accounting ch 11
why is using gross cost of operating assets when calculating ROI preferable to using the netbook value?
ROI will not vary based on the age or purchase of operating assets
an integrated set of performance measures that are derived from the company's strategy is:
a balanced scorecard
performance measures should be reported:
as often as needed
an advantage of using an __________ is that it continually test the theories that underlie management strategies
balanced scorecard
manager has control over costs, but not over revenue or the use of investment funds
cost
an organization in which decision-making authority is spread throughout the organization is:
decentralized
the time between when an order is placed and when it is delivered is known as:
delivery cycle time
the higher a business segment's return on investment, the greater the profit earned per __________ invested in the segment's average operating assets
dollar
an adaptation of residual income that has been adopted by many companies is called:
economic value added
true or false: an integrated set of performance measures is a strategy
false
true or false: for a typical company current financial measures ar ethe best and only indication of future financial performance
false
true or false: for a typical company current financial measures are best and only indication of future financial performance
false
operating performance measures:
help identify what drives organizational performance
using the net book value (instead of gross cost) to calculate average operating assets:
increases ROI overtime
Profit
manager has control over both costs and revenue, but not over the use of investment funds
Investment
manager has the control over costs, revenues, and the investment in operating assets
companies that are strongly decentralized should give all their ________ the ability to make business decisions about the day to day operations of the company
managers
managers will be (more,less) likely to pursue projects that will benefit the entire company when being evaluated on residual income, rather than on return on investment
more
residual income
net operating income - (average operating assets*minimum rate of return)
ROI
net operating income/sales or sales/average operating assets
What are the components of throughput time?
process, queue, and inspection time
lower-level managers' decision-making authority can be linked to the outcomes of those decisions through __________ accounting systems
responsibility
the term________center is used for any part of an organization whose manager has control over and is accountable for cost, profit, and/or investments
responsiblity
net operating income/average operating assets
return on investment
an _______ is essentially a theory about how to achieve the organization's goals
strategy
because companies target different customers with different kinds of products and services, performance measures should be tailored to the specific _____ of a company
strategy
the balance scorecard should be consistent with the compnany's __________, so that people will not find themselves working at cross-purposes
strategy
if a balanced scorecard is well constructed:
the performance measures should link together on a cause-and-effect basis
decentralized operations are able to respond quickly to customers and changes in operation because in a decentralized organization:
there are fewer managers that must be consulted before a decision is made
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
throughput
how does a manager who is evaluated based on residual income decide whether or not to invest in a new project?
to be accepted, net operating income for the investment should be above the minimum required return on average operating assets
