c11-lm.doc - Which of the following statemems regarding...

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Unformatted text preview: Which of the following statemems regarding decentralized organizations are correct? V Your answer is partially correct. an" 'm “I" Also correct V Decisions can be made more rapid Iv. since not as me ny layers of management are needed for approval. X Decentralization is likely to causejob dissatisfaction and decreased motivation for lower-level managers since they have increased responsibility. In a decentralized orga nlziation, decision-making authority is reserved for top management so lower level managers can concentrate on operations. X In a decentralized organization. lower—level managers should not be held accountable forthe outcomes of their decisions. V Decentralization helps train lower-level managers for higher positions. I Also correct V It allows top management to concentrate on issues such as overall strategy. Garnett. Inc. has a required rate of return on new projects of 12%. The Westem division of Garnett is currently earning a combined return on investment {ROI} of 14.5% on the projects In its division. The manager of the Western division is considering a project that is projected to earn 13.25%. Which of the following statements regarding the manager's decision are correct? . haul I V Your answer us almost correct. an" ' “1 ‘ V The manager may decideto reject the project because it will lower the current ROI earned by his division. I Also correct V The project is acceptable because it exceeds the company’s required rate of return. V Rejecting the project would be an example of the manager sacrificing the objectives of the overall company in order t0 impmve his segment. The project will lm prove the ROI for the Western division. since it is above the required rate of return that the company has specified. Which of the following statements is incorrect regarding the use of financial indicators as performance measures? x Sorry, your answer is incorrect. '"d ‘m‘ "1" Financial measures should be Integrated with nonfinancial measures In a well-designed balanced scorecard. s/ Missedl V Financial perfonnanoe is the responsibility of lower-level supervisors and managers who are in charge of the company‘s daily operations. X Top managers are ordinarily responsible forThe financial performance measures. Financial measures are lag indicators that report the results of past actions. Marcos Co. is considering a project that will increase residual income by $15,000. The project has a 12% return on investment {ROI} which exceeds the company's 1096 required rate of return. Marcos Co. currently has an overall 15% ROI in the department where this project would be implemented. Which of the following statements regarding this potential investment are two? and about thll VYour answer is partially correct. V The project should be accepted bythe company because it increases overall residual income. X The project should be accepted because the residual income will help push the project's ROI above the projected 12%. HISO correct V The department manager may not want to accept the project because it will lower the overall ROI for the department. The project should be rejected by The company because I15 ROI I5 lower than the current departmental ROI. A manufacturing cycle efficiency of 40% means that: [Check all that apply.) x Sorry, your answer is incorrect. “4"“ 'mm" 3 Missedl V the typical order is being worked on 40% of the time. I Missed! vvalue-added activities are being performed 40% of the time. valueaddad activities are being performed 60% of thotima. X 40% of the company‘s time is spent on non-value added activities- If 111E: MCE is 40% the company is spending 60% of its time on non-value added activities. l3} Which of the following statements is not a weakness of using return on investment {ROI} to evaluate segment performance? x Sorry, your anewer is incorrect. '“d “mm" Segnent managers may cut back on costs that will benefit the company In the long-term if the costs negatively affect the segments ROI. V Missed! V ROI does not include the investment in nonoperating assets. such as land held for investment or stock in Dti'IEI' '30 [TI panics. The segment’s ROI will Increase mechanically over time due to the effect of depreciation accumulating on operating assets. 3‘ Segment managers may sacrifice Investment opportunities that would benefit the entire company if the segment's ROI is negatively affected. Which of the following is not a characteristic of decentralization? flood about thll x Sorry, your answer is incorrect. V Missedl V Decentralization reduces how accountable lower-level managers are for the outcomes of their decisions. X Decentralization puts the decision-making authority.r in the hands of those who have the most information on day-to—day operations. Decentralization helps to train lower-level managers for higher level positions. Decentralization allows top management to concentrate on bigger issues such as overall strateg. Which of the following statements regarding a balanced scorecard is incorrect? x Sorry, your answer is incorrect. 5“" 'm‘w' The scorecard should not contain too many perforrnanoe measures. The performance measures should be conh'oilable to a significant extent by those being evaluatad. X The performance measures should be consistent with the company‘s strategy. v Missed! V The scorecard should provide an oppodunity for subordinates to evaluate their superiors. Which of the following statements are correct when comparing projects using residual income versus return on investment (ROI)? ' I VYour answer Is correct. flud Ibuulth I Managers will he more likely to pursue projects that will benefit the entire company when being evaluated on ROI than residual Income. V A manager might reject a proposal using ROI that the manager would accept using residual income. «I Residual income cannot be used to compare divisions of different sizes without some modification. ROI automatically decreases over time when usingthe net book value of operating assets as depreciation lowers net book value. Which of the following statements is incorrect regarding the use of financial indicators as performance measures? x Sorry, your answer is incorrect. “”1 'm‘ "1" Top managers are ordinarily responsible for the financial performance measures. Financial measures are lag indicators that report the results of past actions. V Missed! V Financial performance is the responsibility of lower-level supervisors and managers who are in charge of the company‘s daily operations. X Financial measures should be integrated with nonfinancial measures in a well-designed balanced scorecard. Which of the following is not a benefit of using a balanced scorecard? . II I V Your answer Is correct. I!“ lbflfllth l The balanced scorecard helps to ensure employees understand the organization's strategy. The balanced scorecard helps managers communicate the organization‘s strategy to meir Subordinates. The balanced scorecard helps to link the organization's strategy It) its financial budgets. V The balanced scorecard removes pressure on lower level managers to help further the company's overall strategy. The correct answer is shown. The process of holding lower-level managers accountable for the revenues and expenses over which they have control is referred to as responsibility accounting. {Enter only one word per blank.) Profit center managers are often evaluated by comparing actual profit to targeted profit. (Enter only one word per blank.) ...
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