Performance Management
Final Exam Questions
Course Introduction
Performance Management explores the strategies, processes, and tools used to evaluate and enhance individual and organizational performance. The course examines key concepts such as goal setting, performance appraisal systems, feedback mechanisms, and the alignment of employee objectives with overall business strategy. Students will learn best practices in designing effective performance management systems, managing underperformance, and fostering a culture of continuous improvement. Case studies and real-world examples provide insights on how to motivate employees, support professional development, and drive organizational success through effective performance management.
Recommended Textbook Managerial Accounting 3rd Edition by Charles
E. Davis
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Page 2
Chapter 1: Accounting As a Tool for Management
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Q1) All other things held equal,the more frequent the controlling activity,the faster an out-of-control process can be corrected.
A)True
B)False
Answer: True
Q2) Which of the following is not a duty of a management accountant under the IMA Statement of Ethical Professional Practice's confidentiality standard?
A)Refrain from engaging in any conduct that would prejudice carrying out duties ethically.
B)Keep information confidential except when disclosure is authorized or legally required.
C)Inform all relevant parties regarding appropriate use of confidential information.Monitor subordinates' activities to ensure compliance.
D)Refrain from using confidential information for unethical or illegal advantage. Answer: A
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Chapter 2: Cost Behavior and Cost Estimation
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Q1) An example of a committed fixed cost is when a company signs a 10-year lease on an office building.
A)True
B)False
Answer: False
Q2) A contribution format income statement presents all costs
A)by behavior rather than by function.
B)by function rather than behavior.
C)by cost classification rather than by behavior.
D)by category rather than behavior.
Answer: A
Q3) As the level of activity increases,the total variable cost
A)increases proportionally.
B)changes inversely.
C)changes conversely.
D)remains the same.
Answer: D
Q4) Assume sales revenue of $50,000,variable costs of $22,000,and fixed costs of $25,000.Prepare a contribution format income statement.
Answer: 11ea84e3_90ac_60cc_abcc_cfb79fe51d69_TB3446_00
Page 4
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Chapter 3: Cost-Volume-Profit Analysis and Pricing
Decisions
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Sample Questions
Q1) As volume changes,which of the following items do not change?
A)Total sales revenue
B)Total variable costs
C)Total fixed costs
D)Total contribution margin
Answer: C
Q2) Evergreen's most popular product sells for $33.00 and has a variable cost of $26.40.On Evergreen's income statement the cost of goods sold per
A)35%; 35%
B)35%; 25%
C)26%; 20%
D)20%; 26%
Answer: B
Q3) Which of the following formulas is used to calculate the breakeven point in
A)Total fixed costs divided by contribution margin per unit.
B)Total fixed costs divided by total contribution margin.
C)Total fixed costs divided by contribution margin ratio.
D)None of these formulas calculates the breakeven point in
Answer: A
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Chapter 4: Product Costs and Job Order Costing
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Q1) For labor to be considered direct,the worker must actually have his or her hands on the product or on the machine as the product is being made.
A)True
B)False
Q2) The predetermined overhead rate is calculated by dividing budgeted total manufacturing overhead by budgeted activity level of application base.
A)True
B)False
Q3) Which of the following types of cost is not related to inventory?
A)Direct material
B)Indirect labor
C)Product costs
D)Period costs
Q4) Which of the following is not classified as a variable product cost?
A)Direct materials
B)Electricity
C)Sales commissions
D)Indirect materials
Q5) Predetermined overhead rates and manufacturing overhead application
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Chapter 5: Planning and Forecasting
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Sample Questions
Q1) Which of the following is not a step in preparing the production budget?
A)Add beginning inventory units to required units to determine the budgeted production.
B)Enter budgeted sales units from the sales budget.
C)Calculate budgeted ending inventory units for the period.
D)All of these answer choices are steps in preparing the production budget.
Q2) In the manufacturing of swim suits,in addition to the price of fabric,the standard materials price also includes A)cost of shipping.
B)volume discounts.
C)taxes.
D)All of these answer choices are correct.
Q3) Williams Company makes and sells laundry duffel bags.Each duffel bag sells for $20 and has a
a.How many units did Williams budget to sell during March?
b.What is Williams' budgeted cash balance at the end of the period before borrowing?
c.How much should Williams budget for borrowing in January? Unit 5-4,
Q4) Berry Products Company manufactures and sells a single product.Each
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Chapter 6: Performance Evaluation: Variance Analysis
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Sample Questions
Q1) Fox Company manufactures decorative fountains used by hotels and restaurants.The company applies fixed overhead based on direct labor hours.Fox Company's fixed overhead spending variance for the year was $6,500 unfavorable.For the current year,the company had budgeted to produce 78,000 fountains.The company's actual fixed overhead for the year was $689,000.Fox produced 75,000 fountains and used 131,250 direct labor hours,which was the standard hours allowed for the number of fountains produced.What was Fox's budgeted fixed overhead rate per direct labor hour for the year if necessary,round your answer to the nearest cent?
