Exam 2: Measuring and Evaluating Performance

A common form of data manipulation consists of reporting sales revenue near the end of a financial reporting period, even though the actual sales transactions will not be completed until the following period. This practice is referred to as:

Applying the philosophy of continuous improvement requires that organizations allow self-directed teams of workers to make decisions regarding process improvements.

Quantified key performance indicators, called measures, have eight essential features. When a measure is unbiased, providing the same signal no matter who or what is being measured, or who is doing the measuring, it is said to be:

To successfully implement a continuous improvement philosophy, an entity must:

Managing reported income by choosing when to dispose of an investment at a gain is an illustration of falsification.

A measure possesses the characteristic of objectivity if it is clear, precise, and consistent, providing the right signal within an acceptable level of measurement error.

In July 2017, Elon Musk, CEO of Tesla Motors, Inc., announced that the company would produce and deliver 20,000 of its new Model 3 automobiles in December 2017. This announcement is an example of:

The success of Southwest Airlines' strategy hinges critically on its ability to minimize the amount of time that an aircraft spends at the gate. The amount of time required to clean, fuel, and supply an aircraft would be viewed by Southwest as a key performance indicator (KPI).

Backwoods Products, Inc., produces an insect repellant spray that has become popular due to its ability to repel ticks that are known carriers of Lyme disease. The effectiveness and safety of the product depend critically on achieving the proper concentration of its active ingredient, Beet. If too little Beet is mixed into a 4-ounce container, then the product will fail to repel most ticks. On the other hand, if the concentration of Beet is too high, the product poses a risk of certain skin diseases. The amount of Beet targeted for a 4-ounce container of the repellant spray is 0.25 ounces with an upper limit of 0.28 ounces and a lower limit of 0.22 ounces. One container is sampled every 15 minutes to determine if the mixing process is under control and introducing an appropriate concentration of Beet into the product. The table below contains the first 10 measurements for today's production. Required: Prepare a Shewart control chart for the quantity of Beet placed into the 4-ounce spray containers. Given the results from your control chart, does it appear that the production line should be stopped and adjusted? Why or why not?

Total quality management is focused on discovering ways to improve performance by eliminating waste.

An automated filling machine is designed to place a specific or standard amount of breakfast cereal into a box. Insignificant variations around this standard are allowable; however, significant variations require shutting down the filling process and adjusting or servicing the machine. Which of the following analytical tools would most likely be used to support the decision to shut down the filling process?

In 2016, Tesla Motors, Inc., planned to deliver 90,000 automobiles. Its actual deliveries that year totaled only 76,230. The difference of 13,770 between the planned and actual deliveries illustrates:

Financial accounting information is intended for an audience of investors and creditors external to the reporting entity.

Deviations between planned and actual expenditures on raw materials can result from price and/or quantity errors. Such deviations are best analyzed by variance computations.

When actual revenue, sales, or profit is greater than plan, the resulting variance is labeled as favorable.

Of the following specialized types of accounting, which is focused on the information needs of investors and creditors external to the entity?

Your Daily Bread, Inc., is a large chain of franchised restaurants specializing in soup and sandwich lunches. Management is attempting to determine whether or not to introduce dinner-size salads into its product mix. The most appropriate form of analysis for this decision is known as:

Chase Green Racing, Inc., provides a full range of services to thoroughbred horse owners including boarding, training, and veterinary care. The table below provides both the budgeted and actual statements of operating income for the first quarter of 2018. Required: Prepare a variance analysis to explain the differences between actual and budgeted amounts. Compute a variance for each line item and indicate whether each variance is favorable or unfavorable.

Management control includes all of the efforts of an organization to influence individual performance. A control that places emphasis on what has been accomplished is:

Trend analysis provides an improvement over gap analysis by: