CHAPTER 13: THE BALANCED SCORECARD: STRATEGIC-BASED
CONTROL
1. Activity-based responsibility accounting focuses on processes and uses both operational and financial measures.
a. True
b. False
2. Activity-based responsibility accounting employs dynamic standards and emphasizes and supports
continuous improvement.
a. True
b. False
3. A strategic-based responsibility accounting system transforms the strategy of a company into operational
objectives and measures.
a. True
b. False
4. The most common form of strategic-based responsibility accounting system is the worksheet.
a. True
b. False
5. In a strategic-based responsibility accounting system, stretch targets are established for individual
performance measures.
a. True
b. False
6. The balanced scorecard is a strategic-based performance management system that identifies four perspectives.
a. True
b. False
7. Strategy translation means specifying objectives and percentage of revenues from sale of products.
a. True
b. False
Chapter 13: The Balanced Scorecard: Strategic-Based Control
8. The customer perspective defines the customer and market segments in which the business unit will compete.
a. True
b. False
9. Customer value is the sum of realization and sacrifice what the customer gives up and receives.
a. True
b. False
10. Strategic information availability include processes with real-time feedback.
a. True
b. False
11. Performance measures are derived from a company’s vision, strategy, and objectives.
a. True
b. False
12. To link measures to a strategy, they must be derived from management and be balanced.
a. True
b. False
13. Double-loop feedback occurs when managers get information about the effectiveness and the validity of the
strategy.
a. True
b. False
14. The strategy map connects the balanced scorecard strategy with an organization’s administration.
a. True
b. False
15. A testable strategy is a set of linked objectives aimed at an overall goal.
a. True
b. False
Chapter 13: The Balanced Scorecard: Strategic-Based Control
16. In order for the balanced scorecard to succeed, the entire organization must be behind it.
a. True
b. False
17. Articulation of the balanced scorecard should not be made to individuals within the organization.
a. True
b. False
18. Incentives must be structured and resources allocated to support the strategy chosen.
a. True
b. False
19. Performance expectations must be established once objectives and measures have been executed and advertised.
a. True
b. False
20. Compensation should be based on performance and paid based on percentage of objective achieved.
a. True
b. False
21. Outcome measures that are a result of past efforts are called measures.
22. Outcome measures that are expressed in monetary terms are called measures.
23. Dissatisfied customers are an example of a measure.
24. The targets aimed at transforming the organization within a period of 3 to 5 years are called targets.
25. Choosing general goals, customer segment, and nature of a business are all concern
of strategy __________ .
Chapter 13: The Balanced Scorecard: Strategic-Based Control
26. Setting balanced objectives, target values, and rewards are steps in developing
the __________ .
27. Training hours is an example of a(n) measure.
28. A set of linked objectives aimed at an overall goal is the definition of a strategy.
29. For strategic alignment, incentive compensation should be based on performance, compared to target
values.
30. In a balanced scorecard, performance expectations are communicated by setting .
31. Activity-based responsibility accounting adds which of the following to the financial-based responsibility
accounting perspective?
a. consumer perspective
b. functional perspective
c. process perspective
d. learning perspective
32. A competitive environment means that organizations will be
a. producing increasingly high-volume, low-variety products and services.
b. focused internally on efficiency.
c. managing cause and effect linkages to customer satisfaction.
d. viewing their actions independent of competitors, suppliers, and customers.
33. Which type of responsibility accounting addresses directed continuous improvement in environments that consist
of competitive conditions and dynamic change?
a. activity-based responsibility accounting
b. functional-based responsibility accounting
c. process-based responsibility accounting
d. strategic-based responsibility accounting
Chapter 13: The Balanced Scorecard: Strategic-Based Control
34. Which of the following is NOT true about activity-based responsibility accounting?
a. The emphasis changes from cost reduction through change to cost control.
b. The emphasis includes financial results as well as how things are done.
c. Responsibility moves from one dimension to two dimensions.
d. It moves from a control system to a performance management system.
