ACCA Applied Knowledge (BT, MA, FA) · Management Accounting (MA)

Performance measurement

20 practice questions, each with the answer and an explanation.

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Random questions from this topic, one at a time. You see the answer and the explanation straight after each one.

All 20 questions

  1. A division has operating profit of £240,000 and capital employed of £1,200,000. The group's cost of capital is 15%. What are the division's return on investment (ROI) and residual income (RI)?
  2. A division earns an ROI of 22% and the group requires 15%. A new project would earn 18% on its investment. Which statement is correct?
  3. Why is residual income often preferred to ROI for assessing the performance of divisional managers?
  4. Which of the four perspectives of the balanced scorecard is concerned with how well the organisation innovates and develops its people and systems for the future?
  5. In value for money (VFM) terms, which of the three Es refers to achieving the intended results and objectives?
  6. A hospital reduces the cost per patient by 10% but waiting times increase and patient satisfaction falls. Which of the three Es has it improved, and which has it harmed?
  7. A company compares its processes with those of the best performer in a different industry. What type of benchmarking is this?
  8. Which of the following is a non-financial performance indicator for a delivery company?
  9. Operating profit is £84,000 on sales of £600,000, and sales are £600,000 on capital employed of £400,000. What are the net profit margin and asset turnover (sales ÷ capital employed)?
  10. A company wants to reduce the cost of a product without lowering its function or quality, by examining each component and its purpose. What technique is this?
  11. Which statement correctly distinguishes cost control from cost reduction?
  12. Which of the following is the best example of an investment centre?
  13. A company reports the following in a performance dashboard: sales growth, customer complaints, staff turnover and defect rate. What is the main purpose of including non-financial measures with financi…
  14. Which of the following is a characteristic of a good management report?
  15. The standard cost card for a unit is: materials 3 kg at £4 = £12; labour 2 hours at £9 = £18; variable overhead 2 hours at £3 = £6; fixed overhead (absorbed) £12. The standard selling price is £50. Wh…
  16. Standard material for a product is 5 litres at £2.50 per litre. In a period 800 units were made, using 4,200 litres that cost £10,080. What is the material usage variance?
  17. Total labour costs were £39,060 against a standard labour cost for the output of £36,000. The rate variance was £1,260 adverse, the efficiency variance £450 adverse and the idle time variance £1,350 a…
  18. Which factor would most strongly justify investigating a variance?
  19. Which of the following would a company use to assess the quality of management of a cost centre?
  20. A division has operating profit of £150,000 on capital employed of £1,000,000, and the group's cost of capital is 12%. It is offered a project needing £200,000 and earning £28,000 per year. Which stat…

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