Chapter 23 Performance Measurement, Compensation, and Multinational Considerations

Chapter 23 Performance Measurement, Compensation, and Multinational Considerations

Objective 23.1

1) A report that measures financial and nonfinancial performance measures for various organization
units in a single report is called a(n):
A) balanced scorecard
B) financial report scorecard
C) imbalanced scorecard
D) unbalanced scorecard
Answer: A
Diff: 1
Terms: Balanced Scorecard
Objective: 1
AACSB: Reflective thinking

2) Customer-satisfaction measures are an example of the:
A) goal-congruence approach
B) balanced scorecard approach
C) financial report scorecard approach
D) investment success approach
Answer: B
Diff: 1
Terms: Balanced Scorecard
Objective: 1
AACSB: Reflective thinking

3) An example of a performance measure with a long-run time horizon is:
A) direct materials efficiency variances
B) overhead spending variances
C) number of new patents developed
D) All of these answers are correct.
Answer: C
Diff: 2
Terms: Balanced Scorecard
Objective: 1
AACSB: Reflective thinking




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,4) Does operating income best measure a subunit's financial performance? This question is considered
part of which step in designing an accounting-based performance measure?
A) Choose performance measures that align with top management's financial goals.
B) Choose the time horizon of each performance measure.
C) Choose a definition for each performance measure.
D) Choose a measurement alternative for each performance measure.
Answer: A
Diff: 2
Terms: Balanced Scorecard
Objective: 1
AACSB: Reflective thinking

5) Should assets be defined as total assets or net assets? This question is considered part of which step in
designing an accounting-based performance measure?
A) Choose performance measures that align with top management's financial goals.
B) Choose the time horizon of each performance measure.
C) Choose a definition for each performance measure.
D) Choose a measurement alternative for each performance measure.
Answer: C
Diff: 2
Terms: return on investment (ROI)
Objective: 1
AACSB: Reflective thinking

6) Should assets be measured at historical cost or current cost? This question is considered part of which
step in designing an accounting-based performance measure?
A) Choose performance measures that align with top management's financial goals.
B) Choose the time horizon of each performance measure.
C) Choose a definition for each performance measure.
D) Choose a measurement alternative for each performance measure.
Answer: D
Diff: 2
Terms: current cost, return on investment (ROI)
Objective: 1
AACSB: Reflective thinking

7) Which of the following statements about designing an accounting-based performance measure is
FALSE?
A) The steps may be followed in a random order.
B) The issues considered in each step are independent.
C) Management's beliefs are present during the analyses.
D) Behavioral criteria are important when evaluating the steps.
Answer: B
Diff: 2
Terms: Balanced Scorecard
Objective: 1
AACSB: Reflective thinking




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,8) Many common performance measures, such as customer satisfaction, rely on internal financial
accounting information.
Answer: FALSE
Explanation: Customer satisfaction would be obtained by surveys that are not in the financial
accounting records.
Diff: 1
Terms: Balanced Scorecard
Objective: 1
AACSB: Analytical skills

9) Some companies present financial and nonfinancial performance measures for various organization
units in a single report called the "balanced scorecard."
Answer: TRUE
Diff: 1
Terms: Balanced Scorecard
Objective: 1
AACSB: Analytical skills

10) The "balanced scorecard" in most organizations is broken down into the following categories:
financial perspective, customer perspective, internal business-process perspective, and productivity
perspective.
Answer: FALSE
Explanation: The "balanced scorecard" in most organizations is broken down into the following
categories: financial perspective, customer perspective, internal business-process perspective, and
learning-and-growth perspective.
Diff: 1
Terms: Balanced Scorecard
Objective: 1
AACSB: Reflective thinking

11) The first step in designing accounting based performance measures is to choose a target level of
performance and feedback mechanism.
Answer: FALSE
Explanation: The first step in designing accounting based performance measures is to choose
performance measures that align with top management's financial goals.
Diff: 1
Terms: performance measure
Objective: 1
AACSB: Reflective thinking




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Copyright © 2012 Pearson Education, Inc.

, 12) Assume you are evaluating a manufacturing company. Match the various organizational activities
and concepts with the performance measures listed. Some items may have more than one match.

Activities:
1. Change in revenues
2. Cycle time
3. Economic order quantity
4. Manufacturing defects
5. Market share
6. New products
7. On-time delivery
8. Operating income
9. Product reliability
10. Time-to-market

Performance measure:

__________ a. Profitability

__________ b. Customer satisfaction

__________ c. Innovation

__________ d. Efficiency, quality, and time
Answer:
1, 8 a. Profitability

5, 7, 9 b. Customer satisfaction

6, 10 c. Innovation

2, 3, 4, 7, 9, 10 d. Efficiency, quality, and time
Diff: 2
Terms: Balanced Scorecard
Objective: 1
AACSB: Analytical skills




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Copyright © 2012 Pearson Education, Inc.