Chapter 14—Performance Evaluation Using the Balanced
Scorecard Key
1. Which of the following statements about the balanced scorecard approach is true?
2. Which of the following statements regarding the balanced scorecard approach is false?
3. Which of the following statements about the balanced scorecard approach is true?
4. Which of the following statements about the balanced scorecard approach is false?
5. Which of the following statements is true regarding more traditional measures of financial performance?
6. Which of the following is not one of the perspectives that is usually examined under the balanced scorecard
approach?
7. The balanced scorecard approach looks at a company’s performance from four perspectives. Those
perspectives are:
8. Which of the following questions would the financial perspective of the balanced scorecard attempt to
answer?
9. Which of the following questions would the internal business perspective of the balanced scorecard attempt
to answer?
10. Which of the following questions would the learning and growth perspective of the balanced scorecard
attempt to answer?
11. Which of the following questions would the customer perspective of the balanced scorecard attempt to
answer?
12. Return on investment (ROI) is a measure of performance under which perspective of the balanced
scorecard?
13. Residual income would be a measure of performance under which perspective of the balanced scorecard?
14. Determining the market share for a company’s product would be a measure of performance under which
perspective of the balanced scorecard?
15. Determining customer loyalty would be a measure of performance under which perspective of the balanced
scorecard?
16. Throughput would be a measure of performance under which perspective of the balanced scorecard?
17. Increasing information systems capabilities would be a critical success factor found in which perspective of
the balanced scorecard?
18. Which perspective links the critical success factors of the other perspectives and ensures an environment
that supports and allows the objectives of the other perspectives to be achieved?
19. Which of the following is least likely to be a critical success factor within the financial perspective of the
balanced scorecard?
20. Which of the following is least likely to be a critical success factor within the internal business perspective
of the balanced scorecard?
21. A system of improvement based on a series of gradual and often small improvements is called:
22. Which of the following statements about kaizen is false?
23. Which of the following statements is false regarding ISO 9000?
24. Which of the following statements regarding “quality” is true?
25. Which of the following statements regarding “quality” is false?
26. Which of the following is generally not one of the classifications of quality costs?
27. Which of the following statements about prevention costs is true?
28. Which types of quality costs are incurred to eliminate quality problems before they occur?
29. Which types of quality costs are incurred in the course of inspecting, identifying, and isolating defective
products and services before they reach the customer?
30. Which types of quality costs are incurred once the product is produced and then found to be defective before
being sold to customers?
31. Which types of quality costs are incurred after a defective product is delivered to a customer?
32. Newman Co. provides training and technical support to its suppliers in order to increase the quality of
purchased raw materials. Which type of quality cost would this most likely be?
33. Barksdale Manufacturing Inc. produces its products in batches containing 100 units. Barksdale randomly
samples 15 of the units in each batch for quality control. The costs of performing these random sample tests
would most likely be which type of quality cost?
34. CLR Inc. is a clothing manufacturer. Recently, CLR made and produced about 2,000 shirts. During the
production process, some of the shirts did not have the required number of buttons sewed on. CLR has decided
to rework the shirts to add the buttons. These rework costs would most likely be classified as which type of
quality cost?
35. FMI is a car manufacturer. Recently, they have had to recall approximately 6,000 cars due to potential brake
pad malfunction. The costs to inspect and replace the brake pads would most likely be classified as which type
of quality cost?
36. Which of the following statements about quality costs is true?
37. Which of the following statements about quality costs is true?
38. Which of the following statements about quality costs is true?
39. External failure costs include:
40. If a company consistently produces and sells defective products, which type of quality cost is likely to be
the most costly in the long-run?
41. HNW Ltd.
HNW Ltd. manufactures and sells food processors. A popular consumer magazine has recently evaluated food
processors and has ranked HNW’s processors as being of “poor quality”. As a result, HNW’s management team
has begun to analyze all costs associated with their food processors in more detail, and the following data has
been compiled:
Scrap costs
$ 80,000
Quality training
75,000
Warranty claims
100,000
Rework costs
50,000
Inspection of incoming materials
30,000
Product quality audits
60,000
Statistical process control
40,000
Refer to the HNW Ltd. information above. What are HNW’s total appraisal (detection) costs?
42. HNW Ltd.
HNW Ltd. manufactures and sells food processors. A popular consumer magazine has recently evaluated food
processors and has ranked HNW’s processors as being of “poor quality”. As a result, HNW’s management team
has begun to analyze all costs associated with their food processors in more detail, and the following data has
been compiled:
Scrap costs
$ 80,000
Quality training
75,000
Warranty claims
100,000
Rework costs
50,000
Inspection of incoming materials
30,000
Product quality audits
60,000
Statistical process control
40,000
Refer to the HNW Ltd. information above. What are HNW’s total prevention costs?
