Deck 15: The Balanced Scorecard: Strategic-Based Control

Question 1

Activity-based responsibility accounting adds which of the following to the financial-based responsibility accounting perspective?

A)process perspective
B)functional perspective
C)consumer perspective
D)learning perspective

Answer 1

A

Question 2

How is directed continuous improvement accomplished?

A)by linking initiatives to processes
B)by linking initiatives to strategy and mission
C)by linking initiatives to financial outcomes
D)by linking initiatives to measures

Answer 2

B

Question 3

Which is a major difference between activity-based measures and strategic-based measures?

A)Strategic-based measures are linked to strategy.
B)Strategic-based measures are used to align objectives.
C)Strategic-based measures are balanced measures.
D)Strategic-based measures include long term focus of the financial perspective.

Answer 3

D

Question 4

Which type of responsibility accounting addresses directed continuous improvement in environments that consist of competitive conditions and dynamic change?

A)activity-based responsibility accounting
B)strategic-based responsibility accounting
C)process-based responsibility accounting
D)functional-based responsibility accounting

Question 5

Which of the following statements is true regarding lag measures?

A)lag measures are measures that relate to customers
B)lag measures are factors that drive future performance
C)lag measures are performance drivers
D)lag measures include measures such as customer profitability

Question 6

What is the balanced scorecard?

A)an activity-based responsibility accounting model that measures operating activities
B)a financial-based responsibility accounting model that focuses on the financial performance of units,rewarding performance with static financial-oriented standards
C)a strategic-based financial reporting system that balances assets with liabilities and owner's equity
D)a strategic-based performance management system that identifies objectives and measures from a financial perspective,customer perspective,process perspective,and learning and growth perspective

Question 7

What is the term for outcome measures that are a result of past efforts?

A)objective measures
B)external measures
C)financial measures
D)lag measures

Question 8

What is the impact of a competitive environment on an organization?

A)producing increasingly high-volume,low-variety products and services.
B)focused internally on efficiency.
C)viewing their actions independent of competitors,suppliers,and customers.
D)managing cause and effect linkages to customer satisfaction.

Question 9

Which of the following is a perspective of strategic-based responsibility accounting but is NOT a perspective of activity-based responsibility accounting?

A)financial perspective
B)process perspective
C)customer perspective
D)responsibility perspective

Question 10

What is the most common strategic-based performance management system?

A)variance analysis with standard costs as benchmarks
B)the balanced scorecard
C)financial budgets
D)strategic responsibility system

Question 11

What are the two additional perspectives that are added to the activity-based approach to achieve strategic-based responsibility?

A)a customer perspective and a learning and growth perspective
B)an infrastructure perspective and a process perspective
C)a customer perspective and a financial perspective
D)a financial perspective and a process perspective

Question 12

What is the term for outcome measures that can be readily quantified and verified?

A)objective measures
B)external measures
C)financial measures
D)lag measures

Question 13

Why are lead measures critical to strategy?

A)because they are based on actual activity
B)because they are an independent part of the system
C)because there should be a causal linkage with strategy
D)because they are outcome measures

Question 14

For a firm to have balanced measures,what must the measures selected be balanced between?

A)lag and lead measures,objective and subjective measures,and financial and nonfinancial measures
B)lag and lead measures,long-term and short-term measures,and financial and nonfinancial measures
C)lag and lead measures,objective and subjective measures,and international and local measures
D)lag and lead measures,objective and subjective measures,and financial and nonfinancial measures

Question 15

What is the term for outcome measures that are expressed in monetary terms?

A)objective measures
B)external measures
C)financial measures
D)lag measures

Question 16

What is the term for outcome measures that relate to customers?

A)objective measures
B)external measures
C)financial measures
D)lag measures

Question 17

Which of the following would be a nonfinancial measure?

A)customer profitability
B)dissatisfied customers
C)return on investment
D)cost per unit

Question 18

Which of the following is a limitation of activity-based responsibility accounting?

A)Change efforts are often fragmented.
B)Change efforts lack connection to mission.
C)Change efforts lack connection to strategy.
D)Change efforts are driven by value-added analysis.

Question 19

Which of the following would be a subjective measure?

A)employee capabilities
B)market share
C)return on investment
D)cost per unit

Question 20

Which of the following is limitation of activity-based responsibility accounting?

A)The continuous improvement were fragmented.
B)The emphasis includes financial results as well as how things are done.
C)Responsibility moves from one dimension to two dimensions.
D)It moves from a control system to a performance management system.

