Accounting II chapter 10
net operating income
EBIT is another term for ______
cannot be used to evaluate different sized divisions
A disadvantage of the residual income approach is that it ______.
Balanced Scorecard
An advantage of using a(n) _________ is that it continually tests the theories underlying management strategies.
a balanced scorecard
An integrated set of performance measures that are derived from the company's strategy is ______.
decentralized
An organization in which decision-making authority is spread throughout the organization is _____
responsibility
Any part of an organization whose manager has control over and is accountable for all three centers (cost, profit, or investments) is a(n) ______ center
Financial, customer, internal business processes, and learning and growth
Choose the four groups of performance measures typically used in the balanced scorecard approach.
profit
Comparing actual net income to budgeted net income is often done to evaluate the manager of a(n) _______center
margin; turnover
Computing ROI using the expanded model provides additional insights. ROI can be lowered by excessive operating expenses which can depress _________ and excessive operating assets which can depress _________
11.6 Delivery cycle time = wait time + process time + inspection time + move time + queue time.
Gavin, Inc. recorded the following information for one of its products. All amounts are in days: Wait time 5.0; Inspection time 0.7; Process time 2.5; Move time 0.4; Queue time 3.0. Gavin's delivery cycle time is ______ days.
spread throughout the organization
In decentralized organizations, decision-making authority is ______.
margin; turnover
In order to fully understand how a manager's decisions can affect ROI, both _____ and ______ should be computed.
6.7 Throughput time = process time + inspection time + move time + queue time.
JPL, Inc. recorded the following information for one of its products. All amounts are in days: Wait time 4.0; Inspection time 0.6; Process time 2.3; Move time 0.7; Queue time 3.1. JPL's throughput (manufacturing cycle) time is ______ days.
decentralized, increase
Lower-level managers are empowered to make decisions in a ______ organization, which can ________ motivation and job satisfaction.
cost
Managers of ______ centers are expected to minimize costs, while providing an acceptable level of service
Residual income
Net operating income (NOI) - (Average operating assets × Minimum required rate of return) = ________
interest and taxes
Net operating income is income before ____ and ____
Return on investment
Net operating income ÷ Average operating assets =
there are fewer managers that must be consulted before a decision is made
Operations are able to respond quickly to customers and changes in the environment in a decentralized organization because ______.
2 ÷ 8 =.25
Quick to Ship Company has a process time of 2 days and a throughput time of 8 days. The manufacturing cycle efficiency is _____
Net operating income ÷ Average operating assets
Return on investment =
cost; profit
Service departments, such as the accounting department, are generally considered ____ centers, while sales offices are often considered _____ centers
average operating assets for the year
The ROI formula typically uses ______.
Delivery Cycle Time
The elapsed time from when a customer order is received until the finished goods are shipped is known as the _________
residual income
The inability to compare divisions of different sizes is a major disadvantage of ______.
throughput
The manufacturing cycle efficiency (MCE) is computed by relating the value-added time to the _____ time
residual income
The net operating income that an investment center earns above the minimum required return on its average operating assets is _______
throughput
The period from which a product begins production as raw materials and ends as a finished product is known as _______ time or manufacturing cycle time.
more
When managers are evaluated on residual income, rather than on return on investment (ROI), they will be ______ likely to pursue projects that will benefit the entire company.
Balanced Scorecard
a(n) _____________ consists of an integrated set of performance measures that are derived from and support a company's strategy.
balanced scorecard
presents a theory of how a company can take action to attain its desired outcomes