Question

True or false :

a. If a company contains a number of investment centers of differing sizes, return on investment (ROI) should be used rather than residual income to rank the financial performance of the divisions.

b.  If a strategy is not working, it should become evident on the balanced scorecard when some of the predicted effects don’t occur.

c. Incentive compensation for employees, such as bonuses, should be tied to balanced scorecard performance measures only if managers are confident that the performance measures are easily manipulated by those being evaluated.

d. Move time is considered non-value-added time.

e. The variable costs of a product are relevant in a decision concerning whether to eliminate the product.

Answer 1

a. True

It facilitates a comparison among investment centers of different sizes and in different lines of business

b. True

Without this an organisation may keep on going with wrong assumptions.

c. False

Performance measures should not be easily manipulated by those being evaluated.

d. True

Time taken to move goods from one department to another.

e. True

Variable costs along with other components are relevant in deciding whether to eliminate a product or not.