Exam 7: Performance Management and Evaluation

A responsibility accounting system ensures that

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

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.

An organization chart assists in management control.

Cost of capital is the maximum desired rate of return on a particular investment.

The manager of Center B produces a product that is not sold to an external party. What type of responsibility center is Center B?

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

A report for a responsibility center includes costs and revenues that are both controllable and uncontrollable by a manager.

For purposes of computing EVA, the minimum desired rate or return on an investment is known as

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

The causal links between an organization's goals, objectives, measures, performance targets need not be apparent.

Performance reports should include

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

A good example of a profit center would be

Which of the following is an example of a performance measurement?

Identify and describe the five different responsibility centers, and provide one example of each.

Kristen Roper oversees her company's largest and most profitable investment center. She has asked you, as her staff accountant, to compute the center's ROI, residual income, and EVA for the month of August 20xx, using the following information (rounded to two decimal places): August 20 operating income \ 300,000 August 20xx sales 450,000 Assets at July 31, 20xx 500,000 Assets at August 31, 20xx 510,000 August 20\times6 income taxes 90,000 Current liabilities at August 31,20 250,000 Cost of capital 19\% Desired ROI 52\%

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

Variable costing allows a manager to classify controllable costs as

One of the overall goals of the Pancake House Restaurant is customer satisfaction. In the light of that goal, match the learning and growth perspective with the appropriate objective.