Chapter 10_ Performance Measurement in Decentralized Organizations

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Houston Community College *

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Management

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Feb 20, 2024

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1/ A n organization in which decision-making authority is spread throughout the organization is   -decentralized 2/Operations are able to respond quickly to customers and changes in the environment in a decentralized organization because   -there are fewer managers that must be consulted before a decision is made 3/Which of the following is not one of the three primary types of responsibility centers? - sales 4/Managers of cost centers are expected to ______. - minimize costs, while providing an acceptable level of service 5/Return on investment = ______. Net operating income ÷ Average operating assets 6/ True or false: In strongly decentralized organizations, even the lowest-level managers can make decisions. True 7/ Net operating income is income before     and   .   -interest taxes  or  tax 8/ Lower-level managers are empowered to make decisions in a ______ organization, which can ________ motivation and job satisfaction. decentralized, increase 9/Which of the following ratios are part of the ROI formula? Sales ÷ Average operating assets Net operating income ÷ Sales 10/ Any part of an organization whose manager has control over and is accountable for all three centers (cost, profit, or investments) is a(n)     center. - responsibility 11/ Garnett, Inc. has a required rate of return on new projects of 12%. The Western division of Garnett is currently earning a combined return on investment (ROI) of 14.5% on the projects in its division. Western's manager is considering a project that is projected to earn 13.25%. Which of the following statements regarding the manager's decision are correct?   - The manager may decide to reject the project because it will lower the current ROI earned by his division. - the project is in the best interest of the company as a whole. 12. Which of the following business segments would not   be considered a cost center? -Retail outlet 13/ The net operating income that an investment center earns above the minimum required return on its operating assets is its  - Residual 14/ Net operating income ÷ Average operating assets = ______. - Return on investment 15/ EBIT is another term for   Blank _____
-net operating income 16/Which of the following statements is  correct ? - A manager might reject a proposal using ROI that the manager would accept using residual income. 17/ROI can be calculated as ______. - margin × turnover -net operating income ÷ average operating assets 18/ Valid criticisms of evaluating performance based on return on investment (ROI) include managers may   -be put in charge of a business segment that includes committed costs over which a manager has no control -reject investment opportunities that are profitable for the company but have a negative impact on a manager's ROI - actions that increase ROI in the short-run at the expense of long-term performance 19/ Net operating income - (Average operating assets × Minimum required rate of return) - residual income 20/ The inability to compare divisions of different sizes is a major disadvantage of ______. - residual income only 21/The period from which a product begins production as raw materials and ends as a finished product is known as     time or manufacturing cycle time.   ( - throughput 22/ When managers are evaluated on residual income, rather than on return on investment (ROI), they will be   Blank ______   likely to pursue projects that will benefit the entire company. More 23/The elapsed time from when a customer order is received until the finished goods are shipped is known as the - Delivery - Cycle -Time 24/ Quick to Ship Company has a process time of 2 days and a throughput time of 8 days. The manufacturing cycle efficiency is   25Which of the following statements is not  a weakness of using return on investment (ROI) to evaluate performance? -ROI does not include the investment in nonoperating assets, such as land held for investment or stock in other companies. 26/An integrated set of performance measures that are derived from the company's strategy is   -a balanced scorecard 27/A disadvantage of the residual income approach is that it ______. - cannot be used to evaluate different sized divisions
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