Exam 22: Performance Management and Evaluation

The logical linking of goals to measurable objectives and targets and the tying of appropriate compensation incentives to the achievement of such objectives and targets are critical to the successful coordination of goals.

Employer-provided health insurance is a common type of incentive compensation.

Tying compensation incentives to performance targets decreases the likelihood that the goals of responsibility centers,managers,and the entire organization will be well coordinated.

An organization chart assists in management control.

Compute the May 20xx EVA for an investment center with the following information: Pre-tax operating income for May 20xx \ 18,000,500 Income tax expense for May 20xx 5,100,000 Assets at May 31, 20xx 13,200,500 Current liabilities at May 31, 20xx 10,000,000 Long-term liabilities at May 31, 20xx 3,500,000 Minimum desired rate of return 20\% Minimum desired rate of return 20%

The equation for economic value added includes pretax operating income as well as current liabilities.

Dana Klammer is the manager of the Cutting Department in the Northwest Division of Steel Products.Which of the following costs is a controllable cost?

Use the following performance report for a cost center of the Dry Cat Food Division for the month ended December 31 to answer the question below. What is the direct labor variance between the actual results and the flexible budget?

For residual income figures to be comparable on a companywide basis,all investment centers must have equal access to resources and similar asset investment bases.

Performance reports allow comparisons between actual performance and budget expectations.

Determine the February 20xx residual income for an investment center with the following information: Operating income for the month ended February 28, 20xx \ 2,900,000 Desired ROI 52\% Actual ROI 38\% Assets invested \ 18,200,000

Many organizations utilize responsibility accounting

The economic value added performance measure focuses on long-term financial performance.

Why is it important that a manager's evaluation be based only on those revenues and costs that he or she can control?

If a performance report contains items that are out of a manager's control,the entire responsibility accounting system can be called into question.

In developing performance measures,management must consider which of the following?

Why are managers more likely to achieve their objectives in both the short term and the long term when they utilize a tool such as the balanced scorecard?

Incentive plans must be developed with input from which of the following groups?

As the staff accountant for NYC Investment Center #1,compute the center's EVA,using the following information: Pretax Operating income 900,000 Income taxes 270,000 Total assets 1,500,000 Total liabilities 1,000,000 Long-term liabilities 100,000 Cost of capital 55\%

ROI is a performance measure mainly connected with a company's income statement.