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