, but rather a customer perspective indicator. The other options are all financial performance indicators that could be included in the balanced scorecard's financial perspective.

Question 4

Revenue center performance reports highlight ONLY flexible budget variances, whereas cost center performance reports include sales volume variances.

Accepted Answer

Cost center performance reports also only highlight flexible budget variances, not sales volume variances. Only profit center performance reports include both flexible budget and sales volume variances.

Question 5

A critical function of the performance report is to focus on which managers must take blame for unfavorable variances.

Accepted Answer

The purpose of the performance report is to provide information on the performance of the organization and identify areas where improvements can be made. It is not solely focused on blaming managers for unfavorable variances, but rather identifying the root causes of the variances and developing solutions to address them. Blaming managers for unfavorable variances can create a negative and defensive culture where individuals are more concerned with avoiding blame rather than finding solutions.

Question 6

Which of the following is a lagging indicator?

Accepted Answer

Lagging indicators are typically those that show the results after an event has occurred, such as financial performance. Operational performance, customer satisfaction, and employee training are all leading indicators as they can help predict future outcomes.

Question 7

Which of the following is FALSE about a balanced scorecard?

Accepted Answer

A balanced scorecard does not necessarily provide a starting point for creating company strategies, but rather helps to measure and monitor the success of the strategies that have already been implemented.

Question 8

Waycross Construction Company has a pipeyard operation which is run as a cost center. They are preparing a performance report for the month of March and have provided the data below:  How much is the percentage variance for Wages and benefits?

Accepted Answer

The answer of Waycross Construction Company has a pipeyard operation...

Question 9

Waycross Construction Company has a pipeyard operation which is run as a cost center. They are preparing a performance report for the month of March and have provided the data below:

Accepted Answer

The answer of Waycross Construction Company has a pipeyard operation...

Question 10

When measuring a company's performance, which of the following is NOT a lag indicator?

Accepted Answer

Lag indicators are backward-looking and report on past performance, while expected growth in future demand is a forward-looking indicator and thus not a lag indicator. Operating income, ratio analysis, and variance analysis are all examples of lag indicators as they report on past financial performance.

Question 11

In a balanced scorecard system, if financial profitability was one of the critical factors, which of the following would be a relevant KPI?

Accepted Answer

Revenue growth is a relevant KPI for financial profitability as it indicates the increase or decrease in revenue which directly affects the financial health of the organization. Production yield rate, market share, and employee training hours are not direct indicators of financial profitability.

Question 12

Which of the following is a relevant performance indicator for the balanced scorecard's learning and growth perspective?

Accepted Answer

The learning and growth perspective of the balanced scorecard focuses on the organization's ability to innovate, learn, and improve. Employee access to customer information indicates the organization's commitment to knowledge sharing and empowering employees with the necessary information to better serve customers. Earnings and revenue growth are more relevant to the financial perspective while percentage of on-time deliveries is more relevant to the internal business process perspective.

Question 13

Manufacturing cycle time is a measure pertaining to the balanced scorecard's:

Accepted Answer

Manufacturing cycle time is a measure of internal business perspective, as it reflects the efficiency and effectiveness of the internal manufacturing process. It can help identify potential bottlenecks and areas for improvement within the company's manufacturing operations.

Question 14

Managers of profit centers are responsible for generating revenue and controlling costs, so their performance reports include both revenues and expenses.

Accepted Answer

Managers of profit centers are responsible for generating revenue and controlling costs, so their performance reports include both revenues and expenses.

Question 15

Union Company's corporate payroll department is a cost center, and prepares monthly performance reports. Union uses the management by exception approach, based on the dollar amounts of the variances. Based on the performance report for the payroll department shown below, on which of the following variances would the company focus first for investigation and explanation?

Accepted Answer

Salary and benefits have the largest unfavorable variance of $25,000, indicating that the actual costs were significantly higher than the budgeted costs. This variance would be the first to investigate as it has the greatest impact on the overall performance of the payroll department. The other variances have either favorable variances or smaller unfavorable variances in comparison.

Question 16

Real-time feedback on quality is a measure pertaining to the balanced scorecard's:

Accepted Answer

The answer of Real-time feedback on quality is a measure...

Question 17

Westhaven Company has a warehousing unit which operates as a cost center. They prepare monthly performance reports. The report for February is shown here:
 Westhaven uses the management by exception approach. On which of the following variances would the company focus first for investigation and explanation?

Accepted Answer

The answer of Westhaven Company has a warehousing unit which...

Question 18

New product development time is a measure pertaining to the balanced scorecard's:

Accepted Answer

New product development time is a measure of the internal business perspective as it reflects the effectiveness and efficiency of the company's internal processes in developing new products.

Question 19

When companies use the management by exception approach, ONLY unfavorable variances are investigated.

Accepted Answer

Management by exception involves investigating both unfavorable and favorable variances to understand why they occurred and to improve future performance.

Question 20

Customer satisfaction, operational efficiency, and employee excellence are the three primary considerations when using the balanced scorecard approach.

Accepted Answer

The balanced scorecard approach focuses on four perspectives: financial, customer, internal business processes, and learning and growth.

Quiz 24: Performance Evaluation and the Balanced Scorecard

Which of the following statements BEST describes the purpose of the balanced scorecard approach?

Based on the variances shown on responsibility performance reports, management must take corrective action on all variances, including favorable, unfavorable, controllable, and uncontrollable variances.

Which of the following is NOT a relevant performance indicator for the balanced scorecard's financial perspective?

Revenue center performance reports highlight ONLY flexible budget variances, whereas cost center performance reports include sales volume variances.

A critical function of the performance report is to focus on which managers must take blame for unfavorable variances.

Which of the following is a lagging indicator?

Which of the following is FALSE about a balanced scorecard?

Waycross Construction Company has a pipeyard operation which is run as a cost center. They are preparing a performance report for the month of March and have provided the data below: How much is the percentage variance for Wages and benefits?

Waycross Construction Company has a pipeyard operation which is run as a cost center. They are preparing a performance report for the month of March and have provided the data below:

When measuring a company's performance, which of the following is NOT a lag indicator?

In a balanced scorecard system, if financial profitability was one of the critical factors, which of the following would be a relevant KPI?

Which of the following is a relevant performance indicator for the balanced scorecard's learning and growth perspective?

Manufacturing cycle time is a measure pertaining to the balanced scorecard's:

Managers of profit centers are responsible for generating revenue and controlling costs, so their performance reports include both revenues and expenses.

Real-time feedback on quality is a measure pertaining to the balanced scorecard's:

New product development time is a measure pertaining to the balanced scorecard's:

When companies use the management by exception approach, ONLY unfavorable variances are investigated.

Customer satisfaction, operational efficiency, and employee excellence are the three primary considerations when using the balanced scorecard approach.