PRIMARY MEASURES OF DIVISIONAL AND FUNCTIONAL PERFORMANCE

Question 1

A budget for a business unit
that is approved by top management during
strategy formulation and implementation.

Answer 1

Operating budgetPeriodic statistical report Reports:
summarizing data on key factors such as the
number of new customer contracts, volume of
received orders, and productivity figures.

Question 2

summarizing data on key factors such as the
number of new customer contracts, volume of
received orders, and productivity figures.

Answer 2

Periodic statistical report Reports:

Question 3

A unit that is isolated so
that it can be evaluated separately from the rest
of the corporation.

Answer 3

Responsibility center:

Question 4

There are five major types of responsibility
centers.

Answer 4

Standard cost center:
Revenue center:
Expense center:
Profit center:
Investment center:
Transfer price

Question 5

A responsibility center
that is primarily used to evaluate the
performance of manufacturing facilities.

Answer 5

Standard cost center:

Question 6

A responsibility center in
which production, usually in terms of unit or
dollar sales, is measured without consideration
of resource costs.

Answer 6

Revenue center:

Question 7

A business unit that uses
money but contributes to revenues only
indirectly.

Answer 7

Expense center:

Question 8

A unit’s performance, measured
in terms of the difference between revenues and
expenditures.

Answer 8

Profit center:

Question 9

A practice in which one unit can
charge a transfer price for each product it sells to
a different unit within a company

Answer 9

Transfer price

Question 10

A unit in which
performance is measured in terms of the
difference between the unit’s resources and its
services or products.

Answer 10

Investment center:

Question 11

The process of measuring
products, services, and practices against those of
competitors or companies recognized as industry
leaders.

Answer 11

Benchmarking:

Question 12

A method of
minimizing taxes by declaring high profits in a
subsidiary located in a country with a low tax
rate and small profits in a subsidiary located in a
country with a high tax rate.

Answer 12

International transfer pricing:

Question 13

The transfer of profits
from a foreign subsidiary to a corporation’s
headquarters.

Answer 13

Repatriation of profits:

Question 14

A company
that has significant assets and activities in
multiple countries.

Answer 14

Multinational corporation (MNC)

Question 15

(MNC)

Answer 15

Multinational corporation

Question 16

Software that unites all of a company’s major
business activities, from order processing to
production, within a single family of software
modules.

Answer 16

Enterprise resource planning (ERP) software:

Question 17

Enterprise resource planning (ERP) software:

Answer 17

Enterprise resource planning software:

Question 18

A technology in which radio frequency
identification tags containing product
information is used to track goods through
inventory and distribution channels.

Answer 18

RADIO FREQUENCY IDENTIFICATION RFID:

Question 19

RFID:

Answer 19

RADIO FREQUENCY IDENTIFICATION

Question 20

The tendency of
managers to consider only current tactical or
operational issues and ignore strategic ones

Answer 20

Short-term orientation:

Question 21

A calculation that is
determined by dividing net earnings by the
number of shares of common stock issued.

Answer 21

Earnings per share (EPS):

Question 22

Confusion of means with
ends, which occurs when activities originally
intended to help managers attain corporate
objectives become ends in themselves or are
adapted to meet ends other than those for which
they were intended.

Answer 22

Goal displacement:

Question 23

A phenomenon that
occurs when people substitute activities that do
not lead to goal accomplishment for activities that do lead to goal accomplishment because the
wrong activities are being rewarded.

Answer 23

Behavior substitution: