ACCLSch11

Which of the following are correct?

-fixed service department costs are based entirely on budgeted data -variable service department costs are charged to operating divisions based on the budgeted rate and actual activity

the balanced scorecard:

-incorporates both financial and non-financial measures -may include ROI and residual income in its coordinated system of performance measures -helps employees to understand the strategy of the company

which of the following are disadvantages of decentralization?

-lower level managers may have objectives that differ from the objectives of the entire organization -lower level managers may make decisions without understanding the big picture -coordination among departments may be lacking

What is NOT a weakness of using ROI to evaluate performance?

ROI does not include the investment in non operating assets, such as land held for investment or stock in other companies

which of the following statements is correct?

a manager might reject a proposal using ROI that the manager would accept using residual income

an integrated set of performance measures that are derived from the companies strategy is a _________-_________

balanced scorecard

operating divisions are charged for _________ service department costs

budgeted

the time between when an order is placed and when it is delivered is know as the _________-________-________

delivery cycle time

True or False: Adams, inc. has found that their managers are reluctant to replace old equipment with new, updated equipment. To stop this practice, Adams should compute ROI using assets' net book values

false

choose the four groups of performance measures typically used in the balanced scorecard approach

financial, customers, internal business processes, and learning and growth

the results of what people in the organization do are reflect in __________ performance measures and what drives organizational performance are reflected in __________ performance measures

financial, non financial

service department ______ costs represent the costs of making capacity available for use. These costs should be charged in _________ lump-sum amounts

fixed, predetermined

Residual income is a measure used to evaluate managers of __________ centers

investment

the manager of a ________ center has control over costs, revenue, and investments in operating assets

investment

Which of the following performance measures are part of the balanced scorecard?

learning and growth, financial, customer perpective

the buying division in a transfer will only agree to a transfer price if the inside supplier's price is _________ than or equal to the price offered by an outside supplier

less

if cost is used as a transfer price, the only division that an opportunity to make a profit on the transfer is the division that:

makes the final sale to an outside party

in order to fully understand how a mangers decisions can affect ROI, both ________ and _________ should be computed

margin and turnover

EBIT is another term for:

net operating income

a MCE of less than 1 indicated:

non value added time is present

the performance of two different investment centers should be evaluated by comparing the ________ change in residual income from year to year for the two investment centers

percent

the only value-added component of throughput time is _________ time

process

comparing actual net income to budgeted net income is often done to evaluate the manager of a ______ center

profit

components of throughput time include

queue time, inspection time, process time

why is using the gross cost of operating assets when calculating ROI preferable to using the net book value?

replacing an existing asset will not automatically decrease ROI

when a manager accepts a project because the net operating income from the investment exceeds the minimum acceptable profit based on required rate of return, the investment was evaluated based on _____-____

residual income

any part of an organization whose manager has control over and is accountable for cost, profit, and/or investments is a ___________ center

responsibility

when a department has no idle capacity and will interrupt their current level of sales to regular customers, the lowest acceptable transfer price to supply product to another division is

selling price

in decentralized organizations, decision making authority is:

spread throughout the organization

the balanced scorecard should be consistent with the company's _________, so that people will not find themselves working at cross purposes

strategy

when managers do not act in the best interests of the overall company, ________ occurs

suboptimization

the manufacturing cycle efficiency is computed by relating the value added time to the __________ time

throughput

the amount that one division charges when it sells goods or services to another division of the same company is called a _______-_______

transfer price

the elapsed time from when a customer order is received and when production begins is called _______ time

wait