35. What are the two additional perspectives that are added to the activity-based approach to achieve strategic-based
responsibility?
a. a customer perspective and a learning and growth perspective
b. an infrastructure perspective and a process perspective
c. a customer perspective and a financial perspective
d. a financial perspective and a process perspective
36. Which of the following is NOT a limitation of activity-based responsibility accounting?
a. Change efforts are often fragmented.
b. Change efforts lack connection to mission.
c. Change efforts lack connection to strategy.
d. Change efforts are driven by value-added analysis.
37. Directed continuous improvement is accomplished by linking initiatives to
a. processes.
b. strategy and mission.
c. financial outcomes.
d. measures.
38. Which of the following is NOT an advantage of strategic-based responsibility accounting?
a. It includes perspectives that serve as a source of competitive advantage.
b. Responsibility is centralized within the organization.
c. Change efforts are directed by the mission and strategy.
d. All are advantages of strategic-based responsibility accounting.
39. Which of the following is a perspective of strategic-based responsibility accounting but is NOT a perspective of
activity-based responsibility accounting?
a. financial perspective
b. process perspective
c. customer perspective
d. all of the above
Chapter 13: The Balanced Scorecard: Strategic-Based Control
40. The most common strategic-based performance management system is
a. variance analysis with standard costs as benchmarks.
b. the balanced scorecard.
c. financial budgets.
d. all of the above.
41. The balanced scorecard
a. is an activity-based responsibility accounting model that measures operating activities.
b. is a financial-based responsibility accounting model that focuses on the financial performance of units,
rewarding performance with static financial-oriented standards.
c. is a strategic-based financial reporting system that balances assets with liabilities and owner’s equity.
d. is a strategic-based performance management system that identifies objectives and measures from a
financial perspective, customer perspective, process perspective, and learning and growth perspective.
42. Lead measures are critical to strategy because
a. they are based on actual activity.
b. they are an independent part of the system.
c. there should be a causal linkage with strategy.
d. they are outcome measures.
43. A major difference between activity-based responsibility accounting and strategic-based responsibility accounting is
a. only strategic-based responsibility accounting is linked to strategy.
b. only strategic-based responsibility accounting is focused on systemwide efficiency.
c. only strategic-based responsibility accounting includes the process perspective.
d. only strategic-based responsibility accounting reinforces team accountability.
44. Which feature is related solely to strategic-based responsibility and not to activity-based responsibility?
a. financial perspective
b. process perspective
c. team accountability
d. customer perspective
45. Which is a major difference between activity-based measures and strategic-based measures?
a. Strategic-based measures are linked to strategy.
b. Strategic-based measures are used to align objectives.
c. Strategic-based measures are balanced measures.
d. all of the above.
Chapter 13: The Balanced Scorecard: Strategic-Based Control
46. Which of the following statements is true regarding lag measures?
a. lag measures are measures that relate to customers
b. lag measures are factors that drive future performance
c. lag measures are performance drivers
d. lag measures include measures such as customer profitability
47. The outcome measures that are expressed in monetary terms are called:
a. Objective measures
b. External measures
c. Lag measures
d. Financial measures
48. For a firm to have balanced measures, the measures selected must be balanced between
a. lag and lead measures.
b. objective and subjective measures.
c. financial and nonfinancial measures.
d. all of the above.
49. The outcome measures that are a result of past efforts are called:
a. Objective measures
b. External measures
c. Lag measures
d. Financial measures
50. The outcome measures that can be readily quantified and verified are called:
a. External measures
b. Objective measures
c. Financial measures
d. Lag measures
51. The outcome measures that relate to customers are called:
a. External measures
b. Objective measures
c. Financial measures
d. Lag measures
Chapter 13: The Balanced Scorecard: Strategic-Based Control
52. Which of the following would be a nonfinancial measure?
a. customer profitability
b. dissatisfied customers
c. return on investment
d. cost per unit
53. Which of the following would be an external measure?
a. return on investments
b. employee satisfaction
c. process efficiency
d. all of the above
54. Which of the following would be a subjective measure?
a. employee capabilities
b. market share
c. return on investment
d. cost per unit
55. Which of the following would NOT be an objective measure?
a. customer profitability
b. employee capabilities
c. return on investment
d. cost per unit
56. Which of the following would be a lead measure?
a. customer profitability
b. cost per employee
c. return on investment
d. employee training hours
57. Lead measures
a. are the measures with the highest priority.
b. are generic to different strategies.
c. are based on performance drivers.
d. represent the desired outcomes.
