12 assume you are evaluating a manufacturing company match the various organizationa 4309251

12) Assume you are evaluating a manufacturing company. Match the various organizational activities and concepts with the performance measures listed. Some items may have more than one match.

Activities:

1.Change in revenues

2.Cycle time

3.Economic order quantity

4.Manufacturing defects

5.Market share

6.New products

7.On-time delivery

8.Operating income

9.Product reliability

10.Time-to-market

Performance measure:

 

__________a.Profitability

__________b.Customer satisfaction

__________c.Innovation

__________d.Efficiency, quality, and time

13) Designing an accounting based performance measure requires six steps. List each step. For three of the steps, describe a question that must be resolved as part of the implementation process.

14) The executive vice president of Wicker Pen Company wants to establish an accounting-based performance measurement system for the company's new plant. The company has an accounting information system sufficient to support a fairly sophisticated performance measurement system. The new plant is going to be considered an investment center since its products will be markedly different from others the company currently sells. The new plant will have no internal dealings with other plants within the company.

1.Choose performance measures that align with top management's financial goals for the plant. They would include those that relate to the plant as an investment center.

2.Choose the time horizon of each performance measure in step 1.

3.Choose a definition of the components in each performance measure in step 1. For example, how should investment be defined?

4.Choose a measurement alternative for each performance measure in step 1. For example, should historical cost or current cost be used to measure investment?

5.Choose a target level of performance.

6.Choose the timing of feedback.

15) Companies are increasingly using nonfinancial measures to evaluate performance. Why? Since these numbers do not come from the company's financial records, why are they used?

1) Managers usually use the term return on investment to evaluate:

A) the performance of a subdivision

B) a potential project

C) the performance of a subunit

D) Both A and C are correct.

2) The return on investment is usually considered the most popular approach to incorporating the investment base into a performance measure because:

A) it blends all the ingredients of profitability into a single percentage

B) once determined, there is no need to use it with other measures of performance

C) it is similar to the company's price earnings ratio because a corporation's return on investment appears every day in The Wall Street Journal

D) Both A and C are correct.

3) Return on investment can be increased by:

A) increasing operating assets

B) decreasing operating assets

C) decreasing revenues

D) Both B and C are correct.

4) The ________ method of profitability analysis recognizes the two basic ingredients in profit-making: increasing income per dollar of revenues and using assets to generate more revenues.

A) Balanced Scorecard

B) Residual-Income

C) Dupont

D) Economic Value Added