43. HNW Ltd.
HNW Ltd. manufactures and sells food processors. A popular consumer magazine has recently evaluated food
processors and has ranked HNW’s processors as being of “poor quality”. As a result, HNW’s management team
has begun to analyze all costs associated with their food processors in more detail, and the following data has
been compiled:
Scrap costs
$ 80,000
Quality training
75,000
Warranty claims
100,000
Rework costs
50,000
Inspection of incoming materials
30,000
Product quality audits
60,000
Statistical process control
40,000
Refer to the HNW Ltd. information above. What are HNW’s total internal failure costs?
44. HNW Ltd.
HNW Ltd. manufactures and sells food processors. A popular consumer magazine has recently evaluated food
processors and has ranked HNW’s processors as being of “poor quality”. As a result, HNW’s management team
has begun to analyze all costs associated with their food processors in more detail, and the following data has
been compiled:
Scrap costs
$ 80,000
Quality training
75,000
Warranty claims
100,000
Rework costs
50,000
Inspection of incoming materials
30,000
Product quality audits
60,000
Statistical process control
40,000
Refer to the HNW Ltd. information above. What are HNW’s total external failure costs?
45. Bradford Inc.
Bradford Inc. manufactures and sells digital cameras. Bradford’s management team has begun an intensive
program whereby more time and effort are to be focused on product quality than were focused on in the past.
The following data has been compiled regarding expected quality costs in the upcoming year:
Product quality audits
$60,000
Quality training
50,000
Rework costs
80,000
Warranty claims
40,000
Inspection of incoming materials
25,000
Scrap costs
20,000
Statistical process control
35,000
Refer to the Bradford Inc. information above. What are Bradford’s total prevention costs?
46. Bradford Inc.
Bradford Inc. manufactures and sells digital cameras. Bradford’s management team has begun an intensive
program whereby more time and effort are to be focused on product quality than were focused on in the past.
The following data has been compiled regarding expected quality costs in the upcoming year:
Product quality audits
$60,000
Quality training
50,000
Rework costs
80,000
Warranty claims
40,000
Inspection of incoming materials
25,000
Scrap costs
20,000
Statistical process control
35,000
Refer to the Bradford Inc. information above. What are Bradford’s total appraisal (detection) costs?
47. Bradford Inc.
Bradford Inc. manufactures and sells digital cameras. Bradford’s management team has begun an intensive
program whereby more time and effort are to be focused on product quality than were focused on in the past.
The following data has been compiled regarding expected quality costs in the upcoming year:
Product quality audits
$60,000
Quality training
50,000
Rework costs
80,000
Warranty claims
40,000
Inspection of incoming materials
25,000
Scrap costs
20,000
Statistical process control
35,000
Refer to the Bradford Inc. information above. What are Bradford’s total internal failure costs?
48. Bradford Inc.
Bradford Inc. manufactures and sells digital cameras. Bradford’s management team has begun an intensive
program whereby more time and effort are to be focused on product quality than were focused on in the past.
The following data has been compiled regarding expected quality costs in the upcoming year:
Product quality audits
$60,000
Quality training
50,000
Rework costs
80,000
Warranty claims
40,000
Inspection of incoming materials
25,000
Scrap costs
20,000
Statistical process control
35,000
Refer to the Bradford Inc. information above. What are Bradford’s total external failure costs?
49. Which of the following is generally not one of the classifications of environmental costs?
50. Velum Inc., a local paper plant, is considering expanding its operations. The expansion would require the
release of a small amount of byproduct into the local river. Velum has decided to conduct an environmental
impact study. Which type of environmental cost would the impact study be classified as?
51. Tri-Chem Inc. is a manufacturer of various chemicals used in the plastics industry. Tri-Chem is required to
have its smokestacks inspected every six months for compliance. Which type of environmental cost would the
smokestack inspections most likely be classified as?
52. JBH Inc. is a tire manufacturer. JBH is required to either recycle or properly dispose of all rubber scrap
material. Which type of environmental cost would the recycling and disposal costs most likely be classified as?
53. Royalle Inc. transports crude oil for a well known oil producer. Last year, the company spilled
approximately one million gallons of crude oil off the coast of Alaska. Royalle was held responsible for
cleaning up the spill. Which type of environmental cost would the clean up costs most likely be classified as?
54. A measure of the relationship between outputs and inputs is often called:
55. The time it takes to deliver a product or service after an order is placed is called the:
56. Which of the following statements about customer response time is true?
57. Bellwood Inc. produces and sells golf carts which come with a two-year warranty. The controller of
Bellwood has asked the operations manager to compute the total customer response time. Which of the
following would not be included in the total customer response time?
58. Which of the following items used to measure customer response time would not be used to measure
manufacturing cycle time?
59. The total time a product is in production, including process time, inspection time, wait time, and move time,
is called:
60. The time between when an order is placed and when the order is ready for setup is referred to as:
61. The time between when an order is ready for setup and the set up is complete is referred to as:
62. Which of the following is a common metric used to measure efficiency and timeliness?
63. The number of good units that can be made in a given period of time is called:
64. In general, as the manufacturing cycle time decreases, throughput will:
65. Manufacturing cycle efficiency (MCE) is calculated as follows:
66. Fleming Inc. manufactures and sells wooden bookshelves. Which of the following steps in the
manufacturing cycle would be considered non-value added time?