Deck 13: The Balanced Scorecard: Strategic-Based Control

Question 1

Lead measures are critical to strategy because

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

Answer 1

C

Question 2

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

Answer 2

D

Question 3

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) all of these

Answer 3

C

Question 4

_______________ are outcome measures that are a result of past efforts.

A) Objective measures
B) External measures
C) Financial measures
D) Lag measures

Question 5

A major difference between activity-based responsibility accounting and strategic-based responsibility accounting is

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 6

The balanced scorecard

A) is an activity-based responsibility accounting model that measures operating activities.
B) is a financial-based responsibility accounting model that focuses on the financial performance of units, rewarding performance with static financial-oriented standards.
C) is a strategic-based financial reporting system that balances assets with liabilities and owner's equity.
D) is 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

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

Question 8

Which of the following is NOT an advantage of strategic-based responsibility accounting?

A) It includes perspectives that serve as a source of competitive advantage.
B) Change efforts are directed by the mission and strategy.
C) Responsibility is centralized within the organization.
D) All are advantages of strategic-based responsibility accounting.

Question 9

The most common strategic-based performance management system is

A) variance analysis with standard costs as benchmarks.
B) the balanced scorecard.
C) financial budgets.
D) all of these.

Question 10

Which of the following is NOT 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 11

_______________ are outcome measures that are expressed in monetary terms.

A) Objective measures
B) External measures
C) Financial measures
D) Lag measures

Question 12

Which of the following is NOT true about activity-based responsibility accounting?

A) The emphasis changes from cost reduction through change to cost control.
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 13

Directed continuous improvement is accomplished by linking initiatives to

A) processes.
B) strategy and mission.
C) financial outcomes.
D) measures.

Question 14

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 15

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 16

Which is NOT 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) All of these.

Question 17

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

A) lag and lead measures.
B) objective and subjective measures.
C) financial and nonfinancial measures.
D) all of these.

Question 18

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 19

A competitive environment means that organizations will be

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 20

_______________ are outcome measures that can be readily quantified and verified.

A) Objective measures
B) External measures
C) Financial measures
D) Lag measures

Question 21

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) rewards

Question 22

Stretch targets are

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 23

Lead measures

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

Question 24

_______________ are outcome measures that relate to customers.

A) Objective measures
B) External measures
C) Financial measures
D) Lag measures

Question 25

In the financial perspective, economic value added would be an appropriate measure for

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

Question 26

Which of the following would be a subjective measure?

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

Question 27

Which of the following would be an external measure?

A) profitability
B) employee satisfaction
C) process efficiency
D) all of these

Question 28

Communicating strategy through measurements requires both scope and flexibility.Which of the following statements is true?

A) Flexibility requires subjective and objective measurement as well as nonfinancial measures.
B) Flexibility requires that measures be optimal and dynamic.
C) Scope implies that internal and external measures are needed.
D) Both a and c are true.

Question 29

Which of the following is NOT a measure commonly used to evaluate asset utilization?

A) return on investment
B) economic value added
C) market share
D) return on investment

Question 30

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 31

Strategy translation is 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 32

Diversifying customers and product lines are initiatives important to

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

Question 33

Which of the following statements comparing activity-based performance and strategic-based performance evaluation is NOT true?

A) Strategic-based performance evaluation expands the set of metrics.
B) Only strategic-based performance evaluation leads to cost reductions.
C) Only strategic-based performance standards set stretch targets for all four perspectives.
D) Both systems encourage quality improvements.

Question 34

Business strategy is concerned with

A) choosing market and customer segments.
B) identifying critical internal and business processes.
C) selecting individual and organizational properties required.
D) all of these.

Question 35

Which of the following would NOT be an objective measure?

A) customer profitability
B) employee capabilities
C) return on investment
D) cost per unit

Question 36

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 37

Objectives for increasing revenue growth include

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

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 would be a lag measure?

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

Question 40

Which of the following would be a nonfinancial measure?

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

Question 41

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 42

The number of units that can be produced in a given period of time is called

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

Question 43

Roberts, Inc., manufactures a product that experiences the following activities: The MCE for the product is

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

Question 44

In the Balanced Scorecard system, core objectives and measures

A) are common across all organizations.
B) are common across all scorecard perspectives.
C) are common across departments.
D) none of these.

Question 45

At the beginning of 2011, Peters Company installed a JIT purchasing and manufacturing system.The following information has been gathered about one of the company's products:

- 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 46

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 47

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. The theoretical velocity per hour is

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

Question 48

Increasing customer value occurs when

A) the customer receives more benefits.
B) the customer perceives a greater gap between benefits and sacrifice.
C) customer costs are reduced.
D) none of these.

Question 49

Harris, Inc., manufactures a product that experiences the following activities: The MCE for the product is

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

Question 50

At the beginning of 2011, Smith Company installed a JIT purchasing and manufacturing system.The following information has been gathered about one of the company's products.

-The theoretical velocity per hour is

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

Question 51

An operational measure of quality is

A) defects per unit.
B) number of defective units.
C) pounds of scrap.
D) all of these.

Question 52

On-time delivery performance is calculated as

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 53

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.The theoretical cycle time per unit in minutes is

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

Question 54

In the customer perspective, objectives and measures that drive the creation of customer value are

A) customer survey ratings.
B) post-purchase cost.
C) on-time deliveries.
D) all of these.

Question 55

Cycle time is

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 56

Delivery performance can be improved by

A) decreasing cycle time.
B) increasing cycle time.
C) decreasing velocity.
D) increasing turnover.

Question 57

At the beginning of 2011, Smith Company installed a JIT purchasing and manufacturing system.The following information has been gathered about one of the company's products.

-What is the ideal conversion cost per unit?

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

Question 58

The formula for computing Manufacturing Cycle Efficiency (MCE) is

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) none of these.

Question 59

At the beginning of 2011, Peters Company installed a JIT purchasing and manufacturing system.The following information has been gathered about one of the company's products:

-The theoretical velocity per hour is

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

Question 60

The time it takes to produce one unit of product is called

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

Question 61

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 62

The critical performance measures of the Balanced Scorecard have some special properties.Which of the following is NOT one of those properties?

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 63

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 64

Double-loop feedback can be defined as

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 65

A testable strategy is defined as

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 66

A testable strategy can be constructed

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

Question 67

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.

Question 68

Which of the following would not be an outcome measure?

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

Question 69

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) Sensitive information may end up in the hands of competitors.
D) All of these.

Question 70

Which of the following is NOT a major enabling factor of the learning and growth perspective?

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

Question 71

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 72

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

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

Question 73

For purposes of strategic alignment, incentive compensation should 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 74

Failure of a strategy might be due to

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

Question 75

Performance expectations are communicated by setting

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

Question 76

A strategy map

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 77

Balanced scorecard is designed to bring about organizational change.Which of the following is NOT a means of alignment?

A) Employees must share ownership of objectives, measures, targets, and initiatives.
B) Incentives must be structured to support strategy.
C) Resources must be allocated to support strategy.
D) All of these.

Question 78

Which of the following is NOT a condition that must be present for a strategy to become attainable?

A) budgetary process must provide the resources necessary to carry out the initiatives
B) resources must be allocated to strategic initiatives
C) the organization must decide how much of the strategic targets will be achieved for the coming year
D) all are conditions that must be met for strategy to become actionable

Question 79

The perspective that defines the capabilities needed by the organization to create long-term improvement is the

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

Question 80

Which of the following would NOT be a core outcome measure for employee capabilities?

A) employee satisfaction ratings
B) number of employees
C) employee turnover
D) employee productivity