Question 1

Which of the following statements are problems associated with conventional performance measures?

1. They may encourage short-term financial performance.

2. They describe results not causes.

3. They do not emphasize areas that need development for long-term goal achievement.

Accepted Answer

1, 2 and 3.

Answer

2 and 3

Answer

1 and 3

Answer

1 and 2

Question 2

Which of the following are likely to be the result of concentration on short-term financial measures?

1. Reduced expenditure on product development

2. Increased spending on new technology

3. Increased employee training

4.Reduced marketing effort

Accepted Answer

1 and 4

Answer

1 and 3

Answer

1&#44; 2&#44; 4

Answer

3 and 4

Question 3

The first step to successful balanced scorecard implementation is clarifying the

Accepted Answer

organization's vision and strategy

Answer

objectives of all four balanced scorecard measurement perspectives

Answer

elements that pertain to value-added aspects of the business

Answer

owner's expectations about return on investment

Question 4

Which of the following statements best relates to the balanced scorecard's financial perspective?

Accepted Answer

How can we increase shareholder value?

Answer

How will we achieve continuous improvements?

Answer

How can we maximize customer satisfaction?

Answer

How can we maximize profits for the current year?

Question 5

Which of the following questions best relates to the balanced scorecard's internal business processes perspective?

Accepted Answer

How can our processes be executed in such a way as to increase value to customers?

Answer

How do we streamline operations to lower costs to increase profits?

Answer

How do we motivate employees so that they can become more productive?

Answer

How can we increase our market share?

Question 6

Which of the following statements best relates to the balanced scorecard's learning and growth perspective?

Accepted Answer

How will we empower our employees?

Answer

How can we obtain greater profits?

Answer

What processes will increase value to customers?

Answer

How do we lower costs?

Question 7

A company's balanced scorecard measures yield, order-delivery time, cycle time, and errors as part of which of the following perspectives?

Accepted Answer

Internal-business-process

Answer

Innovation and learning

Answer

Customer

Answer

Financial

Question 8

Which of the following statements does NOT refer to a problem with the Balanced scorecard?

Accepted Answer

Balanced scorecard should be formed exclusively by top management

Answer

Conflicting measures such as quality and costs, make it difficult to make decisions

Answer

Senior management should be committed to it

Answer

Staff may not have the expertise to analyse strategic operational, financial and nonfinancial information

Answer

Interpretation is more complicated

Question 9

Which of the following statements about the Balanced scorecard is FALSE?

Accepted Answer

The scorecard will never generate too many measures

Answer

The scorecard emphases processes not departments

Answer

Can influence behavior among managers to conform to the requirements of the strategy

Answer

Deciding what to measure can be difficult

Question 10

Which of the following statement about the performance pyramid is INCORRECT?

Accepted Answer

The performance pyramid has 12 dimensions of performance

Answer

The pyramid firstly focuses on the development of a coherent set of objectives from the overall corporate vision

Answer

The performance measurement system is then built up to reflect the objectives and so ensure that each of the performance measures at the operational level feed the tactical level requirements and measures at this level drive the strategic objectives of the organisation

Answer

The operational objectives of quality, delivery, cycle time and waste are then derived from the tactical drivers

Answer

The strategic level concerns relate to market and financial factors and these are fed by the tactical level drivers of customer satisfaction, flexibility and productivity

Answer

The pyramid views a range of objectives from the strategic to the operational, linking these through the themes of external effectiveness and internal efficiency

Question 11

Which of the following statements about the performance pyramid is FALSE?

Accepted Answer

When using the pyramid the objectives are developed from the bottom up and the measures are derived from the top down

Answer

The pyramid shape is to emphasise that the measures from the operational up to the strategic levels should support the corporate vision

Answer

The aim is to produce a set of performance measures which cover the outputs and drivers of the outputs of the organisation

Answer

The performance pyramid is based on the belief that each level of an organisation has different concerns but they must support each other in order to achieve the overall objective of the organisation

Question 12

Which of the following statements is INCORRECT?

