Question 1

When evaluating managers and employees under the balanced scorecard approach,only financial measures should be considered.

Accepted Answer

A) True 
 B)False

Question 2

Re-engineering benefits are most significant when they focus on one business function rather than crossing functional lines of the business process.

Accepted Answer

A) True 
 B)False

Question 3

Downsizing discretionary costs is easier than downsizing engineered costs.

Accepted Answer

A) True 
 B)False

Question 4

'Unused capacity' is the amount of productive capacity available over and above the productive capacity employed to meet customer demand in the current period.

Accepted Answer

A) True 
 B)False

Question 5

Engineered costs:

Accepted Answer

A) include R&D and human resource costs. 
B) arise from periodic (usually annual)decisions. 
C) include a high level of certainty. 
D) often incur a delay between when the resource is acquired and when it is used.

Question 6

A strategic objective that has a hub-and-spoke quality with multiple ties flowing into or out of it is referred to as a 'focal point'.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following do managers need to measure and manage to reduce capacity-based fixed costs?

Accepted Answer

A) Variable costs 
B) Engineered costs 
C) Unused capacity 
D) Discretionary costs

Question 8

Engineered costs contain a higher level of uncertainty than discretionary costs.

Accepted Answer

A) True 
 B)False

Question 9

________ is an organisation's ability to achieve low costs relative to competitors through productivity and efficiency improvements,elimination of waste,and tight cost control.

Accepted Answer

A) Strategy 
B) Product differentiation 
C) The balanced scorecard 
D) Cost leadership

Question 10

Total factor productivity will increase if:

Accepted Answer

A) the company incurs fewer costs per input. 
B) current technology becomes obsolete. 
C) the company uses more total inputs per output. 
D) outputs increase.

Question 11

Answer the following questions using the information below:
Following a strategy of product differentiation,Platypus Company makes a high-end appliance,AP15.Platypus Company presents the following data for the years 2017 and 2018:
 $$\begin{array} { l r r } 
& 2017 & 2018 \
\text { Units of AP15 produced and sold } & 20000 & 21000 \
\text { Selling price } & \$ 200 & \$ 220 \
\text { Direct materials (square metres) } & 60000 & 61500 \
\text { Direct materials costs per square metre } & \$ 20 & \$ 22 \
\text { Manufacturing capacity in urits of AP15 } & 25000 & 25000 \
\text { Total conversion costs } & \$ 1000000 & \$ 1110000 \
\text { Conversion costs per unit of capacity } & \$ 40 & \$ 44 \
\text { Selling and customer-service capacity (customers) } & 60 & 58 \
\text { Total selling and customer-service costs } & \$ 360000 & \$ 362500 \
\text { Selling and customer-service capacity cost per customer } & \$ 6000 & \$ 6250
\end{array}$$ Platypus Company produces no defective units but it wants to reduce direct materials usage per unit of AP15 in 2019.Manufacturing conversion costs in each year depend on production capacity defined in terms of AP15 units that can be produced.Selling and customer-service costs depend on the number of customers that the customer and service functions are designed to support.Platypus Company has 46 customers in 2017 and 50 customers in 2018.The industry market size for high-end appliances increased 5% from 2017 to 2018.
-What is the net effect on operating profit as a result of the productivity component?

Accepted Answer

A) $420 000 F 
B) $45 500 F 
C) $179 000 F 
D) $241 000 U

Question 12

An analysis of Kookaburra Ltd's operating profit for the last two years showed the following:
$$\begin{array} { | l | r | } 
\hline \text { Operating profit for } 2017 & \$ 600000 \
\hline \text { Add growth component } & 15000 \
\hline \text { Add price-recovery component } & 100000 \
\hline \text { Deduct productivity component } & ( 8000 ) \
\hline \text { Operating profit for } 2018 & \$ 707000 \
\hline
\end{array}$$
This gain in operating profit is consistent with a:

Accepted Answer

A) re-engineering strategy 
B) cost leadership strategy 
C) product differentiation strategy 
D) downsizing strategy

Question 13

Measures of the balanced scorecard's customer perspective include all of the following EXCEPT:

Accepted Answer

A) customer satisfaction. 
B) number of new customers. 
C) customer training on new products. 
D) market share.

Question 14

The average number of student credit hours taught per department member is an example of a(n):

Accepted Answer

A) partial productivity measure. 
B) budgeted productivity measure. 
C) expected performance measure. 
D) standard productivity measure.

Question 15

When analysing the change in operating profit,the strategy component of productivity will increase when:

Accepted Answer

A) less capacity is used in the current year to produce the same output as in the previous year. 
B) selling prices are increased. 
C) quality is enhanced. 
D) more units are produced and sold.

Question 16

Measures of the balanced scorecard's learning-and-growth perspective include:

Accepted Answer

A) employee satisfaction ratings. 
B) time taken to deliver a product to customers. 
C) economic value added. 
D) customer-retention percentage.

Question 17

'Strategy' describes how an organisation matches its own capabilities with the opportunities in the marketplace to accomplish its overall objectives.

Accepted Answer

A) True 
 B)False

Question 18

________ is the fundamental rethinking and redesign of business processes to achieve improvements in critical measures of performance such as cost,quality,service,speed and customer satisfaction.

Accepted Answer

A) Strategy 
B) Re-engineering 
C) Learning and growth perspective 
D) Customer perspective

Question 19

One valuable measure of the customer perspective of the balanced scorecard is market share.

Accepted Answer

A) True 
 B)False

Question 20

________ translates an organisation's mission and strategy into a comprehensive set of performance measures that provide the framework for implementing its strategy.

Accepted Answer

A) Product differentiation 
B) Cost leadership 
C) Productivity component 
D) The balanced scorecard

Exam 15: Strategy Formation, Strategic Control and the Balanced Scorecard

When evaluating managers and employees under the balanced scorecard approach,only financial measures should be considered.

Re-engineering benefits are most significant when they focus on one business function rather than crossing functional lines of the business process.

Downsizing discretionary costs is easier than downsizing engineered costs.

'Unused capacity' is the amount of productive capacity available over and above the productive capacity employed to meet customer demand in the current period.

Engineered costs:

A strategic objective that has a hub-and-spoke quality with multiple ties flowing into or out of it is referred to as a 'focal point'.

Which of the following do managers need to measure and manage to reduce capacity-based fixed costs?

Engineered costs contain a higher level of uncertainty than discretionary costs.

________ is an organisation's ability to achieve low costs relative to competitors through productivity and efficiency improvements,elimination of waste,and tight cost control.

Total factor productivity will increase if:

Measures of the balanced scorecard's customer perspective include all of the following EXCEPT:

The average number of student credit hours taught per department member is an example of a(n) :

When analysing the change in operating profit,the strategy component of productivity will increase when:

Measures of the balanced scorecard's learning-and-growth perspective include:

'Strategy' describes how an organisation matches its own capabilities with the opportunities in the marketplace to accomplish its overall objectives.

________ is the fundamental rethinking and redesign of business processes to achieve improvements in critical measures of performance such as cost,quality,service,speed and customer satisfaction.

One valuable measure of the customer perspective of the balanced scorecard is market share.

________ translates an organisation's mission and strategy into a comprehensive set of performance measures that provide the framework for implementing its strategy.