Chapter 10. Performance Measurement
in Decentralized Organizations
questions with answers.
Which of the following statements is NOT a weakness of using return on investment (ROI) to evaluate
performance? ANS -ROI does not include the investment in nonoperating assets, such as land held for
investment or stock in other companies.
The manager of a(n) ______ center does not have control over revenue or the use of investment funds.
ANS -cost
Which of the following evaluation measures are used for investment center managers only -- not for
cost or profit center managers? ANS -- Residual income
- Return on Investment (ROI)
Residual income = ANS -Net Operating Income - (Average Operating Assets x Minimum Required Rate of
Return)
The manager of a(n) ________ center has control over both costs and revenues, but not over the use of
_____ funds. ANS -profit
investment
Choose the groups of performance measures typically used in the balanced scorecard approach. ANS --
Financial
- Customer
- Learning
- Growth
Assembling products and handling baggage are examples of ______ processes. ANS -internal business
, Which of the following statements is INCORRECT regarding the use of financial indicators as
performance measures? ANS -Financial performance is the responsibility of lower-level supervisors and
managers whoa re in charge of the company's daily operations.
Which of the following statements regarding a balanced scorecard is INCORRECT? ANS -The scorecard
should provide an opportunity for subordinates to evaluate their superiors
An integrated set of performance measures that are derived from the company's strategy is _____. ANS
-a balanced scorecard
The balanced scorecard: ANS -- links the organization's strategy to its financial budgets
- helps managers communicate the organization's strategy to their subordinates
- helps to ensure employees understand the organization's strategy
The balanced scorecard: ANS -- incorporates both financial and nonfinancial measures
- helps employees to understand the strategy of the company
- may include ROI and residual income in its coordinated system of performance measures
Using a balanced scorecard, top management can translate the company's vision and _____ into _____
measures that the employees can understand and influence. ANS -strategy
performance
Given a margin of 12%, sales of $150,000 and average operating assets of $90,000, the ROI is _____%
ANS -ROI = Margin x Turnover
ROI = (Net operating income/sales) * (Sales/Average operating assets)
in Decentralized Organizations
questions with answers.
Which of the following statements is NOT a weakness of using return on investment (ROI) to evaluate
performance? ANS -ROI does not include the investment in nonoperating assets, such as land held for
investment or stock in other companies.
The manager of a(n) ______ center does not have control over revenue or the use of investment funds.
ANS -cost
Which of the following evaluation measures are used for investment center managers only -- not for
cost or profit center managers? ANS -- Residual income
- Return on Investment (ROI)
Residual income = ANS -Net Operating Income - (Average Operating Assets x Minimum Required Rate of
Return)
The manager of a(n) ________ center has control over both costs and revenues, but not over the use of
_____ funds. ANS -profit
investment
Choose the groups of performance measures typically used in the balanced scorecard approach. ANS --
Financial
- Customer
- Learning
- Growth
Assembling products and handling baggage are examples of ______ processes. ANS -internal business
, Which of the following statements is INCORRECT regarding the use of financial indicators as
performance measures? ANS -Financial performance is the responsibility of lower-level supervisors and
managers whoa re in charge of the company's daily operations.
Which of the following statements regarding a balanced scorecard is INCORRECT? ANS -The scorecard
should provide an opportunity for subordinates to evaluate their superiors
An integrated set of performance measures that are derived from the company's strategy is _____. ANS
-a balanced scorecard
The balanced scorecard: ANS -- links the organization's strategy to its financial budgets
- helps managers communicate the organization's strategy to their subordinates
- helps to ensure employees understand the organization's strategy
The balanced scorecard: ANS -- incorporates both financial and nonfinancial measures
- helps employees to understand the strategy of the company
- may include ROI and residual income in its coordinated system of performance measures
Using a balanced scorecard, top management can translate the company's vision and _____ into _____
measures that the employees can understand and influence. ANS -strategy
performance
Given a margin of 12%, sales of $150,000 and average operating assets of $90,000, the ROI is _____%
ANS -ROI = Margin x Turnover
ROI = (Net operating income/sales) * (Sales/Average operating assets)
