Which of the following is not a criticism of using ROI as the only performance measure?16Multiple CholceAskIt may Incentivize short-term decisions at the expense of long-term planningIt may Incentivize employees to act in ways that are consistent with the overall goals and objectives of the organization.It may Incentlvize decistons that are effective at the divislon-level, but not necessartly at the enterprise-levelIt may be too rellant on subjective or arbitrary allocations of capital.

ROI stands for Return on investment that shows the return earned by the company on the capital…

Answered: Which of the following is not a…

Business

Accounting

Which of the following is not a criticism of using ROI as the only performance measure?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter12: Balanced Scorecard And Other Performance Measures

Section: Chapter Questions

Problem 6MC: Which of the following is not a characteristic of a good performance measurement system? A. timely...

See similar textbooks

Related questions

Q: explain why GAAP requires full absorption costing (instead of variable costing) if absorption…

A: Introduction:- i)Absorption costing:- Under the absorption costing, The following costs included in…

Q: Which of the following is false regarding activity-based costing (ABC)? a. Companies that have…

A: Activity based costing is a type and method of costing methodology, in which all indirect costs or…

Q: Managers often assume a strictly linear relationship between cost and the level of activity.Under…

A: There are 3 main types of cost: a. Variable cost b. Fixed cost b. Mixed Costs Variable costs are…

Q: Managers often assume a strictly linear relationship between cost and the level of activity.How can…

A: The managers often assume the strictly linear relationship between the cost and the level of…

Q: We can begin to answer ROI questions only if we know the goal that the marketing action was intended…

A: Return on Investment (ROI) is a presentation measure used to assess the productivity or benefit of…

Q: Identify and explain the criticisms of using return on investment (ROI) as the onlyperformance…

Q: most significant drawback of evaluating investment centers using RO

A: ROI is an accounting metric used to evaluate the return on invested capital of the business.

Q: What is the biggest disadvantage of using ROI to evaluate investment centers?

A: Return on Investment: Under return on Investment, the investment opportunity with the highest rate…

Q: Create an example showing how residual income is calculated. What information is used in computing…

A: Return on investment (ROI): Return on investment evaluates how efficiently the assets are used in…

Q: Which of the statement is not a true reflection of Target cost gap ? The target cost gap =…

A: target costing is the way in which deriving of a target cost is done to set the production manager…

Q: Which of the following is NOT true about the cause-and-effect criterion when estimating a cost…

A: The cause and effect analysis is one of the factors for making cost allocation decisions. The cost…

Q: Which of the following is NOT true of regression techniques for estimating costs?

A: Cost: Cost can be defined as the cash and cash equivalent which is incurred against the products…

Q: Using the concept of substitution and income effect, explain why means-tested transfer programs…

A: The income effect is basically the shift in consumer consumption of items as a result of income…

Q: Why can full cost accounting lead to wrong management decisions?

A: Full cost accounting says that total costs of the product either it is fixed costs or it is variable…

Q: Company X sees a disruption in its supply chain at the same time it sees a decrease in customer…

A: A supply chain network is an organization of individuals, associations, and exercises that move an…

Q: What does it mean to use the DuPont model to help explain a decrease in ROI?

A: Introduction: DuPont analysis is done to find out the various drivers that account for the return on…

Q: Most organizations use residual income instead of return on investment (ROI) as a performance…

A: The Following statement is True because Residual Income is much better than Return on Investment…

Q: What is the difference between an accounting break-even and a break-even NPV? Which will offer the…

Q: Managers often assume a strictly linear relationship between cost and volume. How can thispractice…

A: Cost: Cost can be defined as the cash and cash equivalent which is incurred against the products…

Q: he following sentences relate to achieving the financial goal of cost minimization. Which of the…

A: Cost minimization is a concept by which producers try to figure out how costs should be reduced.…

Q: 1. Discuss whether the manager of Bell Division should be evaluated only on ROI? 2. Provide two…

A: Financial ratios: The ratios calculated by using the various line items reported in the financial…

Q: Given the weaknesses of cost-based pricing, why wouldany company use this method?

A: Cost-based pricing means setting prices based on the cost of goods and services. The major…

Q: In what way can the use of ROI as a performance measure for investment centers lead to bad…

A: ROI: It is a measure on the amount of return on a particular investment with respect to the…

Q: What disadvantages do you see if the chief executive officer (CEO) is primarilyconcerned with…

A: Return on investment is the amount of revenue that is produced on a venture. By measuring the return…

Q: Why should managers worry about product overcosting or undercosting?

A: A product is said to be over costing when it consumes low level of resources but is reported to have…

Q: In what ways might using ROI as a performance indicator for investment centers lead to poor…

A: ROI: It measures the amount of return on a specific investment to the cost of the investment. The…

Q: Wrong allocation of common costs lead to A. Inaccurate estimation of cost of products or…

A: Common costs are those costs that are incurred for two or more products simultaneously. Common costs…

Q: What circumstances might create distortions where estimated costs are not an accurate representation…

A: The estimated costs are the costs determined through the estimation process on past…

Q: When making decisions, managers should consider a. revenues that differ between alternatives. b.…

A: The explanation for the given options: a. A manager on the verge of making decisions must consider…

Q: What factors affecting ROI does the DuPont method of protability analysis highlight?

