Question 1

Assuming you must choose one measure only,which of the following non-financial performance indicators would most likely be chosen to measure employee satisfaction?

Accepted Answer

Percentage of absenteeism is the most likely choice to measure employee satisfaction as it indicates the level of employee engagement and commitment to work. High absenteeism rates may suggest that employees are unsatisfied with their job or work environment. The other options (repeat orders, complaints about service, and idle time) are more relevant to measuring customer satisfaction and operational efficiency.

Question 2

From the following statements about benchmarking,select the incorrect statement.

Accepted Answer

Benchmarking does not necessarily require measuring against another firm in exactly the same type of business. Comparison can be made with any organization which is performing the business process better.

Question 3

What items or perspectives are measured in the balanced scorecard?

Accepted Answer

The answer of What items or perspectives are measured in...

Question 4

Which of the following is the most appropriate lead indicator in relation to 'customer satisfaction rating'?

Accepted Answer

Percentage of on-time delivery can indicate customer satisfaction as timely delivery is often important to customers. Market share, sales growth, and number of customer complaints may be influenced by factors other than customer satisfaction.

Question 5

Which of the following is the most appropriate lag indicator in relation to 'customer satisfaction rating'?

Accepted Answer

The answer of Which of the following is the most...

Question 6

Which of the following non-financial indicators measures product availability?

Accepted Answer

Percentage stock outs measures the amount of time a product is not available for purchase or delivery. Number of overdue deliveries measures late deliveries, downtime/total time measures the amount of time a system is unavailable, and percentage warranty claims measures the amount of faulty products.

Question 7

Benchmarking exercises are most likely to focus on:

Accepted Answer

Benchmarking exercises typically focus on identifying critical success factors for the firm and comparing the firm's performance against those of its peers or competitors in those areas. This allows the firm to identify areas for improvement and develop strategies to enhance its competitiveness. The other options may be relevant to benchmarking exercises, but they are not the primary focus.

Question 8

Assuming you must choose one measure only,which of the following non-financial performance indicators would most likely be chosen to measure quality?

Accepted Answer

The number of repeat orders is a good measure of quality because it reflects the level of customer satisfaction. If customers are satisfied with the quality of the product or service, they are more likely to place repeat orders. This non-financial indicator can also lead to financial benefits such as increased sales and improved customer loyalty. The other options - percentage of absenteeism, machine downtime, and percentage of idle time - are not directly related to quality but rather to efficiency or productivity.

Question 9

Which of the following about a strategic performance measurement system (SPMS)is incorrect?

Accepted Answer

While the development of a strategy map followed by a balanced scorecard is a common approach when implementing a strategic performance measurement system, it is not always required. Some organizations may choose to start with a balanced scorecard or use other frameworks that fit their needs.

Question 10

The internal business process perspective of a balanced scorecard may contain which of the following set of performance measures?

Accepted Answer

The internal business process perspective focuses on measures related to the internal operations of the organization. Sales force efficiency, scrap costs, and percentage of machine downtime are all indicators of how well the internal processes are functioning. Defect costs, employee satisfaction rating, and number of customer complaints are not as directly tied to the internal operations and may fall more under the customer or learning and growth perspectives. The number of incorrect deliveries to customers and production cycle time may be relevant, but profit margin is a financial measure and belongs more to the financial perspective. Therefore, option C is the best choice.

Question 11

Which of the following comments best describes the appropriate application of benchmarking to a medium-sized Australian company with a range of products and services specifically designed for local conditions and demands?

Accepted Answer

Since the company has specific products and services designed for local conditions, it may not be appropriate to benchmark against world best practice or similar organizations. However, benchmarking certain activities and processes with similar businesses in the industry can still be beneficial while accounting for differences in the business environment.

Question 12

Assuming you must choose one measure only,which of the following non-financial performance indicators would most likely be chosen to measure productivity?

Accepted Answer

Units produced per month are a direct measure of productivity as it indicates the output generated by the organization within a specific time frame. The other three options, while important in their own right, do not directly measure productivity. The number of repeat orders may measure customer loyalty, absenteeism may measure employee satisfaction and engagement, and idle time may measure operational inefficiencies.

Question 13

Which of the following statements most correctly completes the following sentence that identifies some of the limitations of traditional management accounting? 'Traditional management accounting focuses on …'

Accepted Answer

Traditional management accounting primarily focuses on financial performance measures, volume-related activity measures, and cost control, rather than non-financial measures or broader strategic considerations.

Question 14

A firm using the balanced scorecard has included among its strategies 'to improve bottom-line profit we need to improve working conditions'.Which of the following statements best describes the evaluation of the firm's success in implementing the strategy?

Accepted Answer

To evaluate the success of the strategy "to improve bottom-line profit we need to improve working conditions" using the balanced scorecard, the firm needs to put in place a number of performance evaluation measures. Even if the results of these measures are favourable, the firm cannot conclude with certainty that the profit resulted from the improvement in working conditions. This is because there could be other factors contributing to the bottom-line profit such as changes in the market or economy. Therefore, it is important to have a holistic view of performance rather than relying on a single measure.

Question 15

Assuming you must choose one measure only,which of the following non-financial performance indicators would most likely be chosen to measure satisfaction with delivery?

Accepted Answer

The number of complaints about service would be the most likely indicator to measure satisfaction with delivery, as it directly relates to customer satisfaction. The other options do not specifically measure customer satisfaction with delivery.

Question 16

Assuming you must choose one measure only,which of the following non-financial performance indicators would most likely be chosen as a measure of the production process?

Accepted Answer

Percentage of idle time is a measure of efficiency in the production process. It indicates the amount of time that equipment or employees are not being utilized, which can lead to increased costs and decreased productivity. The other options are not directly related to the production process and do not provide as clear of a measurement of performance.

Question 17

The management accountant at Kaster Furniture Makers decides to include the following measures on their balanced scorecard (BSC): customer satisfaction,rework costs,on-time delivery,average shopfloor personnel qualification and sales growth in local markets.These measures belong to which BSC perspectives?

Accepted Answer

Sales growth in local markets is a financial measure, rework costs are related to internal processes, on-time delivery and customer satisfaction are customer-focused, and average shopfloor personnel qualification pertains to learning and growth.

Question 18

Which of the following statements is most correct about the selection of performance measures?

Accepted Answer

In today's environment, firms are recognizing the importance of non-financial performance measures in addition to financial measures. This is because non-financial measures provide a more comprehensive view of how an organization is performing and can capture aspects such as customer satisfaction, employee engagement, and innovation which cannot be entirely reflected in financial measures alone. Therefore, it is likely that firms will have an appropriate mix of both financial and non-financial performance measures.

Question 19

Which of the following is the most appropriate lag indicator in relation to 'percentage of products passed final quality inspection'?

Accepted Answer

A lag indicator reflects the outcome of a process. The number of customer complaints is a lag indicator as it shows the result of the quality of products after they have been delivered to customers.

Question 20

Which of the following statements about performance measures is most correct and complete?

Accepted Answer

Financial performance measures are typically lag indicators because they reflect past performance, such as revenue earned or expenses incurred. Non-financial performance measures can be either lead or lag indicators, depending on the specific measure and how it is used. For example, customer satisfaction surveys may be lead indicators if they are used to predict future sales, or lag indicators if they are used to assess past customer experiences.

Quiz 14: Strategic Performance Measurement Systems