Question 21

What is a major difference between activity-based responsibility accounting and strategic-based responsibility accounting?

A)only strategic-based responsibility accounting is linked to strategy
B)only strategic-based responsibility accounting is focused on systemwide efficiency
C)only strategic-based responsibility accounting includes the process perspective
D)only strategic-based responsibility accounting reinforces team accountability

Question 22

Which of the following features make stretch targets feasible?

A)The targets are set in isolation by top management.
B)The measures are linked by causal relationships.
C)The measures are based on currently attainable standard costs.
D)The targets are set at desired levels for twenty years to ensure long-term performance.

Question 23

What are stretch targets?

A)aimed at stretching the firm's resources.
B)aimed at static standards.
C)aimed at transforming the organization within three to five years if achieved.
D)aimed at transforming the organization immediately.

Question 24

What is a nonfinancial measure that can be used to determine customer loyalty?

A)number of repeat customers
B)dollars in repeat customer orders
C)total orders in dollars
D)sales dollars per customer contact

Question 25

Which of the following would be a lead measure?

A)customer profitability
B)cost per employee
C)return on investment
D)employee training hours

Question 26

Which of the following is a measure commonly used to evaluate asset utilization?

A)return on investment
B)total revenue
C)market share
D)net income

Question 27

Diversifying customers and product lines are initiatives important to which of the following goals?

A)revenue growth
B)cost reduction
C)asset utilization
D)risk management

Question 28

What are lead measures?

A)the measures with the highest priority.
B)generic to different strategies.
C)based on performance drivers.
D)represent the desired outcomes.

Question 29

What is strategy translation concerned with?

A)choosing general goals
B)choosing the customer segments
C)identifying measures,targets,and initiatives
D)choosing the nature of the business

Question 30

Which feature is related solely to strategic-based responsibility and not to activity-based responsibility?

A)financial perspective
B)process perspective
C)team accountability
D)customer perspective

Question 31

What does a strategic-based responsibility accounting system do?

A)Allows the strategy to be highly centralized
B)Focuses the strategy on performance measures of top management
C)Translates the strategy into operational objectives and measures
D)Adds a process perspective to the traditional functional based system

Question 32

What do internal measures relate to?

A)Processes that create value for the customer
B)Financial aspects of the business
C)Customer satisfaction survey
D)Shareholders that rely on ROI

Question 33

Which of the following is an objective for increasing revenue growth?

A)adopting a new pricing strategy
B)reducing the cost per unit
C)eliminating non-value-added activities
D)reducing distribution channel cost

Question 34

Which of the following would be an external measure?

A)profitability
B)employee satisfaction
C)process efficiency
D)customer profitability

Question 35

Which of the following would be an objective measure?

A)customer satisfaction
B)employee capabilities
C)management ability
D)product market share

Question 36

In the Balanced Scorecard system,what are core objectives and measures?

A)common across all organizations.
B)common across all scorecard perspectives.
C)common across departments.
D)common across all products

Question 37

Which of the following would be a lag measure?

A)budget forecasts
B)sales per employee
C)plant investment
D)employee training hours

Question 38

Which of the following is not a strategic theme of the financial perspective?

A)revenue growth
B)asset utilization
C)employee capability
D)risk management

Question 39

Which of the following is NOT a step in developing the Balanced Scorecard?

A)setting balanced objectives
B)outlining control procedures
C)setting target values
D)establishing a reward program

Question 40

What is business strategy translation concerned with?

A)choosing market and customer segments
B)identifying critical internal and business processes
C)selecting individual and organizational properties required
D)specifying objectives,measures,targets,and initiatives for each perspective

Question 41

From the customer perspective,which of the following might be considered a core objective rather than a performance value?

A)decrease price
B)increase customer retention
C)improve image
D)improve product quality

Question 42

Which of the following is an operational measure of quality?

A)materials cost per unit
B)number of units produced
C)kilograms of scrap
D)cycle time

Question 43

Which of the following would be a core outcome measure for employee capabilities?

A)employee satisfaction ratings
B)number of employees
C)suggestions per employee
D)percentage of processes with real-time feedback

Question 44

A manufacturing cell has the theoretical capability of producing 40,000 microchips per quarter.The conversion cost per quarter is $25,000.There are 4,000 production hours available within the cell per quarter. What is the theoretical velocity per hour?