Accepted Answer

ABM establishes relationships between overhead costs and activities so that overhead costs can be more precisely allocated to products, services, or customer segments

Answer

ABM can be split into operational ABM and strategic ABM

Answer

Activity-based management focuses on managing activities to reduce costs and improve customer value

Answer

Activity-based management (ABM) is a method of identifying and evaluating activities that a business performs using activity-based costing

Question 13

Which of the following statements about strategic ABM is INCORRECT?

Accepted Answer

With strategic ABM those activities which add value to the product can be identified and improved.

Answer

Strategic ABM can also be used for customer profitability analysis, identifying which customers are the most profitable and focusing on them more

Answer

Strategic ABM is about ‘doing the right things’

Answer

Strategic ABM uses ABC information to decide which products to develop and which activities to use

Question 14

Which of the following statements about operational ABM is INCORRECT?

Accepted Answer

Operational ABM is used to determine what products to sell

Answer

Using operational ABM activities that don’t add value are the ones that need to be reduced to cut costs without reducing product value

Answer

With operational ABM those activities which add value to the product can be identified and improved

Answer

Operational ABM is about ‘doing things right’, using ABC information to improve efficiency

Question 15

Which of the following is an example of operational ABM?

Accepted Answer

It can guide adjustments in price to ensure that an acceptable contribution margin is achieved

Answer

The philosophy is that value is measured by its discounted future cash flows

Answer

It can help managers decide which product types to develop or discontinue

Question 16

Which of the following is NOT associated with the risks of ABM?

Accepted Answer

It highlights the need to focus on quality and continuous improvement

Answer

A customer that represents a loss based on committed activities, but that opens up leads in a new market, may be identified as a low value customer by a strategic ABM process

Answer

A particularly pleasant workplace can help attract and retain the best staff, but may not be identified as adding value in operational ABM

Answer

The implicit value of an activity i.e not necessarily reflected in a financial value added to any product, may be ignored

Question 17

Which statement of the following statements about VBM is INCORRECT?

Accepted Answer

VBM has been accused of too much focus on collecting and measuring data without incorporating the company’s strategic or operating issues. However, this is not true.

Answer

VBM identifies value not profit, accounting distortions are removed

Answer

VBM begins from the view that the value of a company is measured by its discounted future cash flows. The idea being that value is only created when companies generate returns which beat their cost of that capital

Answer

VBM requires cultural change and is forward looking

Answer

VBM focuses the management of the company on those areas which create value. A key to this process is the identification of the drivers of value and then a concentration of effort at all levels (strategic, tactical and operational) on these drivers in order to increase the value of the firm

Question 18

Place the VBM implementation steps given below in the correct order:

1. Performance metrics and reward systems measurement and incentive systems are created compatible with the targets.

2. A strategy is developed to maximise value.

3. Key value drivers must be identified and then performance targets (for both the short and long term) are defined for those value drivers.

4. A plan is developed to achieve the targets.

Accepted Answer

2&#44;3&#44;4&#44;1

Answer

3,2,4,1

Answer

4,1,3,2

Answer

2,4,3,1

Answer

1,2,3,4

Question 19

Which of the statements below is NOT a concern/problem associated with VBM?

Accepted Answer

VBM reduces the tendency to make decisions which have positive short-term impact but may be detrimental in the long term.

Answer

VBM activity may become an exercise in valuing everything but changing nothing

Answer

The measurement of the key value drivers in VBM can often involve non-financial indicators and these can represent a significant change for accounting-based management information systems.

Question 20

Modern performance measurements systems would include all the following EXCEPT?

Accepted Answer

they should be set in away that doesn't respond to changes in the business environment

Answer

they should cover both the short-term and long-term performance of the organization

Answer

they should measure the efficiency of resource utilisation within the organisation

Answer

they should comprise a mix of financial and non-financial (quantitative and qualitative) methods

Answer

they should measure the effectiveness of the business and its processes in meeting the organisation’s objectives in order to link to the overall strategy

Answer

they should contain internal and external measures of performance

Question 21

Which of the options below is NOT one of the ways ABM could be used

Accepted Answer

ABM links the overall strategic view of management with day-to-day operations

Answer

Products to produce or sell

Answer

Design improvements

Answer

Performance measurement

Answer

Product pricing

Answer

Analysis of the activities which drive the costs

Related quizzes

Related quizzes