Question 1

An increasingly popular approach that integrates financial and customer performance measures with measures in the areas of internal operations and learning and growth is known as:

Accepted Answer

The integrated approach described in the question refers to the balanced scorecard, which includes financial, customer, internal process, and learning and growth perspectives to provide a more comprehensive view of organizational performance. A, C, D, and E are not accurate descriptions of this approach.

Question 2

Sand Fly Corporation operates two stores: J and K. The following information relates to J: $\begin{array}{lr}
\text { Sales revenue } & \$ 1,300,000 \
\text { Variable operating expenses } & 600,000\
\text { Fixed expenses: }\
\text { Traceable to J and controllable by J } & 275,000 \
\text { Traceable to J and controllable by others } & 80,000
\end{array}$ J's segment contribution margin is:

Accepted Answer

The answer of Sand Fly Corporation operates two stores: J...

Question 3

The following information was taken from the segmented income statement of Restin, Inc., and the company's three divisions: $\begin{array}{cccc} 
&& \text { Los } & \text { Bay } & \text { Central } \
&\text { Restin, } & \text { Angeles } & \text { Area } & \text { Valley } \
&\text { Inc. } & \text { Division } & \text { Division } & \text { Division }\\hline
\text { Revenues } & \$ 750,000 & \$ 200,000 & \$ 235,000 & \$ 325,000 \
\text { Variable operating expenses } & 410,000 & 110,000 & 120,000 & 180,000 \
\text { Controllable fixed expenses } & 210,000 & 65,000 & 75,000 & 70,000 \
\text { Noncontrollable fixed expenses } & 60,000 & 15,000 & 20,000 & 25,000
\end{array}$ In addition, the company incurred common fixed costs of $18,000.
Assuming use of a responsibility accounting system, which of the following amounts should be used to evaluate the performance of the Los Angeles division manager?

Accepted Answer

The answer of The following information was taken from the...

Question 4

The following information was taken from the segmented income statement of Restin, Inc., and the company's three divisions: $\begin{array}{cccc} 
&& \text { Los } & \text { Bay } & \text { Central } \
&\text { Restin, } & \text { Angeles } & \text { Area } & \text { Valley } \
&\text { Inc. } & \text { Division } & \text { Division } & \text { Division }\\hline
\text { Revenues } & \$ 750,000 & \$ 200,000 & \$ 235,000 & \$ 325,000 \
\text { Variable operating expenses } & 410,000 & 110,000 & 120,000 & 180,000 \
\text { Controllable fixed expenses } & 210,000 & 65,000 & 75,000 & 70,000 \
\text { Noncontrollable fixed expenses } & 60,000 & 15,000 & 20,000 & 25,000
\end{array}$ In addition, the company incurred common fixed costs of $18,000.
Which of the following amounts should be used to evaluate whether Restin, Inc., should continue to invest company resources in the Los Angeles division?

Accepted Answer

The answer of The following information was taken from the...

Question 5

On a segmented income statement, common fixed expenses will have an effect on a company's:

Accepted Answer

The answer of On a segmented income statement, common fixed...

Question 6

The following information was taken from the segmented income statement of Restin, Inc., and the company's three divisions: $\begin{array}{cccc} 
&& \text { Los } & \text { Bay } & \text { Central } \
&\text { Restin, } & \text { Angeles } & \text { Area } & \text { Valley } \
&\text { Inc. } & \text { Division } & \text { Division } & \text { Division }\\hline
\text { Revenues } & \$ 750,000 & \$ 200,000 & \$ 235,000 & \$ 325,000 \
\text { Variable operating expenses } & 410,000 & 110,000 & 120,000 & 180,000 \
\text { Controllable fixed expenses } & 210,000 & 65,000 & 75,000 & 70,000 \
\text { Noncontrollable fixed expenses } & 60,000 & 15,000 & 20,000 & 25,000
\end{array}$ In addition, the company incurred common fixed costs of $18,000.
The profit margin controllable by the Central Valley segment manager is:

Accepted Answer

The answer of The following information was taken from the...

Question 7

Which of the following balanced-scorecard perspectives is influenced by a company's vision and strategy?

Accepted Answer

All the perspectives (Financial, Customer, Internal operations, Learning and growth) are influenced by a company's vision and strategy as they are integral parts of the balanced scorecard framework.

Question 8

Which of the following would be the best measure on which to base a segment manager's performance evaluation for purposes of granting a bonus?

