Performance Measurement and Control Test
Bank
Course Introduction
Performance Measurement and Control explores the principles, techniques, and systems used to evaluate and guide organizational performance. The course covers the design and implementation of performance measurement systems, including key performance indicators (KPIs), financial and non-financial metrics, and scorecards. Students learn how to align measurement with strategic goals, utilize benchmarking, and apply data analysis to inform decision-making. Emphasis is placed on the integration of control mechanisms, such as budgeting, variance analysis, and performance reviews, to drive accountability and continuous improvement across various business functions.
Recommended Textbook Management Accounting 2nd Edition by Leslie G. Eldenburg
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Page 2
Chapter 1: The Role of Accounting Information in Management Decision Making
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Sample Questions
Q1) Managers often break activities into four groups for value chain analysis. Which of the following is not an activity category among those four groups?
A) Unnecessary activities that cannot be eliminated
B) Necessary activities that could be changed to improve the process
C) Necessary activities that cannot be improved upon at this time
D) Unnecessary activities that can be eliminated quickly
Answer: A
Q2) Higher quality reports are more I Relevant
II Understandable
III Available
A) I and II only
B) I and III only
C) II and III only
D) I, II, and III
Answer: D
Q3) An organisation's value chain often includes suppliers and customers.
A)True
B)False
Answer: True
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Chapter 2: Cost Concepts, Behaviour and Estimation
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Sample Questions
Q1) Simple regression analysis produces an equation of the form : Y= + X +
A)True
B)False
Answer: True
Q2) Simple regression minimises the distance from each data point to
A) A trend line
B) The y-intercept
C) The error term
D) The x-axis
Answer: A
Q3) In most accounting information systems, costs are often recorded and coded so they can be summarised based on different
A) Cost drivers
B) Cost objects
C) Volumes of activity
D) Independent variables
Answer: B
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Chapter 3: A Costing Framework and Cost Allocation
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Sample Questions
Q1) If the cost object is the payroll department in a large manufacturing firm which of these would be a direct cost?
A) The raw materials cost of the products produced
B) A share of the building space occupied based on percentage of floor space used
C) the payroll department manager's yearly bonus payment
D) The salaries of the shop floor employees that are paid by the payroll department staff
Answer: C
Q2) Which of these statements concerning the determination of the full cost of a cost object is not true?
A) direct costs are traced via source documentation
B) full cost includes only manufacturing costs
C) indirect costs are allocated via the use of a cost driver
D) none of the statements is untrue
Answer: B
Q3) Indirect costs are traced and direct costs are allocated.
A)True
B)False
Answer: False
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5
Chapter 4: Cost-Volume-Profit Cvp Analysis
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Sample Questions
Q1) At the breakeven point
A) Sales will be equal to variable costs plus target profit
B) Sales will be equal to variable costs plus fixed costs
C) Sales will be equal to fixed costs plus target profit
D) Fixed costs will be equal to variable costs
Q2) Which of the following is an uncertainty faced by managers in CVP analysis? I
Unexpected changes in costs
II How quickly demand for new products will change
III The amount of budgeted advertising costs
A) III only
B) I and II only
C) I and III only
D) I, II, and III
Q3) Nelson Co. incurs $568,000 in fixed costs while producing three products with the following characteristics: What is the breakeven point in units?
A) 400
B) 240
C) 299
D) 800
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Page 6
Chapter 5: Job Costing Systems
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Sample Questions
Q1) The statement concerning job costing that is untrue is:
A) Under normal costing overhead is allocated to jobs using the estimated overhead allocation rate
B) Under normal costing overhead is allocated to jobs using the estimated volume of usage of the allocation base
C) Actual job costs will almost certainly be different from estimated job costs
D) Managers monitor operations by comparing actual job costs to the original estimate
Q2) In a job costing system the cost object is a job.
A)True
B)False
Q3) The actual allocation rate under a job costing system is; actual overhead cost divided by actual quantity of allocation base.
A)True B)False
Q4) Under a job costing system rework costs are often not tracked. A)True
B)False
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Chapter 6: Process Costing Systems
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Sample Questions
Q1) Hendrix Ltd employs a process costing system. Direct materials are added at the beginning of the process. Here is information about July's activities: Using the FIFO method, the number of equivalent units of conversion costs was
A) 14,400
B) 14,550
C) 14,850
D) 14,700
Q2) Equivalent whole units of production
A) Are the number of whole units produced in a batch?
B) Include the number of units started and completed during the period
C) Compares the number of units that should have been completed with that actually produced
D) Consists of all units completed this period
Q3) A costing system that determines an average cost for all units of product in a particular time period is a
A) Job costing system
B) Batch costing system
C) Process costing system
D) Direct costing system
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Page 8
Chapter 7: Absorption, Variable and Throughput Costing
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Sample Questions
Q1) General Ltd. budgeted fixed overhead costs of $25,000 per quarter and 1,000 units per quarter in its normal absorption costing system. Any volume variance is carried forward and closed at year-end. The company experienced the following activity: The volume variance in quarter 1 was
A) $2,500 Unfavorable
B) $10,000 Unfavorable
C) $7,500 Favorable
D) $5,000 Favorable
Q2) Theoretical capacity and practical capacity are demand-based capacity measurements.