A)$5.30/DLH
B)$5.00/DLH
C)$5.05/DLH
D)$5.25/DLH
Q2) The algebraic equation for the direct labor efficiency variance is
A)direct labor efficiency variance = AQ x AP - SP.
B)direct labor efficiency variance = SQ<sub> </sub>x AP - SP.
C)direct labor efficiency variance = SP x AQ - SQ.
D)direct labor efficiency variance = AP x AQ - SQ.
Q3) Variances have very important meanings,even before their causes are identified.
A)True
B)False
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Chapter 7: Activity-Based Costing and Activity Based Management
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Sample Questions
Q1) Turnbull Company produces two products and their overhead consists of setups $20,000; machining $2,220,000; and packing $80,000.Data for the current year follow: Beta Delta
Number of setups 20 20
Machine hours 1,000 4,000
Packing orders 150 350
Number of
A)$256,000 and $478,000
B)$464,000 and $456,000
C)$256,000 and $242,000
D)$464,000 and $478,000
Q2) Which of the following is not a consequence of poor management of an organization's activities?
A)The company may see an increase in costs
B)Employees may experience a decrease in job satisfaction
C)Non-value added activities are generally eliminated
D)The company may see an increase in costs,employees may experience a decrease in job satisfaction,and non-value added activities are generally eliminated
Q3) What is an activity cost pool and how are activity cost pool rates calculated?
Page 9
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Chapter 8: Using Accounting Information to Make Managerial Decisions
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Sample Questions
Q1) According to the theory of constraints,which of the following is not a step required to maximize and improve the performance of a value chain?
A)Identifying the constraint
B)Comparing the constraints with industry averages
C)Deciding how to exploit the constraint
D)Elevating the performance of the constraint
Q2) A characteristic of irrelevant information is that
A)the information is the same among the alternatives.
B)differences will occur in the future.
C)differences among the alternatives must have occurred in the past and must occur in the future.
D)it differs between the alternatives
Q3) Which of the following is not a criterion of relevant information?
A)It differs between the alternatives.
B)Differences among alternatives will occur in the future.
C)Differences among the alternatives must have occurred in the past and must occur in the future.
D)It differs between the alternatives and differences among alternatives will occur in the future.
Page 10
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Chapter 9: Capital Budgeting
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Sample
Questions
Q1) Keltner Enterprises is considering investing in a new packing machine.The new machine will provide annual cash operating inflows of $12,300 for 5 years.The cost of the machine is $42,300 and it can be sold at the end of its 5-year useful life for $6,800.Keltner's required rate of return is 10%.What is the packing machine's payback period?
A)3.44 years
B)2.89 years
C)3.99 years
D)7.69 years
Q2) When the interest from year one is built into the principal balance,the interest is referred to as
A)Differential interest
B)Discounted interest
C)Compound interest
D)None of these answer choices are correct
Q3) The payback period is used most often as a screening tool,by companies that have established a maximum acceptable payback period.
A)True
B)False
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Page 11
Chapter 10: Decentralizing and Performance Evaluation
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Sample Questions
Q1) The packaging department in a large manufacturing company would be classified as a
A)Cost center.
B)Profit center.
C)Investment center.
D)Segment.
Q2) In a responsibility accounting environment,which of the following is not a classification of organizational
A)Cost centers
B)Revenue centers
C)Profit centers
D)Investment centers
Q3) To calculate the weighted-average cost of capital we need to know
A)The relative percentage of capital provided by each source.
B)The required rate of return.
C)Both the relative percentage of capital provided by each source and the required rate of return.
D)Neither the relative percentage of capital provided by each source nor the required rate of return.
Q4) What is a transfer price? List the four ways of determining a transfer price.
Page 12
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Chapter 11: Performance Evaluation Revisited: a Balanced Approach
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Q1) Which of the following does not describe the internal business processes perspective?
A)Focus is on creating products and services that customers desire
B)This perspective is the foundation for improvement in all other areas
C)Focus on delivering products and services in a timely manner
D)Measures assist managers in assessing the efficiency and effectiveness of production processes
Q2) The balanced scorecard includes one or two measures in each of six perspectives. A)True
B)False
Q3) Because the organization's vision and strategy lie at the heart of the balanced scorecard,the first step in developing the scorecard is to clarify the strategic focus.As part of this process,organizations may develop a strategy map.
