Question 1

A decentralized organization is one in which:

Accepted Answer

A)  each employee in the organization is given permission to make decisions about their company. 
B)  only top-level management is given decision-making authority. 
C)  managers at various levels throughout the organization are given decision-making authority. 
D)  each stockholder is given decision-making authority.

Question 2

What are two disadvantages of decentralization?

Accepted Answer

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Question 3

Fun-Town Amusement Center Fun-Town Amusement Center offers a variety of family entertainment. The amusement center consists of three separate divisions: miniature golf, arcade, and laser tag. The following information in available regarding each of these divisions for the year just ended:
 Common fixed costs of $60,000 are divided equally among the divisions.
Refer to the Fun-Town Amusement Center information above. The segment margin for the arcade division is:

Accepted Answer

A)  $300,000 
B)  $400,000 
C)  $360,000 
D)  $340,000

Question 4

What does the ratio return on investment (ROI) measure and what are some possible ways it can be computed?

Accepted Answer

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Question 5

Both traditional financial measures of performance and the balanced scorecard approach examine financial factors, but how does their appraisal of financial factors differ?

Accepted Answer

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Question 6

Which of the following statements regarding "quality" is false?

Accepted Answer

A)  Quality is often defined as meeting or exceeding customers' expectations. 
B)  Quality requires that a product be reliable and durable and that these features be provided at a competitive price. 
C)  Studies have found that companies that spend less on quality costs have higher operating income than those companies who spend more on quality costs. 
D)  Improving quality often falls under the customer perspective of the balanced scorecard.

Question 7

Which of the following statements comparing ROI and residual income is correct?

Accepted Answer

A)  ROI is more useful as a performance measure for a single investment center. 
B)  Residual income is a better comparative measure than ROI. 
C)  ROI and residual income are equally good performance measures for a single investment center. 
D)  Residual income is more useful as a performance measure for a single investment center.

Question 8

For the current year, Winston Inc. reported sales of $800,000 and an asset turnover of 2. The rate of return on average invested assets was 20%. The company's margin for the year was:

Accepted Answer

A)  10% 
B)  40% 
C)  25% 
D)  50%

Question 9

WSR Inc. WSR Inc. sells a variety of drink and food products including potato chips and sodas. The segmented income statements for these two products are as follows:
 WSR's management is considering a special advertising campaign that will run during a major sporting event. The advertising campaign is expected to cost $30,000 and only one product can be featured. In-house marketing studies show that the campaign could increase sales of the soda division by $200,000 or increase sales of the chips division by $275,000.
Refer to the WSR Inc. information above. What will be the overall net effect on the company's total profits if the advertising focuses on sodas?

Accepted Answer

A)  Increase of $170,000 
B)  Increase of $150,000 
C)  Increase of $120,000 
D)  Increase of $200,000

Question 10

Which of the following statements regarding ROI computations istrue?

Accepted Answer

A)  Net income after interest and taxes is most frequently used as the measure of income in the ROI formula. 
B)  The fair market value of assets without regard to depreciation is used as a measure of operating assets in the ROI formula. 
C)  Assets used in the ROI formula are generally measured as an average of beginning and end of period numbers. 
D)  All assets, including those that are idle or held for resale, are included in the ROI formula.

Question 11

Determining customer loyalty would be a measure of performance under which perspective of the balanced scorecard?

Accepted Answer

A)  Internal business 
B)  Customer 
C)  Financial 
D)  Learning and growth

Question 12

Increasing information systems capabilities would be a critical success factor found in which perspective of the balanced scorecard?

Accepted Answer

A)  Internal business 
B)  Customer 
C)  Financial 
D)  Learning and growth

Question 13

Why are non-financial measures necessary in today's business environment?

Accepted Answer

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Question 14

The total time a product is in production, including process time, inspection time, wait time, and move time, is called:

Accepted Answer

A)  efficiency time. 
B)  manufacturing cycle time. 
C)  customer response time. 
D)  value-added time.

Question 15

The balanced scorecard approach looks at a company's performance from four perspectives. Those perspectives are:

Accepted Answer

A)  prevention, appraisal, internal, and external. 
B)  customer, creditor, stockholder, and manager. 
C)  financial, customer, internal business, and learning and growth. 
D)  manufacturing cycle time, throughput, appraisal, and environmental.

Question 16

HNW Ltd. HNW Ltd. manufactures and sells food processors. A popular consumer magazine has recently evaluated food processors and has ranked HNW's processors as being of "poor quality". As a result, HNW's management team has begun to analyze all costs associated with their food processors in more detail, and the following data has been compiled:
 Refer to the HNW Ltd. information above. What are HNW's total appraisal (detection) costs?

Accepted Answer

A)  $130,000 
B)  $205,000 
C)  $90,000 
D)  $100,000

Question 17

The manager of a cost center has control over:

Accepted Answer

A)  revenues and costs. 
B)  costs only. 
C)  costs and investment decisions. 
D)  pricing decisions.

Question 18

The term "strategic business unit" is often used to describe a(n):

Accepted Answer

A)  investment center. 
B)  revenue center. 
C)  profit center. 
D)  cost center.

Question 19

Which types of quality costs are incurred in the course of inspecting, identifying, and isolating defective products and services before they reach the customer?

Accepted Answer

A)  Appraisal (detection) costs 
B)  Prevention costs 
C)  External failure costs 
D)  Internal failure costs

Question 20

Graham Pottery Inc. Graham Pottery Inc. produces an item that gives rise to the following activities:
 Refer to the Graham Pottery Inc. information above. The manufacturing cycle efficiency is:

Accepted Answer

A)  44.7%. 
B)  49.2%. 
C)  68.4%. 
D)  36.8%.

Exam 11: Decentralization, Performance Evaluation, and the Balanced Scorecard