Accepted Answer

Profit margin controllable by the segment manager would be the best measure on which to base a segment manager's performance evaluation for purposes of granting a bonus. This measure takes into account not only the segment's profitability, but also the degree to which the manager can control costs and expenses within the segment. It thus provides a more accurate picture of the manager's effectiveness in managing the segment's operations. Other measures such as segment sales revenue, contribution margin, profit margin, and net income may be influenced by factors outside the manager's control, such as changes in market conditions or corporate-wide strategies.

Question 9

Guernsey Retail has three stores in Wisconsin. Which of the following costs would likely be excluded when computing the profit margin controllable by store no. 3's manager?

Accepted Answer

The answer of Guernsey Retail has three stores in Wisconsin....

Question 10

The following information was taken from the segmented income statement of Restin, Inc., and the company's three divisions: $\begin{array}{cccc} 
&& \text { Los } & \text { Bay } & \text { Central } \
&\text { Restin, } & \text { Angeles } & \text { Area } & \text { Valley } \
&\text { Inc. } & \text { Division } & \text { Division } & \text { Division }\\hline
\text { Revenues } & \$ 750,000 & \$ 200,000 & \$ 235,000 & \$ 325,000 \
\text { Variable operating expenses } & 410,000 & 110,000 & 120,000 & 180,000 \
\text { Controllable fixed expenses } & 210,000 & 65,000 & 75,000 & 70,000 \
\text { Noncontrollable fixed expenses } & 60,000 & 15,000 & 20,000 & 25,000
\end{array}$ In addition, the company incurred common fixed costs of $18,000.
Assume that the Los Angeles division increases its promotion expense, a controllable fixed cost, by $10,000. As a result, revenues increased by $50,000. If variable expenses are tied directly to revenues, the new Los Angeles segment contribution margin is:

Accepted Answer

The new Los Angeles segment contribution margin is $22,500. The increase in promotion expense is a controllable fixed cost, which means that it will not affect the variable expenses. The increase in revenues will increase the contribution margin by the same amount, which is $50,000. The new contribution margin is therefore $65,000 + $50,000 = $115,000. The controllable fixed expenses are $75,000, so the new segment contribution margin is $115,000 - $75,000 = $22,500.

Question 11

Swedish Cruise Lines (SCL), which operates in a very competitive marketplace, is considering four categories of performance measures: (1) profitability measures, (2) customer-satisfaction measures, (3) efficiency and quality measures, and (4) learning and growth measures. The company assigns one manager to each ship in its fleet to oversee the ship's general operations. If SCL desired to adopt a balanced-scorecard approach, which measures should the firm use in the evaluation of its managers?

Accepted Answer

A balanced-scorecard approach involves using a comprehensive set of performance measures, including financial, customer, internal process, and learning and growth perspectives, which corresponds to all four categories mentioned.

Question 12

When using a balanced scorecard, which of the following is typically classified as an internal-operations performance measure?

Accepted Answer

The answer of When using a balanced scorecard, which of...

Question 13

The following data relate to Department no. 3 of Tsing Corporation: $\begin{array}{lr}
\text { Segment contribution margin } & \$ 540,000 \
\text { Profit margin controllable by the segment manager } & 310,000 \
\text { Segment profit margin } & 150,000
\end{array}$ On the basis of this information, Department no. 3's variable operating expenses are:

Accepted Answer

The answer of The following data relate to Department no....

Question 14

Wirefree, Inc. provides a variety of telecommunications services to residential and commercial customers from its massive campus-like headquarters in suburban Orlando. For a number of years the firm's maintenance group has been organized as a cost center, rendering services free of charge to the company's user departments (sales, billing, accounting, marketing, research, and so forth).
Requests for maintenance have grown considerably, and demand is approaching the point where quality and timeliness of services provided are becoming an issue. As a result, management is studying whether the maintenance operation should be converted from a cost center to a profit center, with users to be billed for services performed.
Required:
A. Differentiate between a cost center and a profit center. How is each of these centers evaluated?
B. What will likely happen to the number of user service requests if the company makes the switch to a profit-center form of organization? Why?
C. Assume that a user department has requested a particular service, one that is time consuming and costly to perform. The maintenance group's actual cost incurred in providing this service is $17,800, and the user has agreed to pay $20,800 if the switch to a profit center is made. If this case is fairly typical within the firm, which of the two forms of organization (cost center or profit center) will result in a more responsive, service-oriented maintenance group for Wirefree? Why?