A)2.24 units
B)10.00 units
C)16.00 units
D)25.00 units

Question 45

At the beginning of the current year,Smith Company installed a JIT purchasing and manufacturing system.The following information has been gathered about one of the company's products. $\begin{array}{lr}\text { Theoretical annual capacity } & 4,000 \\\text { Actual production } & 3,600 \\\text { Production hours available } & 2,000 \\\text { Actual cost per unit } & \$ 28\end{array}$


-What is the theoretical velocity per hour?

A)0.5 units
B)0.55 units
C)1.8 units
D)2.0 units

Question 46

What is the definition of cycle time?

A)the time it takes to collect the account after the sale
B)the time it takes to turn inventory over
C)the time it takes to deliver the product after it is sold
D)the time it takes to produce one unit of product

Question 47

How is on-time delivery performance calculated?

A)orders delivered on time/total number of orders delivered
B)orders delivered on time/total sales dollars
C)orders delivered on time/total production
D)orders delivered/orders delivered on time

Question 48

At the beginning of the current year,Peters Company installed a JIT purchasing and manufacturing system.The following information has been gathered about one of the company's products: $$\begin{array} { l r } \text { Theoretical annal capacity } & 2,000 \\\text { Actual production } & 1,800 \\\text { Production hours available } & 500 \\\text { Actual conversion cost per hour } & \$ 7\end{array}$$

- What is the ideal conversion cost per unit?

A)$0.9 per unit.
B)$1.75 per unit.
C)$25.50 per unit.
D)$28 per unit.

Question 49

What is the formula for computing Manufacturing Cycle Efficiency (MCE)?

A)Processing Time / (Processing time + Move time + Inspection time + Waiting time + Other non-value-added time)
B)Theoretical Capacity / Production hours available
C)Cycle time per unit * velocity
D)Good output / good input

Question 50

What is the term for the number of units that can be produced in a given period of time?

A)velocity
B)cycle time
C)turnover
D)efficiency

Question 51

In the financial perspective,economic value added would be an appropriate measure for which of the following goals?

A)revenue growth
B)cost reduction
C)improving asset utilization
D)risk management

Question 52

Roberts,Inc.,manufactures a product that experiences the following activities: $$\begin{array} { l l } \text { Proces5ing (three depariments) } & 18 \text { hours } \\\text { Moving (fau moves) } & 2 \text { hours } \\\text { Waiting time } & 14 \text { hours } \\\text { Storage time (before delivery) } & 26 \text { hours }\end{array}$$ What is the MCE for the product?

A)0.30
B)0.42
C)0.45
D)0.48

Question 53

In the customer perspective,which is a measure that drives the creation of customer value?

A)customer survey ratings
B)revenue growth
C)cost reduction
D)risk management

Question 54

At the beginning of the current year,Peters Company installed a JIT purchasing and manufacturing system.The following information has been gathered about one of the company's products: $$\begin{array} { l r } \text { Theoretical anual capacity } & 2,000 \\\text { Actual production } & 1,800 \\\text { Production hours avalable } & 500 \\\text { Actual conversion cost per hour } & \$ 7\end{array}$$

- What is the theoretical velocity per hour?

A)1.0 units
B)1.1 units
C)3.6 units
D)4.0 units

Question 55

How can delivery performance be improved?

A)by decreasing cycle time
B)by increasing ROI
C)by decreasing velocity
D)by increasing turnover

Question 56

A manufacturing cell has the theoretical capability of producing 40,000 microchips per quarter.The conversion cost per quarter is $25,000.There are 4,000 production hours available within the cell per quarter.What is the theoretical cycle time per unit in minutes?

A)0.625 minutes
B)6.000 minutes
C)8.400 minutes
D)37.500 minutes

Question 57

What is the term for the time it takes to produce one unit of product?

A)velocity
B)delivery time
C)cycle time
D)turnover

Question 58

When does increased customer value occur?

A)when the customer receives more benefits
B)when the customer perceives a greater gap between benefits and sacrifice
C)when customer costs are reduced
D)when customer prices are increased

Question 59

Harris,Inc.manufactures a product that experiences the following activities: $$\begin{array} { l l } \text { Procesing (three deparinents) } & \text { 60 hours } \\\text { Moving (fau moves) } & 15 \text { hours } \\\text { Waiting time } & 45 \text { hours } \\\text { Storage time (before delivery) } & 120 \text { hours }\end{array}$$ What is the MCE for the product?

A)0.18
B)0.25
C)0.27
D)0.33

Question 60

From the customer perspective,which of the following might be an appropriate measure for improving product quality?

A)customer profitability
B)cost per customer
C)percentage of returns
D)number of patents pending

Question 61

Which of the following would be considered a lead measure for employee capabilities?