Chapter 13: The Balanced Scorecard: Strategic-Based Control
58. Which of the following would be a lag measure?
a. budget forecasts
b. sales per employee
c. plant investment
d. employee training hours
59. Which of the following features make stretch targets feasible?
a. The targets are set in isolation by top management.
b. The measures are linked by causal relationships.
c. The measures are based on currently attainable standard costs.
d. The targets are set at desired levels for twenty years to ensure long-term performance.
60. Communicating strategy through measurements requires both scope and flexibility. Which of the following
statements is true?
a. Flexibility requires subjective and objective measurement as well as nonfinancial measures.
b. Flexibility requires that measures be optimal and dynamic.
c. Scope implies that internal and external measures are needed.
d. Both a and c are true.
61. Which of the following statements comparing activity-based performance and strategic-based performance
evaluation is NOT true?
a. Strategic-based performance evaluation expands the set of metrics.
b. Only strategic-based performance evaluation leads to cost reductions.
c. Only strategic-based performance standards set stretch targets for all four perspectives.
d. Both systems encourage quality improvements.
62. Stretch targets are
a. aimed at stretching the firm’s resources.
b. aimed at static standards.
c. aimed at transforming the organization within three to five years if achieved.
d. aimed at transforming the organization immediately.
63. Which of the following is not a strategic theme of the financial perspective?
a. revenue growth
b. asset utilization
c. employee capability
d. risk management
Chapter 13: The Balanced Scorecard: Strategic-Based Control
64. Business strategy is concerned with
a. choosing market and customer segments.
b. identifying critical internal and business processes.
c. selecting individual and organizational properties required.
d. all of the above.
65. Strategy translation is concerned with
a. choosing general goals.
b. choosing the customer segments.
c. identifying measures, targets, and initiatives.
d. choosing the nature of the business.
66. Which of the following is NOT a step in developing the Balanced Scorecard?
a. setting balanced objectives
b. outlining control procedures
c. setting target values
d. rewards
67. In the financial perspective, economic value added would be an appropriate measure for
a. revenue growth.
b. cost reduction.
c. improving asset utilization.
d. risk management.
68. Objectives for increasing revenue growth include
a. adopting a new pricing strategy.
b. reducing the cost per unit.
c. eliminating non-value-added activities.
d. reducing distribution channel cost.
69. Which of the following is NOT a measure commonly used to evaluate asset utilization?
a. return on investment
b. economic value added
c. market share
d. all of the above
Chapter 13: The Balanced Scorecard: Strategic-Based Control
70. Diversifying customers and product lines are initiatives important to
a. revenue growth.
b. cost reduction.
c. asset utilization.
d. risk management.
71. In the customer perspective, objectives and measures that drive the creation of customer value are
a. customer survey ratings.
b. post-purchase cost.
c. on-time deliveries.
d. all of the above.
72. On-time delivery performance is calculated as
a. orders delivered on time/total number of orders delivered.
b. orders delivered on time/total sales dollars.
c. orders delivered on time/total production.
d. orders delivered/orders delivered on time.
73. Increasing customer value occurs when
a. the customer receives more benefits.
b. the customer perceives a greater gap between benefits and sacrifice.
c. customer costs are reduced.
d. none of the above.
74. In the Balanced Scorecard system, core objectives and measures
a. are common across all organizations.
b. are common across all scorecard perspectives.
c. are common across departments.
d. none of the above.