Accepted Answer

The answer of Wirefree, Inc. provides a variety of telecommunications...

Question 15

The typical balanced scorecard is best described as containing:

Accepted Answer

The typical balanced scorecard contains both financial and nonfinancial performance measures. This is because the balanced scorecard is designed to provide a comprehensive view of an organization's performance, taking into account both financial and nonfinancial factors that contribute to its success. By including both types of measures, the balanced scorecard helps organizations develop a more balanced and integrated approach to performance measurement and management.

Question 16

When using a balanced scorecard, a company's market share is typically classified as an element of the firm's:

Accepted Answer

Market share is a measure of a company's success in attracting and retaining customers, making it a key metric for the customer perspective of the balanced scorecard. It is not directly related to financial performance or internal operations, and while it could indirectly impact learning and growth, it is not a direct measure of that perspective. Interdisciplinary performance measures are not a category in the balanced scorecard framework.

Question 17

The following data relate to Department no. 2 of Eva Corporation: $$\begin{array} { l r } 
\text { Segment contribution margin } & \$ 540,000 \
\text { Profit margin controllable by the segment manager } & 320,000 \
\text { Segment profit margin } & 60,000
\end{array}$$ On the basis of this information, fixed costs traceable to Department no. 2 but controllable by others are:

Accepted Answer

The answer of The following data relate to Department no....

Question 18

Lead indicators guide management to:

Accepted Answer

Lead indicators are used to guide management in taking actions now that will have positive effects on organizational performance in the future. They are used as a predictive tool to make informed decisions regarding the future performance of the organization.

Question 19

The following information was taken from the segmented income statement of Restin, Inc., and the company's three divisions: $\begin{array}{cccc} 
&& \text { Los } & \text { Bay } & \text { Central } \
&\text { Restin, } & \text { Angeles } & \text { Area } & \text { Valley } \
&\text { Inc. } & \text { Division } & \text { Division } & \text { Division }\\hline
\text { Revenues } & \$ 750,000 & \$ 200,000 & \$ 235,000 & \$ 325,000 \
\text { Variable operating expenses } & 410,000 & 110,000 & 120,000 & 180,000 \
\text { Controllable fixed expenses } & 210,000 & 65,000 & 75,000 & 70,000 \
\text { Noncontrollable fixed expenses } & 60,000 & 15,000 & 20,000 & 25,000
\end{array}$ In addition, the company incurred common fixed costs of $18,000.
Bay Area's segment profit margin is:

Accepted Answer

Segment profit margin = (Segment profit / Segment revenue) * 100Segment profit = Segment revenue - Variable operating expenses - Controllable fixed expenses - Noncontrollable fixed expensesSegment revenue = $235,000Variable operating expenses = $120,000Controllable fixed expenses = $75,000Noncontrollable fixed expenses = $20,000Segment profit = $235,000 - $120,000 - $75,000 - $20,000 = $20,000Segment profit margin = ($20,000 / $235,000) * 100 = 8.51%

Question 20

A segment contribution margin would reflect the impact of:

Accepted Answer

A segment contribution margin reflects the impact of variable operating expenses, which are expenses that vary with changes in the level of activity within the segment. Fixed expenses, whether controllable or not, would be reflected in the segment's net income or loss, but not in its contribution margin. Common fixed expenses are not traceable to any specific segment and should not be allocated to individual segments when computing contribution margins.

Quiz 12: Responsibility Accounting, Operational Performance Measures, and the Balanced Scorecard

An increasingly popular approach that integrates financial and customer performance measures with measures in the areas of internal operations and learning and growth is known as:

On a segmented income statement, common fixed expenses will have an effect on a company's:

Which of the following balanced-scorecard perspectives is influenced by a company's vision and strategy?

Which of the following would be the best measure on which to base a segment manager's performance evaluation for purposes of granting a bonus?

Guernsey Retail has three stores in Wisconsin. Which of the following costs would likely be excluded when computing the profit margin controllable by store no. 3's manager?

When using a balanced scorecard, which of the following is typically classified as an internal-operations performance measure?

The typical balanced scorecard is best described as containing:

When using a balanced scorecard, a company's market share is typically classified as an element of the firm's:

Lead indicators guide management to:

A segment contribution margin would reflect the impact of: