Principles of Accounting Volume 2
19th Edition
ISBN: 9781947172609
Author: OpenStax
Publisher: OpenStax College
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Textbook Question
Chapter 12, Problem 10MC
Without proper performance measures, goal congruence is almost impossible to achieve and will likely lead to _______.
A. more stable targets
B. decreased defects
C. lost profits
D. employees satisfied with the status quo
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Students have asked these similar questions
Which of the following is not a characteristic of a good performance measurement system?
Group of answer choices
A. timely
B. consistent
C. based on activities over which managers have no control or influence
D. uses both long- and short-term performances and standards
Criticisms of return on investment as the only performancemeasure include:a. ROI focuses on short-term decisions.b. ROI is focused on only one component of the value chain.c. Managers evaluated based only on ROI are sometimesmotivated not to make an investment that is in the bestinterest of the organization as a whole.d. All of the above.
Historically, performance measurement systems have been based on accounting or other quantitative numbers. One issue is that some accounting numbers can be affected by the actions of managers, and this may result in distorted performance results. A well-designed performance measurement system should eliminate these potential conflicts, as much as possible.
There is a way to prevent these issues associated with using accounting measures as performance measures through use of nonaccounting measures in conjunction with accounting-based measures to help mitigate the problems of using accounting-based measures alone.
Most performance measurement systems today use a combination of accounting-based measures and non-accounting-based measures, short-term or long-term indicators, or quantitative and qualitative components.
True / False
Chapter 12 Solutions
Principles of Accounting Volume 2
Ch. 12 - Components of the organization that are...Ch. 12 - When managerial accountants design an evaluation...Ch. 12 - Goal congruence in well-designed performance...Ch. 12 - Responsibility accounting holds managers...Ch. 12 - Performance measures are only useful if _______....Ch. 12 - Which of the following is not a characteristic of...Ch. 12 - A good performance measurement system will align...Ch. 12 - What should an organization do if performance...Ch. 12 - A good performance measurement system will include...Ch. 12 - Without proper performance measures, goal...
Ch. 12 - Dixon Construction Materials has collected this...Ch. 12 - The cost of equity is _______. A. the interest...Ch. 12 - Which of the following measures the profitability...Ch. 12 - The capital structure of Ridley Enterprises Is:...Ch. 12 - Calculate the ROI for Gardner Chemical given the...Ch. 12 - Which of the following statements is false? A. The...Ch. 12 - The metrics based on nonfinancial information are...Ch. 12 - The metrics based on financial numbers produced by...Ch. 12 - People affected by decisions made by a company,...Ch. 12 - The owners of company stock are ______. A....Ch. 12 - Why might a manager focused solely on accounting...Ch. 12 - Is there a way to prevent managers from focusing...Ch. 12 - Should an organization focus on controllable or...Ch. 12 - What are the components of a strategic plan? Find...Ch. 12 - What are the four types of centers and their...Ch. 12 - What would be wrong with using two points of data...Ch. 12 - Compare and contrast short- and long-term goals...Ch. 12 - Can a short-term goal also be a long-term goal?...Ch. 12 - What does goal congruence mean? Provide an example...Ch. 12 - What are the six characteristics of a good...Ch. 12 - What is EVA and why is it superior to other...Ch. 12 - What are the drawbacks to ROI? Give examples of...Ch. 12 - Describe the history and purpose of the balanced...Ch. 12 - What are the characteristics of successful...Ch. 12 - For the following situations, identify whether the...Ch. 12 - For the following descriptions state whether the...Ch. 12 - Identify the type of responsibility center...Ch. 12 - Sara has just taken a job as the middle school...Ch. 12 - During the current year, Sokowski Manufacturing...Ch. 12 - During the current year, Sokowski Manufacturing...Ch. 12 - Assume Skyler Industries has debt of $4,500,000...Ch. 12 - Why do managers want a high ROI, and how would...Ch. 12 - Classify each of the following performance...Ch. 12 - For the following situations identify whether the...Ch. 12 - For the following descriptions, state whether the...Ch. 12 - Identify the type of responsibility center...Ch. 12 - Padma completed her doctoral degree and has taken...Ch. 12 - During the current year. Plainfield Manufacturing...Ch. 12 - During the current year, Plainfield Manufacturing...Ch. 12 - Assume Plainfield Manufacturing has debt of...Ch. 12 - Though a high ROI is desired, what are some...Ch. 12 - Classify each of the following performance...Ch. 12 - Match each of the following with its appropriate...Ch. 12 - Florentino Allers is the production manager of...Ch. 12 - Macon Mills is a division of Bolin Products. Inc....Ch. 12 - Jefferson Memorial Hospital is an investment...Ch. 12 - Crawfords Books and Things has a traditional...Ch. 12 - Coral Creations has strategic plans that call for...Ch. 12 - Match each of the following with its appropriate...Ch. 12 - Oleg Markov is the production manager of NASA...Ch. 12 - Evaluate the two departments for Moxie Products....Ch. 12 - Banyan Industries has two divisions, a tax rate of...Ch. 12 - Forty years ago, Vinfen was founded as a nonprofit...Ch. 12 - What combination of quantitative factors and...Ch. 12 - Josh OShea is the manager of the...Ch. 12 - Kanye Achebe just became the operations manager of...Ch. 12 - Which of the performance measures—ROI, RI, or...
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- Which of the following is not a characteristic of a good performance measurement system? A. timely B. consistent C. based on activities over which managers have no control or influence D. uses both long- and short-term performances and standardsarrow_forwardThese are measures not found in the chart of accounts, such as customer satisfaction scores or product quality measures. A. Quality measures B. Non-financial measures C. Financial Measures D. Balanced Scorecard A manager would like to see reduction of the following operational measures, except: A. Spoilage B. Number of customer complaints C. Queue time D. Manufacturing Efficiencyarrow_forwardAn example of a nonfinancial measure for customer satisfaction is: delivery delay employee turnover number of defects on the production line process yield none of the above could be customer satisfaction measures 2.Measures of the balanced scorecard's financial perspective might include all of the following EXCEPT: operating income customer satisfaction gross profit percentage cost reductions 3. Which of the following is NOT true of the balanced scorecard? Different strategies call for different scorecard measures. Successful implementation requires commitment and leadership from top management. Only objective measures should be used and subjective measures should be avoided. Cause and effect linkages are implied by the balanced scorecard, and even though they may not be precise, can and should evolve over time.arrow_forward
- The tendency for managers to behave like the performance metrics are the strategic objectives is known as a. motivated reasoning b. common measures bias c. surrogation d. metrics errorsarrow_forwardWhat is turnover? What does it measure? Describe this in your own words. Writing a formula is not a sufficient answer. Name one specific way a manager could improve turnover. This will demonstrate your understanding. Explain why your idea would have a positive effect on turnover?arrow_forwardThere are some M&As, which are driven by cognitive errors such as managers’ hubris.Explain how these kinds of M&As are motivated and their plausible outcomes.arrow_forward
- Which of the following promotes goal congruence (aligned goals between segment managers and top management)? Residual Income as a performance evaluation measure O Return on Investment as a performance evaluation measure A positive residual income means O the investment has exceeded management's expectations based on their target rate of return. O the investment has not met management's expectations based on their target rate of return. O A positive or negative residual income does not tell us whether management's expectations were met.arrow_forward1. Discuss whether the manager of Bell Division should be evaluated only on ROI? 2. Provide two (2) reasons why ROI, RI, and EVA may be inappropriate measures of performance.arrow_forwardWhich of the following statements are true? Multiple select question. Measuring and reporting quality costs does not solve quality problems. The impact of customer ill will is generally not found on quality control reports. As managers become more experienced in balancing prevention and appraisal activities, the need for quality cost reports often increases. Decreases in quality costs generally occur as soon as improvement programs are implemented.arrow_forward
- Wrong allocation of common costs lead to A. Inaccurate estimation of cost of products or services B. Under utilization of capacity C. Lower profit margin D. All of the above are correctarrow_forwardAn objective of responsibility accounting is to: a) Provide information that helps managers make optimal decisions. b) Reward managers who have unfavorable variances. Jh c) Decrease productivity. d) Punish managers for variances based on factors outside of their control.arrow_forwardWhich of the following statements about the balanced scorecard approach is false? It requires managers to focus on financial measures more than nonfinancial measures. It looks at performance from the following perspectives: financial, customer, internal business, and learning and growth. It helps balance short-term operating performance with long-term strategies. It recognizes that traditional measures of performance are often not adequate to fully assess a company’s performance.arrow_forward
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