75. From the customer perspective, which of the following might be considered a core objective rather than a
performance value?
a. decrease price
b. increase customer retention
c. improve image
d. improve product quality
Chapter 13: The Balanced Scorecard: Strategic-Based Control
76. From the customer perspective, which of the following might be an appropriate measure for improving product
quality?
a. customer profitability
b. cost per customer
c. percentage of returns
d. number of patents pending
77. An operational measure of quality is
a. defects per unit.
b. number of defective units.
c. pounds of scrap.
d. all of the above.
78. The formula for computing Manufacturing Cycle Efficiency (MCE) is
a. Processing Time / (Processing time + Move time + Inspection time + Waiting time + Other non-value-added
time).
b. Theoretical Capacity / Production hours available.
c. Cycle time per unit × velocity.
d. none of the above.
79. The time it takes to produce one unit of product is called
a. velocity.
b. delivery time.
c. cycle time.
d. turnover.
80. Cycle time is
a. the time it takes to collect the account after the sale.
b. the time it takes to turn inventory over.
c. the time it takes to deliver the product after it is sold.
d. the time it takes to produce one unit of product.
81. The number of units that can be produced in a given period of time is called
a. turnover.
b. cycle time.
c. velocity.
d. efficiency.
Chapter 13: The Balanced Scorecard: Strategic-Based Control
82. Delivery performance can be improved by
a. decreasing cycle time.
b. increasing cycle time.
c. decreasing velocity.
d. increasing turnover.
83. A manufacturing cell has the theoretical capability of producing 40,000 microchips per quarter. The conversion
cost per quarter is $25,000. There are 4,000 production hours available within the cell per quarter.
The theoretical velocity per hour is
a. 25.00 units.
b. 16.00 units.
c. 10.00 units.
d. 2.24 units.
84. Which of the following might be a measure of employee motivation, empowerment, and alignment?
a. process efficiency
b. suggestions per employee
c. customer satisfaction
d. units product cost
85. Which of the following is NOT a major enabling factor of the learning and growth perspective?
a. customer attributes
b. information system capabilities
c. employee attitudes
d. employee capabilities
Chapter 13: The Balanced Scorecard: Strategic-Based Control
86. At the beginning of 2016, Terrapin Company installed a JIT purchasing and manufacturing system. The
following information has been gathered about one of the company’s products:
Theoretical annual capacity
3,500
Actual production
1,800
Production hours available
700
Actual conversion cost per hour
$10
The theoretical velocity per hour is
a. 1.3 units.
b. 4.5 units.
c. 1.4 units.
d. 5.0 units.
87. At the beginning of 2016, Terrapin Company installed a JIT purchasing and manufacturing system. The following
information has been gathered about one of the company’s products:
Theoretical annual capacity
3,500
Actual production
1,800
Production hours available
700
Actual conversion cost per hour
$10
What is the ideal conversion cost per unit?
a. $1.02 per unit.
b. $29.10 per unit.
c. $2.00 per unit.
d. $32 per unit.
Chapter 13: The Balanced Scorecard: Strategic-Based Control
88. Homegrown, Inc., manufactures a product that experiences the following activities:
Processing (three departments) 60 hours
Moving (four moves) 15 hours
Waiting time 45 hours
Storage time (before delivery) 120 hours
The MCE for the product is
a. 0.33.
b. 0.25.
c. 0.27.
d. 0.18.
89. A manufacturing cell has the theoretical capability of producing 40,000 microchips per quarter. The conversion
cost per quarter is $25,000. There are 4,000 production hours available within the cell per quarter. The theoretical
cycle time per unit in minutes is
a. 0.625 minutes.
b. 6.000 minutes.
c. 8.400 minutes.
d. 37.500 minutes.
90. At the beginning of 2016, Haroldson Company installed a JIT purchasing and manufacturing system. The
following information has been gathered about one of the company’s products.
9,000
3,600
3,000
$33
The theoretical velocity per hour is
a. 3.0 units.
b. 2.8 units.
c. 1.5 units.
d. 1.55units.