Ch 10 M/C

When managers are evaluated on residual income, rather than on return on investment (ROl), they will be _____ likely to pursue projects that will benefit the entire company O equally O less O more

More

A MCE of less than 1 indicates O operations are efficient O non-value added time is present O the majority of time is spent on activities that add value to the product

Non-value added time is present

Which of the following statements is not a weakness of using return on investment (ROl) to evaluate performance? O It may be difficult to assess the performance of a manager who takes over an existing business segment. O Managers may reject investment opportunities that would benefit the entire company but negatively affect the manager. OROl does not include the investment in nonoperating assets, such as land held for investment or stock in other companies O Managers may increase ROl in a way that is inconsistent with company strategy.

ROl does not include the investment in nonoperating assets, such as land held for investment or stock in other companies

Decision-making authority lies mostly with higher-level managers in strongly organizations. O segregated O centralized O decentralized O diversified

Centralized

What the company does in an attempt to satisfy customers falls into the____ group of the balance scorecard. O customer O internal business processes O financial O learning and growth

Internal business process

The inability to compare divisions of different sizes is a major disadvantage of O ROI only O residual income only O neither residual income nor ROl O both residual income and ROl

Residual income only

Which of the following is not one of the three primary types of responsibility centers? O profit O cost O sales O investment

Sales

In decentralized organizations, decision-making authority is O not granted to the lowest level managers O spread throughout the organization O confined to a few top executives

Spread throughout the organization

Operational excellence is an example of a company O balanced scorecard O strategy O performance measure O operating measure

Strategy

A disadvantage of the residual income approach is that it O sometimes discourages investments that are beneficial to the company as a whole O only considers investments acceptable if the return exceeds current ROl O cannot be used to evaluate different sized divisions

cannot be used to evaluate different sized divisions

ROl is a method used to evaluate O cost and profit centers, but not investment centers O profit and investment centers, but not cost centers O cost, profit, and investment centers O investment centers, but not cost or profit centers

investment centers, but not cost or profit centers

When a manager is evaluated on residual income, an investment is acceptable when O the return on investment of the new project equals or exceeds current ROI O net operating income for the investment is above the minimum required return on average operating assets O it generates any positive net operating income O net operating income for the new investment is above the current return on average operating assets

net operating income for the investment is above the minimum required return on average operating assets

A balanced scorecard O presents a theory of how a company can take action to attain its desired outcomes O should only focus on the financial measures needed to achieve success O will not identifv an ineffective strategy based on faulty assumptions

presents a theory of how a company can take action to attain its desired outcomes

An integrated set of performance measures that are derived from the company's strategy is O residual income O the minimum required rate of return O a balanced scorecard O return on investment

A balanced scorecard

Leading indicators of future financial success include O both customer satisfaction and financial measures O financial measures such as ROl and residual income O customer satisfaction measures O neither customer satisfaction nor financial measures

Customer satisfaction measures

Which of the following is not a characteristic of decentralization? O Decentralization allows top management to concentrate on bigger issues such as overall strategy. O Decentralization helps to train lower-level managers for higher level positions. O Decentralization puts the decision-making authority in the hands of those who have the most information on day-to-day operations. O Decentralization reduces how accountable lower-level managers are for the outcomes of their decisions.

Decentralization reduces how accountable lower-level managers are for the outcomes of their decisions

An organization in which decision-making authority is spread throughout the organization is ______ O decentralized O centralized

Decentralized

Assembling products and handling baggage are examples of ____ processes. O learning and growth O customer O internal business O financial

Internal business

Managers of cost centers are expected to O maximize sales, while also minimizing the costs associated with those sales O manage the return on investment in operating assets O increase departmental sales O minimize costs, while providing an acceptable level of service

Minimize costs, while providing an acceptable level of service

EBIT is another term for O operating assets O residual income O net operating income O income after taxes

Net operating income