Question 1

Provide three examples of something that an organization might want to measure and a performance measurement that could be utilized in each example.

Accepted Answer

Answers will vary.The following are three examples.
 $\begin{array}{ll}
\text {What to Measure}&\text {Performance Measurement}\
\text { 1. Service quality } & \text { Number of customer complaints } \
\text { 2. Expenditures on a monthly basis } & \text { Monthly expenditure budgets } \
\text { 3. Effectiveness of new computerized } & \text { Monthly number of defective product } \
\text { assembly line } & \text { produced }
\end{array}$

Question 2

Compute the average assets invested for the Hi Ho investment center as shown below. $\begin{array}{lr}
 & \text { Hi Ho Subsidiary } \
\text { Total sales } & \$ 20,000 \
\text { Operating income } & \$ 5,000 \
\text { Beginning assets invested } & \$ 14,000 \
\text { Ending assets invested } & \$ 14,600 \
\text { Average assets invested } & \$ ? \
\text { Desired ROI } & 25 \% \
\text { Residual income } & \$ ?
\end{array}$

Accepted Answer

A)  $14,400 
B)  $14,450 
C)  $14,350 
D)  $14,300 
A)  $14,400 
B)  $14,450 
C)  $14,350 
D)  $14,300 D

Question 3

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

Accepted Answer

A) True 
 B)False  True

Question 4

Manufacturing companies rarely utilize responsibility accounting.

Accepted Answer

A) True 
 B)False

Question 5

Performance reports allow comparisons between actual performance and budget expectations.

Accepted Answer

A) True 
 B)False

Question 6

Many organizations utilize responsibility accounting

Accepted Answer

A)  to assist in building performance measures for the organization. 
B)  to assist in performance management and evaluation. 
C)  solely to evaluate how well employees are handling their responsibilities. 
D)  as an alternative to generally accepted accounting principles. 
A)  to assist in building performance measures for the organization. 
B)  to assist in performance management and evaluation. 
C)  solely to evaluate how well employees are handling their responsibilities. 
D)  as an alternative to generally accepted accounting principles.

Question 7

What is being measured by managers is the same as the actual measures used to monitor performance.

Accepted Answer

A) True 
 B)False

Question 8

The balanced scorecard links the perspectives of an organization's stakeholders with the organization's mission and vision,performance measures,strategic plan,and resources.

Accepted Answer

A) True 
 B)False

Question 9

One of the overall goals of the Pancake House Restaurant is customer satisfaction.In the light of that goal,match the internal business processes perspective with the appropriate objective.

Accepted Answer

A)  Customer satisfaction means that the chefs engage in culinary continuing education. 
B)  Customer satisfaction means that customers receive their food within 10 minutes of placing an order. 
C)  Customer satisfaction means that the customer appreciation program is successful. 
D)  Customer satisfaction means that the restaurant is profitable. 
A)  Customer satisfaction means that the chefs engage in culinary continuing education. 
B)  Customer satisfaction means that customers receive their food within 10 minutes of placing an order. 
C)  Customer satisfaction means that the customer appreciation program is successful. 
D)  Customer satisfaction means that the restaurant is profitable.

Question 10

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 actual total cost?

Accepted Answer

A)  $521 
B)  $595 
C)  $744 
D)  $1,031 
A)  $521 
B)  $595 
C)  $744 
D)  $1,031

Question 11

A responsibility center whose manager is held accountable for both revenues and costs and for the resulting operating income is called a profit center.

Accepted Answer

A) True 
 B)False

Question 12

Use the following performance report for a profit center of the Wet Cat Food Company for the month ended December 31 to answer the question below.  
 What were the actual sales?

Accepted Answer

A)  $180 
B)  $200 
C)  $220 
D)  $240 
A)  $180 
B)  $200 
C)  $220 
D)  $240

Question 13

Which of the following represents the number of sales dollars generated by each dollar invested in assets?

Accepted Answer

A)  Asset turnover 
B)  Assets invested 
C)  Profit margin 
D)  Operating income 
A)  Asset turnover 
B)  Assets invested 
C)  Profit margin 
D)  Operating income

Question 14

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

Accepted Answer

A)  Supervisory employees 
B)  Production line employees 
C)  All employees 
D)  Human resources employees 
A)  Supervisory employees 
B)  Production line employees 
C)  All employees 
D)  Human resources employees

Question 15

A performance management and evaluation system is utilized so that a company can identify which of the following?