A)employee satisfaction
B)employee turnover
C)employee productivity
D)number of training hours

Question 62

How can a testable strategy be constructed?

A)by prioritizing objectives
B)by sequencing if-then statements
C)by creating alternative scenarios
D)by creating lead measures

Question 63

For purposes of strategic alignment,what should incentive compensation be based upon?

A)expected performance of weighted targets for a given period
B)expected financial performance of the company
C)actual performance compared to weighted target values for a given period
D)actual financial performance of the company

Question 64

Why might a strategy fail?

A)due to incorrect calculations
B)due to incorrect feedback
C)due to implementation problems
D)due to invalid controls

Question 65

What does a strategy map provide?

A)links the cause-and-effect relationships in the proposed strategy,creating a testable strategy.
B)maps the organization's strategies over time.
C)documents the performance results of an organization.
D)strategizes about the organization's competitors.

Question 66

At the beginning of the current year,Smith Company installed a JIT purchasing and manufacturing system.The following information has been gathered about one of the company's products. $\begin{array}{lr}\text { Theoretical annual capacity } & 4,000 \\\text { Actual production } & 3,600 \\\text { Production hours available } & 2,000 \\\text { Actual cost per unit } & \$ 28\end{array}$


-What is the ideal conversion cost per unit?

A)$14 per unit
B)$15.55 per unit
C)$50.90 per unit
D)$56 per unit

Question 67

What is the definition of double-loop feedback?

A)feedback that deals with both the effectiveness of strategy implementation and the validity of the assumptions underlying the strategy
B)feedback that emphasizes the effectiveness of strategy implementation and the costs of implementation
C)feedback that emphasizes the validity and assumptions underlying the strategy and the costs of the strategy
D)feedback on lead indicators and lag indicators

Question 68

Which is the most important requirement of the Balanced Scorecard?

A)scorecard measures are linked by cause-and-effect relationships
B)performance measures are derived from strategy
C)benchmarking plays a critical role
D)performance measures should be balanced between outcome and lead measures

Question 69

If only the return on investment were used to measure performance,what would it be considered?

A)double-loop feedback
B)triple-loop feedback
C)testable strategy feedback
D)single-loop feedback

Question 70

Which perspective defines the capabilities needed by the organization to create long-term improvement?

A)the financial perspective
B)the customer perspective
C)the process perspective
D)the learning and growth perspective

Question 71

What happens once objectives and measures have been defined and communicated?

A)Performance expectations must be established.
B)Evaluation methods must be developed.
C)Sensitivity analysis must be performed.
D)Testing must be evaluated.

Question 72

The learning and growth perspective has three major objectives.Which of the following is an objective of the learning and growth process?

A)increase the number of new products
B)increase customer acquisition
C)increase motivation and alignment
D)improve asset utilization

Question 73

What is the definition of a testable strategy?

A)a strategy that can be implemented
B)a set of profit goals
C)a set of linked objectives aimed at an overall goal
D)a strategy that is verifiable

Question 74

How are performance expectations communicated?

A)by setting new initiatives
B)by setting targets
C)by setting a strategic vision
D)by setting activity measures

Question 75

Which of the following might be a measure of employee motivation,empowerment,and alignment?

A)process efficiency
B)suggestions per employee
C)customer satisfaction
D)units product cost

Question 76

The balanced scorecard becomes a means of communicating the strategy of the organization to its employees and managers.What might be a downside of communicating this information?

A)Employees will need direction about what is to be done.
B)Employees will need to understand where the organization is headed.
C)Employees may allow sensitive information may end up in the hands of competitors.
D)Employees can be informed of objectives using video or newsletters.

Question 77

Which of the following are major enabling factors of the learning and growth perspective?

A)customer attributes,information system capabilities and employee attitudes
B)information system capabilities,customer attributes,employee capabilities
C)information system capabilities,employee attitudes,employee capabilities
D)information system capabilities,employee attitudes,customer attributes

Question 78

Who needs to be committed for the balanced scorecard to be successful?

A)The production employees
B)The organization's suppliers
C)The organization's customers
D)The entire organization

Question 79

Which of the following would not be an outcome measure?

A)net income
B)market share
C)return on investment
D)training hours

Question 80

Double-loop feedback occurs under what conditions?

A)When managers receive information about both the effectiveness of strategy implementation as well as the validity of assumptions.
B)When managers receive feedback information from two information sources.
C)When managers validate the feedback information by double checking it.
D)When managers receive information about the effectiveness of the controls and the effectiveness of the implementation.