M4-Performance Management: Part 1

Question 1

A control chart shows the performance of a particular process in relation to acceptable upper and lower limits of deviation. Performance within the limits is termed statistical control. Processes are designed to ensure that performance consistently falls within the acceptable range of error. (true or false)

Answer 1

true

Question 2

A Pareto diagram represents an individual and cumulative graphical analysis of errors by type. Individual error types are represented on a histogram (bar graph), while the cumulative number of errors is presented on a line graph. The Pareto diagram is used to prioritize process improvement efforts. (true or false)

Answer 2

true

Question 3

A Fishbone diagram describes a process, the contributions to the process, and the potential problems that could occur at each phase of a process. The chronological sequence of events is represented by a single horizontal line while the contributions to the process are represented by diagonal lines that create the image of a fishbone. (true or false)

Answer 3

True

Question 4

A Value Chain Analysis is a macro level flowchart that shows the relationship between broad functional areas, the product delivered by the organization, and manner in which is added at each link in the chain. (true or false)

Answer 4

true

Question 5

Benchmarking would be used by a company in comparing its financial data to published information to determine if optimal results had been achieved. Benchmarking is the process often used to identify standards that define or quantify critical success factors. (true or false)

Answer 5

true

Question 6

Nonfinancial measures are an effective way to observe problems as they occur and thereby direct attention to potential errors or influence inefficiencies before poor financial results are produced. (true or false)

Answer 6

true

These are a good complement to financial measures but they are NOT a substitute.

Question 7

Managers are more likely to use nonfinancial measures if they are tied to the managers individual effort and, by extension, the manager can control the outcome. (true or false)

Answer 7

true

Question 8

Total productivity ratios consider all inputs and prices of those inputs. (true or false)

Answer 8

true

Question 9

Manpower, machinery, methods, and materials are commonly identified elements of manufacturing processes that would be used to evaluate the source of defects. (true or false)

Answer 9

true

Question 10

Strategic plans are broad-based and long-term in nature. Performance reports are much more specific and shorter term. A performance report would not normally include strategic plans. (true or false)

Answer 10

true

Question 11

The balanced scorecard reports management information regarding organizational performance as defined by “critical success factors.” These critical success factors are often classified as human resource, business process, customer satisfaction, and financial performance, to demonstrate that no single dimension of organizational performance can be relied upon to evaluate success. (true or false)

Answer 11

true

Question 12

In a quality control program, internal failure costs are incurred because nonconforming products products and services are detected prior to being shipped to customers. Examples are rework, scrap, reinspection, and retesting. (true or false)

Answer 12

true

Question 13

Critical success factors identified in the balanced scorecard generally include human resource aspects, particularly as it relates to harnessing employee innovation, internal business process improvement, customer satisfaction, and financial performance. (true or false)

Answer 13

true

Question 14

Controllable margin is computed as contribution margin net of controllable costs. Controllable costs represent those fixed costs that managers can impact in less than one year. (true or false)

Answer 14

true

Question 15

An investment center is most like an independent business. Investment centers are responsible for revenues, expenses, and invested capital. (true or false)

Answer 15

true

Question 16

Financial and non-financial features of an organization that contribute to its success in achieving strategy are referred to as critical success factors and are normally classified as:

Answer 16

1. Financial solvency and return
2. Customer satisfaction
3. Internal business processes, and
4. Human resource innovation

Question 17

A profit center is responsible for revenue and costs. (true or false)

Answer 17

true

Question 18

A revenue center is responsible for revenue only. (true or false)

Answer 18

true

Question 19

Employee satisfaction and retention measures are used under the “learning and growth” perspective of the balanced scorecard. Employee satisfaction typically correlates with productivity, employee effectiveness, and retention. Retention itself often relates to reduced retraining, increased opportunity for human resource development, and reduced investment in learning curves. (true or false)

Answer 19

true

Question 20

The customer perspective of the balanced scorecard measures results of business operation. (true or false)

Answer 20

true

Measurement of customer value, such as discount’s prices to competitors prices for a cost leader, would most likely be included in the customer section of the balanced scorecard.

Question 21

Responsibility accounting is a system of accounting that recognizes various responsibility or decision centers throughout an organization and reflects the plans and actions of each of these centers by assigning particular revenues and costs to the one having the responsibility for making decisions about these revenues and costs. (true or false)

Answer 21

true

Question 22

Appraisal costs would detect individual products that do not conform to specifications. Examples of appraisal costs include:

Answer 22

• Statistical Quality Checks
• Inspections
• Testing
• Maintenance of lab

Question 23

The four categories of cost associated with product quality are:

Answer 23

• prevention
• appraisal
• internal failure
• external failure

Question 24

Absolute conformance is the most rigorous standard of quality because it represents a perfect, or ideal, level of compliance. (true or false)

Answer 24

true

Question 25

Goalpost conformance assumes a range of acceptable results. Because it represents achievement of compliance within an established range of tolerable error, goalpost conformance is considered less rigorous than absolute conformance. (true or false)

Answer 25

true