Exam 24: Performance Evaluation and the Balanced Scorecard

A company that uses a balanced scorecard has established a KPI for employee turnover. If the KPI is negative, that implies a very low rate of employee turnover.

Waycross Construction Company has a pipeyard operation which is run as a cost center. They are preparing a performance report for the month of March and have provided the data below: Cost Center Flexible Flexible Budget Performance Report Actual Budget Variance U/F \% variance U/F Wages \& benefits \ 81,200 \ 80,000 Office lease expense 42,060 45,000 Depreciation expense 39,600 42,000 Insurance expense 33,490 30,000 Other expense 7,120 8,000 \ 203,470 \ 205,000 - How much is the percentage variance for Wages and benefits?

The manager of a cost center has control of:

Financial performance metrics are considered to be a lead indicator, providing signs of future performance.

In a balanced scorecard system, which of the following KPIs would relate to the financial perspective?

KPIs for customer satisfaction ratings pertain to which of the four perspectives of a balanced scorecard?

A benefit of decentralization is that it allows top management to concentrate on long-term strategic planning.

Assume Division 1 of the XYZ Company had the following results last year. Sales \ 5,000,000 Operating income 1,000,000 Total assets (average) 10,000,000 Current liabilities 500,000 Management's required rate of return is 8% and the weighted average cost of capital is 6%. Its effective tax rate is 30%. - What is the division's economic value added?

Which of the following KPIs are used to evaluate how efficiently a business unit uses assets?

One part of the balanced scorecard helps management answer the question: "What business processes must we excel at in order to reach our objectives?" Which of the four perspectives is being described here?

Profit margin is defined as operating income divided by sales.

In a balanced scorecard system, which of the following KPIs would relate to the internal business perspective?

Huntswell Corporation has two major divisions Agricultural Products and Industrial Products. Data for the year just finished is as follows: Agriculture Division Industrial Division Sales revenue \ 140,000 \ 1,040,000 Operating income \ 16,400 \ 220,000 Average assets \ 300,000 \ 5,540,000 Target rate of return 4.0\% 4.0\% - For the Agricultural Division, how much is the asset turnover?

Johnson Construction Materials Company has a sales office which sells concrete culvert pipe to property developers. The sales office is a revenue center and must prepare a monthly performance report. Please complete the performance report using the format and the data below: Revenue Center Performance Report Actual Flexible Budget Flexible Sales Volume Static Product type: Sales Revenue Variance U/F Budget Variance U/F Budget 40 inch \ 31,500 \ 30,000 \ 40,000 36 inch long \ 40,150 \ 42,000 \ 33,000 36 inch short \ 36,200 \ 33,000 \ 30,000 32 inch \ 19,000 \ 20,000 \ 28,000

Companies benchmark their performance against the performance of their competitors and also against their own past performance.

If a manager's performance is evaluated solely on the ability to control costs, he or she may sacrifice quality for savings, thus endangering customer satisfaction.

Which of the following statements MOST accurately describes residual income?

Which of the following KPIs are used to evaluate how efficiently a business unit uses assets?

Decentralization increases the difficulty of achieving goal congruence among managers.

Which of the following is NOT a relevant performance indicator for the balanced scorecard's financial perspective?