Benchmarks Are Used to Evaluate the Performance of an Activity

question 27

Multiple Choice

Benchmarks are used to evaluate the performance of an activity or operation relative to other organizations or other parts of one's own organization. Which of the following is not a guideline for using benchmarks to evaluate performance?

• A) Benchmarks should only be used for nonfinancial measures.
• B) Do not benchmark everything at the best-in-the-business level.
• C) Benchmark only best-in-the-business activities that are important.
• D) Use internal benchmarks for less important activities or operations.

---

Definitions:

Sales Returns

Transactions where customers return previously purchased merchandise to the seller, resulting in a deduction from gross sales to arrive at net sales.

Purchases Returns

Goods returned by a buyer to the seller, often due to defects or dissatisfaction, resulting in a refund or credit.

Purchase Discounts

Discounts a buyer receives for paying suppliers early, which are used to reduce the cost of purchased goods.

Net Purchases

Net purchases are the total amount of purchases minus returns, allowances, and discounts over a specified period, often used in analyzing inventory costs.