Question 1

The emphasis in the balanced scorecard is on improvement rather than meeting a preset standard.

Accepted Answer

The balanced scorecard is designed to be a tool for continuous improvement, rather than simply evaluating whether certain standards have been met. It encourages organizations to identify areas for improvement and set goals for progress.

Question 2

Residual income is primarily useful because it helps to compare the performance of divisions of different sizes.

Accepted Answer

Residual income is useful for comparing the performance of divisions that have different levels of investment. It takes into account both the division's income and the cost of its assets, so it is a measure of profitability that is independent of division size.

Question 3

All other things the same,if a division's traceable fixed expenses decrease the division's segment margin will increase.

Accepted Answer

Traceable fixed expenses are expenses that can be directly attributed to a specific division. If these expenses decrease, the division's segment margin (which is the profit generated by the division after deducting variable costs and traceable fixed expenses) will increase, assuming all other factors remain the same.

Question 4

If improvement in a performance measure on a balanced scorecard should lead to improvement in another performance measure,but does not,then management should reexamine its strategy.

Accepted Answer

This statement is correct because the balanced scorecard approach is based on the premise that different aspects of an organization's performance are interconnected and interdependent. Therefore, if an improvement in one area fails to improve another area, it suggests that there may be a flaw in the organization's overall strategy or that the measures on the scorecard are not properly aligned. Management should then reevaluate the strategy and modify it accordingly.

Question 5

A decentralized organization is one in which decisions are made by top management and then implemented by managers at lower operating levels.

Accepted Answer

A decentralized organization is one in which decisions are made by managers at lower operating levels, with relatively little input from top management.

Question 6

All other things the same,a decrease in average operating assets will increase return on investment (ROI).

Accepted Answer

This is because ROI is calculated as Net Income divided by Average Operating Assets. If the average operating assets decrease, the denominator in the ROI formula will decrease, resulting in a higher ROI.

Question 7

A company that has a profit can increase its return on investment by:

Accepted Answer

Increasing sales revenue and operating expenses by the same percentage would increase the profit margin, which would increase the return on investment. Increasing operating expenses by the same dollar amount as sales revenue (choice A) would not increase profit margin, and increasing average operating assets and operating expenses by the same dollar amount (choice B) would not necessarily increase profit margin either. Decreasing average operating assets and sales by the same percentage (choice D) would decrease profit margin and therefore decrease return on investment.

Question 8

Which of the following will not result in an increase in return on investment (ROI),assuming other factors remain the same?

Accepted Answer

An increase in operating assets will result in a decrease in ROI as ROI = net operating income/total assets. Therefore, if assets increase, ROI will decrease assuming other factors remain the same.

Question 9

Denner Company has two divisions,A and B,that reported the following results for October:  If common fixed expenses were $31,000,total fixed expenses must have been:

Accepted Answer

11eaaee8_66a5_f812_933a_2dba63a68d0e_TB5186_00 *Given
Solve in the following steps:
1) $2,000 + $23,000 = $25,000
2) $90,000 F1F1F1S1F1F1F10 70% = $63,000;$150,000 F1F1F1S1F1F1F10 60% = $90,000
3) $63,000 + $90,000 = $153,000
4) $90,000 + $150,000 = $240,000
5) $240,000 - $153,000 = $87,000
6) $87,000 - $25,000 = $62,000
7) $62,000 + $31,000 = $93,000

Question 10

The concept of economic value added (EVA) is most similar to:

Accepted Answer

Economic value added (EVA) is a measure of a company's financial performance that is calculated by subtracting its cost of capital from its operating profit. Residual income, on the other hand, is a measure of the economic profit that remains after deducting the cost of capital from the earnings generated by an asset. Both EVA and residual income are measures of a company's ability to create value for its shareholders.

Question 11

An investment center is any responsibility center in an organization that controls cost and revenues and invested funds.

Accepted Answer

An investment center is a responsibility center that controls costs, revenues, and invested funds.

Question 12

A segment of a business responsible for both revenues and expenses would be called:

Accepted Answer

A profit center is a segment of a business that is responsible for generating both revenues and expenses, and therefore is evaluated based on its profitability. It is often given a high degree of autonomy and decision-making power within the larger organization. The other options (A) cost center and (B) investment center are focused solely on expenses and investments, respectively, and (D) residual income is a financial performance metric rather than a business unit designation.

Question 13

Return on investment (ROI) is equal to the margin multiplied by:

Accepted Answer

The answer of Return on investment (ROI) is equal to...

Question 14

A balanced scorecard is an integrated set of performance measures that should be designed to support management's strategy throughout the organization.

Accepted Answer

A balanced scorecard includes measures of financial performance, customer satisfaction, internal processes, and learning and growth, and all of these measures should be aligned with the overall strategy of the organization. This helps ensure that everyone throughout the organization is working towards the same goals and helps measure progress towards those goals.

Question 15

Higado Confectionery Corporation has a number of store locations throughout North America.In income statements segmented by store,which of the following would be considered a common fixed cost?

Accepted Answer

Common fixed costs are those that cannot be directly traced to a specific segment or store. The cost of corporate advertising aired during the Super Bowl is a common fixed cost because it benefits the corporation as a whole and is not attributable to any single store.

Question 16

When used in return on investment (ROI) calculations,operating assets include investments in land held for future use and investments in other companies.

Accepted Answer

Operating assets are the assets used in the day-to-day operations of a business, such as equipment, inventory, and accounts receivable. Investments in land held for future use and investments in other companies are considered non-operating assets and are typically excluded from ROI calculations.

Question 17

Which of the following performance measures will decrease if there is an increase in the accounts receivable?

Accepted Answer

The answer of Which of the following performance measures will...

Question 18

Return on investment (ROI) may not be fully controllable by a manager because of committed costs.

Accepted Answer

Committed costs are expenses that a manager cannot control, such as fixed costs or long-term investments. These costs can affect the ROI, making it difficult for a manager to fully control the outcome.

Question 19

Delmar Corporation is considering the use of residual income as a measure of the performance of its divisions.What major disadvantage of this method should the company consider before deciding to institute it?

Accepted Answer

The answer of Delmar Corporation is considering the use of...

Question 20

The Legal Department of an organization is not considered a responsibility center because it does not generate revenue.

Accepted Answer

The answer of The Legal Department of an organization is...

Quiz 11: Segment Reporting,decentralization,and the Balanced Scorecard