A)True
B)False
Q3) During its first year of operations, Kima Ltd. experienced the following: If Kima calculates operating profit under the variable costing method as opposed to the absorption costing method, operating profit will be
A) $45,000 lower
B) $270,000 lower
C) $315,000 higher
D) $270,000 higher
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Chapter 8: Activity Analysis: Costing and Management
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Sample Questions
Q1) In general, the risk of measurement error in an ABC system increases when A) Costs are traced rather than allocated
B) Managers are uncertain about the relationship between costs and cost pools
C) The number of cost pools decreases
D) A company uses a team approach to systems design
Q2) Accountants, on their own, normally can determine cost drivers for all cost pools without consulting other employees in the organisation.
A)True
B)False
Q3) Administrative salaries are an example of an organisation-sustaining cost in an ABC system.
A)True
B)False
Q4) The salary of the manager of a plant producing a number of products, within a multinational organisation is
A) an organisational-sustaining cost
B) a facility-sustaining cost
C) a customer-sustaining cost
D) a product-sustaining cost
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Chapter 9: Relevant Costs for Decision Making
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Sample Questions
Q1) Mr. Bigletter is employed at an annual salary of $25,000. He plans to start his own business and estimates that he can gross $30,000 annually. If he chooses to open the new business, his foregone salary is a (an)
A) Irrelevant cost
B) Sunk cost
C) Opportunity cost
D) Incremental cost
Q2) When resources are constrained, managers are most likely to use which of the following methods to develop decision making information
A) Simple or multiple regression
B) Analysis at the account level
C) Linear programming
D) High-low method
Q3) In the decision to drop a product line, fixed costs are often classified as
A) Avoidable or sunk
B) Sunk or opportunity
C) Product or period
D) Incremental or avoidable
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Chapter 10: Standard Costs, Flexible Budgets and Variance Analysis
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Sample Questions
Q1) Mason Ltd uses a standard costing system. Overhead costs are allocated based on direct labor hours. The standard variable overhead and fixed overhead rates are $1 and $5 per direct labor hour, respectively. Data relevant for the current period include: The direct labor price variance is
A) $30,000 Favorable
B) $30,000 Unfavorable
C) $75,000 Unfavorable
D) $78,000 Unfavorable
Q2) The budget that reflects the level of activity management expects to attain is the
A) Flexible budget
B) Standard budget
C) Master budget
D) Expected budget
Q3) Because managers use estimates in calculating overhead allocation rates, they are likely to experience
A) Fixed overhead production volume variances
B) No fixed or variable overhead variances
C) Direct labor price variances
D) Lower than expected profits
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Chapter 11: Operational Budgets
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Sample Questions
Q1) Which of the following is not required to develop a budgeted income statement?
A) Sales forecast
B) Cash budget
C) Production budget
D) Marketing budget
Q2) Planning Systems, has forecast the following unit sales and production for the next year, by quarter: A finished unit requires one unit of material A and two units of material B. There should be enough material on hand at the end of each quarter to meet 20% of the next quarter's production needs. There are no work-in-process inventories.
What is the ending inventory for material B in quarter 1?
A) 28
B) 32
C) 56
D) 64
Q3) A flexible budget reflects a range of operations.
A)True
B)False
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Chapter 12: Strategy and Control
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Sample Questions
Q1) 'Control' in the text, is commonly used as a short-form term for managerial control and/or managerial control system tools.
A)True
B)False
Q2) Which of these are is not included within the scope of current management accounting?
A) Compliance with international accounting standards
B) Consideration of environmental issues
C) Consideration of intangible assets
D) None of the above, i.e. all are included within the scope of current management accounting
Q3) Management accounting is now seen as a useful vehicle by which to implement economic theory and social and environmental change.
A)True
B)False
Q4) The value-based management (VBM) technique, was proposed by Kaplan and Norton.
A)True B)False
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Chapter 13: Planning and Budgeting for Strategic Success
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Q1) The Beyond Budgeting philosophy means managing without budgets.
A)True
B)False
Q2) The Beyond Budgeting philosophy does not require the preparation of traditional reports such as income statements and balance sheets.
A)True
B)False
Q3) A type of budgeting that is used to develop cost and time budgets for information technology projects is:
A) Extreme programming
B) Flexible programming
C) Extreme activity-based budgeting
D) Rolling programming
Q4) The key to managing successfully without budgets, as proposed by the Beyond Budgeting philosophy, is:
A) radical decentralisation and accountability
B) reward systems based on relative performance evaluation
C) a high level of trust among employees
D) all of the above
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Chapter 14: Capital Budgeting and Strategic Investment
Decisions
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Sample Questions
Q1) Which of the following capital budgeting methods ignores the time value of money?
