Chapter 24
Performance Evaluation and the
Balanced Scorecard
Short Exercises
(5 min.) S 24-1
Req. 1
Companies usually decentralize when they grow too large for
one person to manage the entire organization’s daily
operations.
Decentralization is often based on:
brand
business function
customer base
geographical area
product line
* Student answers may
vary.
Req. 2
Responsibility Description of responsibilities
centers
Cost center responsible for controlling costs
Revenue center responsible for generating revenue
responsible for generating profit through controlling
Profit center
costs and generating revenue
responsible for generating profit and efficiently
Investment center
managing the division’s invested capital
Chapter 24 Performance Evaluation and the Balanced Scorecard 169
, (5 min.) S 24-2
Req. 1
a. Revenue center
b. Profit center
c. Investment center
d. Cost center
e. Investment center
f. Cost center
(5 min.) S 24-3
Req. 1
a. Providing feedback
b. Communicating expectations
c. Benchmarking
d. Motivating unit managers
e. Promoting goal congruence and coordination
f. Benchmarking
g. Providing feedback
h. Motivating unit managers
170 Accounting 9/e Solutions Manual
, (5-10 min.) S 24-4
Req. 1
Key Performance
Perspective
Indicator
a. Learning and growth
b. Financial
c. Customer / Internal business
d. Learning and growth
e. Customer
f. Internal business
g. Internal business
h. Financial
i. Financial
j. Customer
k. Learning and growth
l. Internal business
m. Internal business
n. Internal business
o. Learning and growth
p. Customer
Chapter 24 Performance Evaluation and the Balanced Scorecard 171
, (5 min.) S 24-5
Req. 1
Performance reports for cost, revenue, and profit centers
typically list both actual and budgeted amounts, along with
dollar and percentage variances. Management by exception is a
tool that allows management to focus its attention on important
differences between actual and budgeted amounts.
Using management by exception, management only
investigates variances exceeding a certain dollar amount
and/or variances exceeding a certain percentage. Management
does not bother investigating smaller variances, since the cost
would most likely outweigh the benefits.
172 Accounting 9/e Solutions Manual
Performance Evaluation and the
Balanced Scorecard
Short Exercises
(5 min.) S 24-1
Req. 1
Companies usually decentralize when they grow too large for
one person to manage the entire organization’s daily
operations.
Decentralization is often based on:
brand
business function
customer base
geographical area
product line
* Student answers may
vary.
Req. 2
Responsibility Description of responsibilities
centers
Cost center responsible for controlling costs
Revenue center responsible for generating revenue
responsible for generating profit through controlling
Profit center
costs and generating revenue
responsible for generating profit and efficiently
Investment center
managing the division’s invested capital
Chapter 24 Performance Evaluation and the Balanced Scorecard 169
, (5 min.) S 24-2
Req. 1
a. Revenue center
b. Profit center
c. Investment center
d. Cost center
e. Investment center
f. Cost center
(5 min.) S 24-3
Req. 1
a. Providing feedback
b. Communicating expectations
c. Benchmarking
d. Motivating unit managers
e. Promoting goal congruence and coordination
f. Benchmarking
g. Providing feedback
h. Motivating unit managers
170 Accounting 9/e Solutions Manual
, (5-10 min.) S 24-4
Req. 1
Key Performance
Perspective
Indicator
a. Learning and growth
b. Financial
c. Customer / Internal business
d. Learning and growth
e. Customer
f. Internal business
g. Internal business
h. Financial
i. Financial
j. Customer
k. Learning and growth
l. Internal business
m. Internal business
n. Internal business
o. Learning and growth
p. Customer
Chapter 24 Performance Evaluation and the Balanced Scorecard 171
, (5 min.) S 24-5
Req. 1
Performance reports for cost, revenue, and profit centers
typically list both actual and budgeted amounts, along with
dollar and percentage variances. Management by exception is a
tool that allows management to focus its attention on important
differences between actual and budgeted amounts.
Using management by exception, management only
investigates variances exceeding a certain dollar amount
and/or variances exceeding a certain percentage. Management
does not bother investigating smaller variances, since the cost
would most likely outweigh the benefits.
172 Accounting 9/e Solutions Manual
