Chapter 10

Question 1

Advantages to decentralization and resposibilty center

Answer 1

Frees up top management to focus on strategic planning & improves motivation and retention

Question 2

Disadvantages to decentralization and responsibility centers

Answer 2

Pontential duplication of cost and effort, lower managers might not see the big picture (goal congrence)

Question 3

Cost center

Answer 3

Responsible for cost only

Question 4

Revenue center

Answer 4

Responsible primarily for revenue

Question 5

Profit center

Answer 5

Revenues and cost

Question 6

Investment center

Answer 6

Responsible for revenue,cost and efficiently managing long term assets

Question 7

Investment center examples

Answer 7

CEO, operations vp

Question 8

Cost center examples

Answer 8

Finance CFO, legal counsel, HR, bottling plant manager, warehouse manager, distribution manager

Question 9

Profit center examples

Answer 9

Snacks division, beverage division, confections division

Question 10

Segment margin

Answer 10

Sales- VC- traceable fixed cost

Question 11

Return on investment

Answer 11

Operating income/total assets (average)

Question 12

Sales margin

Answer 12

Noi/sales

Question 13

Capital turnover

Answer 13

Sales/total assets

Question 14

Sales margin also known as

Answer 14

Profitablility

Question 15

Capital turnover also know as

Answer 15

Prodectivity

Question 16

Increase roi because

Answer 16

Increased sales, reduced operating income, reduced assets

Question 17

Residual income

Answer 17

Operating income- (total sales x min rate of return)

Question 18

Transfer prices

Answer 18

Is the sales revenue for the selling division and the cost for the buying division

Question 19

Market price

Answer 19

Price that could be obtained in an open market in an arms length transaction the fairest price

Question 20

Negotiated price

Answer 20

Division managers negotiate usually between variable cost and market price

Question 21

Cost

Answer 21

VC is the lowest

Question 22

Flexible budgets

Answer 22

Adjusts the budget for a chance in wctual bumber of units sold from which was planned

Question 23

Finacial questions

Answer 23

Has our financial performance improved?

Question 24

Customer questions

Answer 24

Do customers recognize that we are delivering more value?

Question 25

Internal business question

Answer 25

Have we improved key business pricesses so that we can deliver more value to our customers?

Question 26

Learning and growth

Answer 26

Are we maintaining our ability to change and imporve?

Question 27

Examples of KPI financial

Answer 27

Roi, ri, sales, cm

Question 28

Examples kpi customers

Answer 28

Satusfaction, repeat sales, referrals, number of complaints

Question 29

Kpi internal business

Answer 29

Quality checks, time to make product, mce, error rated

Question 30

Kpi learnin and growth

Answer 30

Hours of training, certifications, retention