Exam 25: Performance Management and Evaluation

How effective a performance management and evaluation system is depends on how well the goals of the entire company are coordinated rather than on how well the goals of individual responsibility centers and managers are coordinated.

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

Complete the following calculations for the three investment centers shown (round to two decimal places): 2) For each Investment Center, identify which performance indicator is used.

What are some of the limitations of utilizing ROI, residual income, and EVA to measure the performance of investment centers?

What type of incentive compensation is utilized to motivate employees to achieve financial targets that increase the company's stock price?

A variable costing income statement is essentially the same as a traditional income statement.

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 was the actual profit center income?

An evaluation of EVA will prove more meaningful if it is compared to

When calculating ROI, assets invested represent the average of the beginning and ending asset balances for a given period.

Chow Company has a number of investment centers to track on a day-to-day basis. The following represent key figures related to one of Chow's investment centers for May 2010: Operating income \ 6,000,000 Sales 15,000,000 Asset turnover 47\% What is the investment center's ROI for May 2010 (rounded to two decimal places)?

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 materials variance between the actual results and the flexible budget?

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.

Awards are often used to encourage

ROI, residual income, and economic value added all represent performance measures that can be utilized to determine investment center performance.

To succeed, an organization must add value for all of its stakeholders in the long term only.

How many different types of responsibility centers exist?

Compute the return on investment (rounded to nearest percent) for the Tim Tom investment center as shown below.

In evaluating investment center performance, ROI proves to be such a comprehensive performance measure that other performance measures are rarely needed.

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

Calculate ROI, residual income, and EVA for each of the investment centers listed. (Round to two decimal places.) Investment Center 1 Investment Center 2 Pretax Operating income \ 50,000 \ 70,000 Assets invested 125,000 180,000 Income taxes 15,000 21,000 Cost of capital in dollars 13,000 25,000 Desired ROI 56\% 48\%