A: Return on Investment (ROI): It is an accounting measure of income divided by an accounting measure…

Q: Criticisms of return on investment as the only performancemeasure include:a. ROI focuses on…

A: Return on investment is a measure used compare the benefit received by the investors when compared…

Q: Why is there often a conflict between the performance evaluation and cost-minimization objectives of…

A: SOLUTION- TRANSFER PRICING IS THE ACCOUNTING PRACTICE THAT REPRESENTS THE PRICE THAT ONE DIVISION…

Q: Why do product costing systems using a single, volume-based cost driver tend to overcost highvolume…

A: Costing: Costing is a technique used in cost accounting to determine the cost of a product. With…

Q: What is the most significant drawback of utilizing ROI to assess investment centers?

A: Return on Investment: The investment opportunity with the most significant rate of Return is…

Q: “RI is not identical to ROI, although both measures incorporate income and investment into their…

Q: How may using ROI as a success indicator for investment centers lead to poor decisions? How does the…

A: ROI: It calculates the amount of return on a particular investment about the investment's cost. The…

Q: From the standpoint of cost control, why is the FIFO method superior to the weighted-averagemethod?

A: First-In-First-Out (FIFO) Method: It is a method of managing inventory of an organization. Under a…

Q: Provide 2 examples of situation where the use of ROI can lead to decisions which may harm the future…

A: Return on investment: Return on investment (ROI) or return on costs is a ratio between net income…

Q: What is meant by the terms margin and turnover in ROI calculations?

A: ROI( Return on investment) is a performance measure used to measure the efficiency of an…

Q: In what way can the use of ROI as a performance measure for investment centers lead to baddecisions?

A: Return On Investment (ROI): It is a measure on the amount of return on a particular investment with…

Q: What advantages are there to breaking down the ROI computation into two separate elements, marginand…

A: Ratio analysis is a technique that is used to gain knowledge of the company’s profitability,…

Question

Which of the following is not a criticism of using ROI as the only performance measure?
16
Multiple Cholce
Ask
It may Incentivize short-term decisions at the expense of long-term planning
It may Incentivize employees to act in ways that are consistent with the overall goals and objectives of the organization.
It may Incentlvize decistons that are effective at the divislon-level, but not necessartly at the enterprise-level
It may be too rellant on subjective or arbitrary allocations of capital.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

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 standards
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
1. 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.
Which of the following statements is true? A balanced scorecard contains both customer and internal business process performance measures because improvements in internal business process should result in improvements in customer satisfaction. Incentive compensation for employees, such as bonuses, should be tied to balanced scorecard performance measures only if managers are confident that the performance measures are easily manipulated by those being evaluated.
Statement 1: Goal congruence will more likely occur if management can establish the performance evaluation criteria that inspires behavior aligned to the company’s best interests and at the same time promote the individual interest of company managers. Statement 2: When used for performance evaluation, income computation for periodic internal reports based on a responsibility accounting system should not include allocated fixed overhead. Both statements are true. Only Statement 1 is true. Only Statement 2 is true. Both statements are false.
Which of the following best describes an opportunity for management to issue low-qualityfi nancial reports?A . Ineff ective board of directorsB . Pressure to achieve some performance levelC . Corporate concerns about fi nancing in the future
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.
The costs referred to as “controllable costs” are a. Costs which management decides to incur in the current period to enable the company to achieve objectives other than the filling of orders placed by customers. b. Costs which are likely to respond to the amount of attention devoted to them by a specified manager. c. Costs which are governed mainly by past decisions that established the present levels of operating and organizational capacity and which only change slowly in response to small changes in capacity. d. Costs which fluctuate in total in response to small changes in the rate of utilization of capacity.
What of the following is NOT a Benefit of Activity Based Management? a.It assists in the budgeting process. b.It aids management in cost cutting and/or cost control and inferentially in product profitability. c.It causes managers to identify non-value added activities and therefore encourages thinking of means of reducing such activities. d.Is more complex than traditional accounting system because it uses multiple cost application rates, one for each activity or cost pool.
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.
1. What is not a cloud computing benefit? a) Accessibility improvement b) Safer storge c) A and B d) Increase cost 2. Cost that cannot be conveniently and economically traced to a cost objected is a) Direct cost b) Fixed cost c) Indirect cost d) None of above 3. Price decisions and customer profitability are an example of strategic management accounting. a) True b) False 4. Information that is required across various types of a company structure is not significantly varied. a) True b) False 5. What are internal Sources of information: a) Previous Financial statements b) Internet c) Customers
Provide 2 examples of situation where the use of ROI can lead to decisions which may harm the future competitiveness of a company.