Exam 12: Performance Evaluation and Decentralization

______________________ occurs whenever managers receive information about the effectiveness of strategy implementation as well as the validity of the assumptions underlying the strategy.

Residual income is sometimes used to overcome the tendency of ROI to discourage investments that are profitable for the company,but that lower the division's ROI.

A(n)________________ is when a manager is responsible only for sales.

Figure 12-6. The First National Bank has a mortgage loan office with conversion cost of $73,950 per month.There are five employees who each work 170 hours per month.Last month,1,020 loan applications were processed,but the staff believes that system improvements could lead to the processing of as many as 1,700 per month. Refer to Figure 12-6.Calculate the following:

In a decentralized company,central management is able to focus on strategic planning and decision making.

_________________ is found by dividing sales by average operating assets.

A testable strategy is defined as a

The practice of delegating decision-making authority to lower levels of management in a company is called centralization.

A ____________________ is a segment of the business whose manager is accountable for specific sets of activities.

The Balanced Scorecard perspective that describes the economic consequences of actions taken in the other three perspectives is the ____ perspective.

An ______________________ is when a manager is responsible for revenues,costs and investments.

The practice of delegating decision-making authority to the lower levels of management in a company is

A responsibility center in which a manager is responsible for both revenues and costs is a(n)

If the selling division is operating at less than full capacity,the floor of the bargaining range would most probably set at

The Balanced Scorecard perspective that describes the internal processes needed to provide value for customers and owners is the ____ perspective.

________________ is the difference between realization and sacrifice,where realization is what the customer receives and sacrifices is what is given up in return.

Figure 12-4. Quinn Inc.has a number of divisions.One division,Style,makes zippers that are used in the manufacture of boots.Another division,LeatherStuff,makes boots that use the zippers and needs 90,000 zippers per year.Style incurs the following costs for one zipper: Quinn has capacity to make 950,000 zippers per year,but due to a soft market,only plans to produce and sell 620,000 zippers next year.LeatherStuff currently buys zippers from an outside supplier for $3.50 each (the same price that Style receives). Refer to Figure 12-4.Assume that Style and LeatherStuff have agreed on a transfer price of $3.25.What is the total benefit for Style?

A production department within the factory,such as assembly,is an example of a profit center.

If there is a competitive outside market for the transferred product,then the best transfer price is the cost-based transfer price.

Chase Company had the following income statement for last year: Beginning assets were $279,500 and ending assets were $296,500.