54) Productivity ratios are useful in measuring the extent to which a firm effectively uses the
scarce resources that are available to the firm.
55) Customer satisfaction measures are poor indicators of financial performance.
56) Cycle times and waste-reduction measures are examples of operating results of
benchmarking data.
57) Quality measures include objectives, policies, and procedures followed by a firm.
58) Management by fact dictates that decisions are made based on the sound collection and
analysis of data.
59) To begin the management process of benchmarking, a strategy statement outlining the goals
and strategies to be used is developed.
60) It is best to obtain training from organizations that are experienced with benchmarking and
its potential legal liabilities.
61) Restructuring is defined as a fundamental rethinking and redesigning of business processes.
62) Breadth refers to the impact of the process redesign to the entire organization.
63) Depth of the process redesign refers to organizational elements such as responsibilities,
measurements, information technology, and skills.
64) Baselining requires the monitoring of key internal firm performance measures over time to
identify trends such as improvement to inform managerial decision making.
65) Baselining is a methodology utilized to inform managerial decision-making by assessing
process redesign impacts.
66) Because process redesign affects multiple levels in a firm, abrupt organizational changes are
reflected in baselining results.
67) The concept of interfacing implies that you must have something to offer the target firm in
return for sharing information.
68) Business process maps are used to identify the exact performance measures and metrics
needed from the target firm.
69) Differentiate between financial ratios and productivity ratios of benchmarking data.
70) Explain the importance of using customer-related results as benchmarking data.
71) Give examples of quality measures and structural measures of benchmarking data.
72) Explain the use of performance measures or indicators in performance improvement.
73) Explain the process of managing the benchmarking effort.
74) Explain the importance of training in benchmarking.
75) Define process redesign. State the two factors that are critical to achieving success through
process redesign.
76) Explain the concept of baselining.
77) State the four key problems with benchmarking.
78) What is the formula used to calculate scrap efficiency?
A) scrap/cost of goods sold
B) (cost of goods sold – scrap)/scrap
C) cost of goods sold/scrap
D) (scrap – cost of goods sold/scrap
E) cost of goods sold × scrap
79) If the cost of goods sold reported by Champion Cooling Co. is equal to $600,000 and the
scrap cost amounts to $50,000, what is their scrap efficiency?
A) 8.33
B) 30.0
C) 12.0
D) 18.5
E) 22.8
80) Champion Cooling Co. signed an exclusive contract with a scrap metal dealer that is willing
to pay 33 cents a pound for scrap copper. If the cost of goods sold reported by Champion
amounts to $100,000 and the scrap cost is equal to $20,000 for their 3030 pounds of scrap
copper, what is Champion’s scrap efficiency?
A) 7.60
B) 5.00
C) 6.26
D) 9.33
E) 3.18
81) Ajax Carpet Cleaning promises to clean 100 square feet of carpet for $15.00. Their work
standard for such a job is $5.00 for labor and $2.00 for cleaning supplies. Since they use the
customer’s electricity, there are no other inputs in to the cleaning process. What is their labor
productivity?
A) 3.00
B) 7.50
C) 20.00
D) 10.0
E) 50.0
82) Make-Do, a national automotive painting service, paints cars for $199. Their work standard
for such a job is $20.00 for labor and $30.00 for paint. They consume $10 worth of supplies and
$3 of energy during their service. What is their total factor productivity?
A) 3.16
B) 9.95
C) 5.83
D) 13.6
E) 18.24
83) Ajax Carpet Cleaning promises to clean 100 square feet of carpet for $20.00. Their work
standard for such a job is $5.00 for labor and $2.50 for cleaning supplies. Since they use the
customer’s electricity, there are no other inputs in to the cleaning process. What is their labor
productivity?
A) 20.0
B) 4.00
C) 8.00
D) 2.50
E) 40.0
Use the following information to answer the question(s) below.
A company has gathered the following financial information for itself and a competing firm. The
company wishes to compare productivity for the two firms:
Firm A
Firm B
Labor
$ 25,000
$ 20,000
Plant and Equipment
$ 120,000
$ 150,000
Energy
$ 7,500
$ 15,000
Materials
$ 240,000
$ 200,000
Sales
$ 480,000
$ 520,000
84) Calculate the labor productivity of Firm A.
A) 19.2
B) 24.0
C) 20.8
D) 26.0
E) 9.6
85) Calculate the plant and equipment productivity of Firm B.
A) 26.00
B) 2.60
C) 19.20
D) 3.47
E) 34.67
86) Calculate the energy productivity of Firm A.
A) 34.67
B) 64.00
C) 19.20
D) 27.43
E) 69.33
87) Calculate the materials productivity of Firm B.
A) 3.47
B) 10.40
C) 19.20
D) 6.80
E) 2.60
88) Calculate the total factor productivity for Firm A.
A) 19.20
B) 3.31
C) 1.22
D) 14.77
E) 8.68
89) Calculate the total factor productivity for Firm B.
A) 14.86
B) 1.35
C) 2.60
D) 34.67
E) 20.28
90) Which measure provides the most complete picture of firm productivity?
A) firm materials output
B) the ratio of firm output to a single input
C) multiple factor productivity
D) single-factor productivity
E) total factor productivity
91) The higher a firm’s scrap efficiency ratio, the less efficient is the use of its materials.
92) Firm A has a total factor productivity of 10.0 while Firm B has a total factor productivity of
8.0. Therefore, Firm B is the more productive firm and utilizes its resources most efficiently.
93) The scrap efficiency can be calculated by dividing the cost of scrap by the cost of goods sold.
94) The scrap efficiency formula normalizes the cost of scrap based on the volume of business
that a firm does.
95) The cost of goods sold to scrap ratio is a multiple factor ratio.
96) Total factor productivity is less sensitive to differences in costing conventions and
accounting practices.
97) How is a scrap efficiency ratio calculated?
98) The benchmarking principle of ________ states that you must be willing to provide the same
level of information that you request.
A) preparation
B) exchange
C) completion
D) understanding and action
E) use
99) Which of the following is not one of the potential legal issues described in the benchmarking
principle of legality?
A) price fixing
B) dealing arrangements
C) bid rigging
D) bribery
E) unethical behavior
100) If a firm follows a strict code of conduct, then ethical abuses will never occur.
101) Extending one company’s benchmarking study findings to another without the first
company’s permission would be a violation of the principle of use.
102) To contribute to efficient, effective, and ethical benchmarking, individuals abide by
benchmarking principles.