Required:
a.What is a strategy map?
b.Discuss the process of building a balance scorecard. Unit 11-2,
Q4) Explain the difference between a leading indicator and a lagging indicator and give one example of each relating to your performance in this class.
Page 13
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Chapter 12: Financial Statement Analysis
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Q1) Most companies use a combination of debt and equity to obtain the assets needed to fund their operations.Two leverage ratios are the debt ratio and the debt-to-equity ratio.What do each of these measures,and how are they each calculated?
Q2) Investigating liquidity is important because
A)If a company cannot pay its bills on time,it will have difficulty obtaining resources needed to continue operating.
B)A company needs the ability to take advantage of opportunities as they arise.
C)Both if a company cannot pay its bills on time,it will have difficulty obtaining resources needed to continue operating and a company needs the ability to take advantage of opportunities as they arise.
D)Neither if a company cannot pay its bills on time,it will have difficulty obtaining resources needed to continue operating nor a company needs the ability to take advantage of opport
Q3) In a horizontal analysis balance sheet,the percentage change columns do not add up in the same way as the dollar amounts because each of the percentages was calculated using a different denominator.
A)True
B)False
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Chapter 13: Statement of Cash Flows
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Q1) For the past two years,Monroe Corporation's statement of cash flows has shown net cash used by financing activities.Which of the following choices could explain this result?
A)Collection of accounts receivable balances
B)Purchase of stock in another company
C)Issuance of bonds payable
D)Payment of cash dividends to stockholders
Q2) When preparing the statement of cash flows using the indirect method,gains from financing activities are added to net income to arrive at cash flows from operating activities.
A)True
B)False
Q3) Which of the following items is relevant when deciding whether to prepare the statement of cash flows using the direct method versus the indirect method?
A)Operating activities only
B)Investing activities only
C)Financing activities only
D)Investing and financing activities only
Q4) What is the basic form of the statement of cash flows?
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Chapter 14: Topic Focus: Process Costing
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Q1) Companies that mass-produce similar products or employ a continuous production process typically use which of the following costing systems?
A)Process costing
B)Job order costing
C)Either process or job order costing
D)Neither process nor job order costing
Q2) Which of the following is not a step in calculating the
A)Calculate the equivalent units of production
B)Allocate the equivalent unit costs of production
C)Divide the total equivalent costs by the total units
D)Reconcile the costs of production
Q3) Which of the following types of entities would probably use a process costing system?
A)Oil refiner
B)Construction company
C)Airplane manufacturer
D)CPA firm
Q4) List three goods or services likely to use a process costing system and three that are likely to use a job order costing system.
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Chapter 15: Topic Focus Variable and Absorption Costing
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Q1) The process of classifying all the costs incurred in the production of a product is referred to as absorption costing.
A)True
B)False
Q2) The matching principle states that expenses should be matched with the revenues they generate.
A)True
B)False
Q3) Under variable costing,subtract variable costs from sales to arrive at
A)gross profit.
B)gross margin.
C)contribution margin.
D)net income.
Q4) Describe the format for a variable costing income statement.
Q5) Monroe Corporation produced 20,000
a.Under the absorption costing method,what is the average unit product cost?
b.Under the variable costing method,what is the average unit product cost?
Q6) The following table shows Jackson Company's inventory balances,in
Q7) What managerial behavior does variable costing render ineffective?
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Chapter 16: Topic Focus Standard Costing Systems
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Q1) What is the difference between a normal costing system and a standard costing system?
Q2) When using a normal costing system
A)Direct material and direct labor are recorded at standard cost and overhead is applied to products using a predetermined overhead rate.
B)Direct material and direct labor are recorded at actual cost and overhead is treated as a period cost.
C)Direct material and direct labor are recorded at actual cost and overhead is applied to products using a predetermined overhead rate.
D)Direct material and direct labor are recorded at standard cost and overhead is treated as a period cost.
Q3) When using a standard costing system,the direct materials price variance is recorded at the time direct materials are transferred to the production floor.
A)True
B)False
Q4) Haven Industries transferred 5,500
Q5) Haven Industries purchased 1,000
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Chapter 17: Topic Focus Customer Profitability
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Q1) It may appear that all unprofitable customers should be dropped.However,before any action is taken,managers should evaluate all the implications of the action for the affected customer,for other customers,and for the company.
Required:
a.Explain three implications for the affected customer.
b.Explain three implications for other customers.
c.Explain three implications for the company.
Q2) Two calculations can be made to measure customer profitability: customer net profit and customer profit margin.
Required:
a.What is the formula for customer net profit?
b.What is the formula for customer profit margin?
Q3) When a manager drops an unprofitable customer,a company's total sales revenue and overall company profit will decrease.
A)True
B)False
Q4) Customer net profit divides customer net profit by customer revenues.
A)True
B)False
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