Question

1. Waterfield Company has three decentralized segments. Executive managers are looking for a way to measure the performance of each segment. Which of the following metrics might be used for this purpose?

   a. the material quantity variance in each segment

   b. the return on investment of each segment

   c. the operating cash flows for the entire company

   d. the number of training sessions provided to employees in each segment

2. A company's balanced scorecard may include

   a. both nonfinancial and financial metrics

   b. only nonfinancial metrics

   c. only financial metrics

   d. neither nonfinancial nor financial metrics

3. Nonfinancial performance measures in the balanced scorecard such as customer satisfaction are often _____ of future financial performance.

   a. poor indicators

   b. leading indicators

   c. not considered an indicator

   d. lagging indicators

Answer 1

Solutiana 1 option b' is correct. of each segment. The retwon on investment return on Segments are evaluated on the basis of investment too) residual income. Residual income = Net operating income- Average investment & minimum Required rate of return Higher the residual income, better the performance of the segment- Operating cash flows cannot be compared as the level of investment will be different in segments. Traning sessions and material quantity variance will not gire a broader picture. 2 option à es correct Both non financial and financial metrics.