Question 1

If a strategy is not working, it should become evident on the balanced scorecard when some of the predicted effects don't occur.

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Question 2

In essence, a balanced scorecard lays out a theory of how the company can take concrete actions to attain its desired outcomes.The strategy should seem plausible, but it should be regarded as only a theory.

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Question 3

Which of the following will not result in an increase in return on investment (ROI), assuming other factors remain the same?

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Question 4

A cost center is a responsibility center.

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Question 5

Queue time is considered non-value-added time.

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Question 6

Financial measures tend to be lag indicators that report on the results of past actions.

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Question 7

If the balanced scorecard is correctly constructed, the performance measures should be independent of each other so that bad performance on one measure will not result in bad performance on another performance measure.

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Question 8

Which of the following would be an argument for using the gross cost of plant and equipment as part of operating assets in return on investment computations?

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Question 9

Under a responsibility accounting system, fewer expenses are charged against managers the higher one moves upward in an organization.

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Question 10

If improvement in a performance measure on a balanced scorecard should lead to improvement in another performance measure, but does not, then employees must work harder.

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Question 11

Which of the following would not be included in operating assets in return on investment calculations?

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Question 12

Incentive compensation for employees, such as bonuses, should be tied to balanced scorecard performance measures only if managers are confident that the performance measures are easily manipulated by those being evaluated.

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Question 13

Inspection Time is generally considered to be value-added time.

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Question 14

The performance measures on a balanced scorecard tend to fall into four groups: financial measures, customer measures, internal business process measures, and learning and growth measures.

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Question 15

A profit center is responsible for generating revenue, but it is not responsible for controlling costs.

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Question 16

Financial measures such as ROI are generally better than nonfinancial measures of key success drivers such as customer satisfaction as leading indicators of future financial performance.

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Question 17

A balanced scorecard consists of a report showing a performance measure such as ROI or residual income for all of the divisions in a company that generate profits.

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Question 18

A balanced scorecard contains both customer and internal business process performance measures because improvements in internal business process should result in improvements in customer satisfaction.

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Question 19

Financial measures such as ROI and residual income as well as operating measures may be included in a balanced scorecard.

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Question 20

The basic objective of responsibility accounting is to charge each manager with those costs and/or revenues over which he has control.

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Quiz 10: Performance Measurement in Decentralized Organizations