Accepted Answer

A)  How well it is doing and where it is going 
B)  How satisfied investors are with their return on investment 
C)  How satisfied both customers and employees are 
D)  How well it is doing, where it is going, and what improvements will bring in more profit 
A)  How well it is doing and where it is going 
B)  How satisfied investors are with their return on investment 
C)  How satisfied both customers and employees are 
D)  How well it is doing, where it is going, and what improvements will bring in more profit

Question 16

The manager of Center D designs,produces,and sells products to external parties.The manager makes both long-term and short-term decisions.What type of responsibility center is Center D?

Accepted Answer

A)  Cost center 
B)  Profit center 
C)  Revenue center 
D)  Investment center 
A)  Cost center 
B)  Profit center 
C)  Revenue center 
D)  Investment center

Question 17

An organization's four basic stakeholder groups include investors,employees,external business processes,and customers.

Accepted Answer

A) True 
 B)False

Question 18

A manager can improve the economic value of an investment center by decreasing assets.

Accepted Answer

A) True 
 B)False

Question 19

By balancing all stakeholders' needs,managers are more likely to achieve their objectives in

Accepted Answer

A)  the long term. 
B)  the short term. 
C)  the short term as well as the long term. 
D)  all areas of the organization. 
A)  the long term. 
B)  the short term. 
C)  the short term as well as the long term. 
D)  all areas of the organization.

Question 20

Variable costing is a method of reporting that deals only with a manager's controllable,variable costs.

Accepted Answer

A) True 
 B)False

Exam 22: Performance Management and Evaluation

Provide three examples of something that an organization might want to measure and a performance measurement that could be utilized in each example.

Compute the average assets invested for the Hi Ho investment center as shown below. Hi Ho Subsidiary Total sales \ 20,000 Operating income \ 5,000 Beginning assets invested \ 14,000 Ending assets invested \ 14,600 Average assets invested \ ? Desired ROI 25\% Residual income \ ?

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

Manufacturing companies rarely utilize responsibility accounting.

Performance reports allow comparisons between actual performance and budget expectations.

Many organizations utilize responsibility accounting

What is being measured by managers is the same as the actual measures used to monitor performance.

The balanced scorecard links the perspectives of an organization's stakeholders with the organization's mission and vision,performance measures,strategic plan,and resources.

One of the overall goals of the Pancake House Restaurant is customer satisfaction.In the light of that goal,match the internal business processes perspective with the appropriate objective.

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 actual total cost?

A responsibility center whose manager is held accountable for both revenues and costs and for the resulting operating income is called a profit center.

Use the following performance report for a profit center of the Wet Cat Food Company for the month ended December 31 to answer the question below. What were the actual sales?

Which of the following represents the number of sales dollars generated by each dollar invested in assets?

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

A performance management and evaluation system is utilized so that a company can identify which of the following?

The manager of Center D designs,produces,and sells products to external parties.The manager makes both long-term and short-term decisions.What type of responsibility center is Center D?

An organization's four basic stakeholder groups include investors,employees,external business processes,and customers.

A manager can improve the economic value of an investment center by decreasing assets.

By balancing all stakeholders' needs,managers are more likely to achieve their objectives in

Variable costing is a method of reporting that deals only with a manager's controllable,variable costs.

Uses of Accounting Information and the Financial Statements

Analyzing Business Transactions

Measuring Business Income

Supplement - Closing Entries and the Work Sheet

Financial Reporting and Analysis

The Operating Cycle and Merchandising Operations

Inventories

Cash and Receivables

Current Liabilities and Fair Value Accounting

Long Term Assets

Long-Term Liabilities

Contributed Capital

Investments

The Corporate Income Statement and the Statement of Stockholders Equity

The Statement of Cash Flows

The Changing Business Environment - a Managers Perspective

Cost Concepts and Cost Allocation

Costing Systems- Job Order Costing

Costing Systems- Process Costing

Value-Based Systems- Abm and Lean

Cost Behavior Analysis

The Budgeting Process

Standard Costing and Variance Analysis

Short Run Decision Analysis

Capital Investment Analysis

Pricing Decisions, incltarget Costing and Transfer Pricing

Quality Management and Measurement

Financial Analysis of Performance

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