A) Internal rate of return
B) Net present value
C) Profitability index
D) Payback period
Q2) Green Ltd has invested in a project with a cost of $36,504, annual net cash flows of $12,000, a terminal value of $4,000, and a 5-year useful life. The firm uses a 16% discount rate. Compute the internal rate of return to the nearest tenth of a percent. Ignore income taxes.
A) 19.2%
B) 20.8%
C) 19.8%
D) 18.8%
Q3) If the internal rate of return exceeds the discount rate, the net present value is
A) Zero
B) Less than one
C) Positive
D) Negative
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Chapter 15: The Strategic Management of Costs and Revenues
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Sample Questions
Q1) Target costing is a technique to improve long-term profitability by considering product costs at the design phase.
A)True
B)False
Q2) Low prices are not considered predatory if A) They can be justified by cost differences
B) They are collusive
C) Customers do not complain about them
D) Price elasticity of demand is above 1.00
Q3) WDY currently sells its primary product for $85 per unit, with a profit margin of 30%. Cost of goods sold totals 40% of the product's total cost. WDY's managers are considering implementing a kaizen costing system. If WDY is successful in achieving its kaizen goal, the reduced nonmanufacturing cost (i.e., the cost excluding the product cost) per unit will be
A) $47.60
B) $28.56
C) $19.04
D) $20.40
Q4) Give a complete but concise explanation of the target costing cycle. Correct
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Chapter 16: Strategic Management Control: a Lean Perspective
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Sample Questions
Q1) Which of these is not typically associated with successful implementation of just-in-time (JIT) systems?
A) Finding high quality suppliers
B) Locating suppliers with short transit times
C) Using as many suppliers as possible to minimise the risk of non-delivery
D) Developing management commitment to the JIT process
Q2) Lean accounting embraces full absorption costing.
A)True
B)False
Q3) The philosophy of just-in-time processing results in finished goods being completed just in time to be offered for sale.
A)True
B)False
Q4) The theory of constraints (TOC) involves imposing strict controls and standards on all aspects of the value chain in order to improve efficiency.
A)True
B)False
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Chapter 17: Responsibility Accounting, Performance
Evaluation and Transfer Pricing
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Sample Questions
Q1) In a profit centre, managers' primary goal is to maximise revenues.
A)True
B)False
Q2) Economic value added can be measured so that it reduces most of the problems that arise under residual income.
A)True
B)False
Q3) Dual-rate transfer pricing systems are appropriate when the
A) Market price is unknown
B) Selling department has excess capacity
C) Market price is higher than the variable cost
D) Market price is higher than the full cost
Q4) KNY Pty Ltd reported operating profit of $80,000 and average operating assets of $120,000 in a recent accounting period. Which of the following transactions would definitely increase KNY's return on investment?
A) Increasing product prices
B) Switching suppliers for raw materials
C) Collecting accounts receivable
D) Decreasing research and development expense
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Chapter 18: The Balanced Scorecard and Strategy Maps
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Q1) Which of the following measures would be most likely to be found in the learning and growth perspective of the balanced scorecard?
A) Change in market share
B) Training days per employee
C) Residual income
D) Percent capacity utilisation
Q2) Which of the following are inputs to the development of organisational strategy?
A) Organisational vision and operating plans
B) Operating plans and core competencies
C) Actual operations and operating plans
D) Organisational vision and core competencies
Q3) The basis of a balanced scorecard is continuous strategic analysis from as many perspectives as possible.
A)True
B)False
Q4) Successful organisations communicate their vision, strategies, goals, and objectives to upper-level employees.
A)True
B)False
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Chapter 19: Rewards, Incentives and Risk Management
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Sample Questions
Q1) Managers can reduce agency costs through the use of compensation contracts.
A)True
B)False
Q2) According to the CoCo (criteria of control) guidance on control integrated framework, a catastrophic computer failure would be classed as which category of risk?
A) Strategic risk
B) Financial risk
C) Legal and regulatory risk
D) Operational risk
Q3) Which of these is a not a policy in a banking group that would help reduce company risk?
A) Requiring more scrutiny of less successful traders and less of the more successful
B) Requiring all employees to take regular holidays
C) Ensuring that incentive systems don't encourage excessive risk taking
D) None of the above, i.e. all are policies that would help reduce company risk
Q4) Reward systems at top management level are most commonly fixed payment packages.
A)True
B)False
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Chapter 20: Sustainability Management Accounting
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Q1) In calculating a carbon footprint for an entity which of these is an indirect as opposed to a direct emission?
A) Fuel usage for transporting inputs
B) Onsite waste
C) Emissions generated from purchased electricity
D) All of the above are indirect emissions
Q2) The way that the balanced scorecard should be adapted as a tool for monitoring sustainability which is generally considered to be the most useful approach, is:
A) Integrating environmental and social aspects into the four standard perspectives
B) Adding an additional sustainability perspective
C) Developing a separate, individually derived, sustainability scorecard in conjunction with the existing scorecard
D) There is no opinion as to which is the best option
Q3) Indexes like the Global Reporting Index are not important for management accountants but are only used by financial accountants for external financial reporting.
A)True
B)False
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