Performance Management MCQ Quiz in मराठी - Objective Question with Answer for Performance Management - मोफत PDF डाउनलोड करा
Last updated on Apr 10, 2025
Latest Performance Management MCQ Objective Questions
Top Performance Management MCQ Objective Questions
Performance Management Question 1:
NG is deciding which of four potential venues should be used to stage an entertainment event. Demand for the event may be low, medium or high depending on weather conditions on the day. The management accountant has estimated the contribution that would be earned for each of the possible outcomes and has produced the following regret matrix:
| Regret Matrix | ||||
| Venue | Ayefield | Beefield | Ceefield | Deefield |
| Demand | ||||
| Low | $0 | $200,000 | $300,000 | $450,000 |
| Medium | $330,000 | $110,000 | $0 | $150,000 |
| High | $810,000 | $590,000 | $480,000 | $0 |
If the company applies the minimax regret criterion, which venue would be chosen?
Answer (Detailed Solution Below)
Performance Management Question 1 Detailed Solution
The correct option is option 4.
WORKING
Maximum regret if Ayefield venue is chosen is $ 810,000
Maximum regret if Beefield venue is chosen is $ 590,000
Maximum regret if Ceefield venue is chosen is $ 480,000
Maximum regret if Deefield venue is chosen is $ 450,000
Therefore if NG wants to minimise the maximum regret it should stage the entertainment event at the Deefield venue.
Performance Management Question 2:
The following statements have been made about expected values:
- Expected value is of limited use for decisions regarding outcomes which will be repeated often
- Using expected value in decision-making can lead to the worst possible outcome being ignored
- The reliability of expected value calculations is heavily influenced by the accuracy of the probabilities assigned to outcomes
Which of the statements are correct?
Answer (Detailed Solution Below)
Performance Management Question 2 Detailed Solution
The correct option is option 4.
Additional information:
Expected value is most useful for decisions that are repeated often since the expected value is an average that would be expected if a decision were to be repeated many times, so statement (1) is incorrect.
Performance Management Question 3:
The committee of a new golf club is setting the annual membership fee. The number of members depends on the membership fee charged and economic conditions. The forecast annual cash inflows from membership fees are shown below:
| Membership fee | ||||
| $600 | $800 | $900 | $1,000 | |
| Economic conditions: | ||||
| Low | 360 | 400 | 360 | 320 |
| Average | 480 | 440 | 405 | 380 |
| High | 540 | 480 | 495 | 420 |
Applying the minimax regret criterion, what fee would be set by the committee?
Answer (Detailed Solution Below)
Performance Management Question 3 Detailed Solution
The correct option is option 1.
Additional information:
Table of regrets (opportunity cost):
| Membership fee | ||||
| $600 | $800 | $900 | $1,000 | |
| Economic conditions: | ||||
| Low | 40 | 0 | 40 | 80 |
| Average | 0 | 40 | 75 | 100 |
| High | 0 | 60 | 45 | 120 |
| Maximum regret | 40 | 60 | 75 | 120 |
Therefore, a price of $600 will lead to the lowest maximum regret.
Performance Management Question 4:
The cost card for Product Tom is as follows:
| $ | |
| Selling price | 150 |
| Variable costs | (70) |
| Contribution per unit | 80 |
| Fixed costs | (50) |
| Profit per unit | 30 |
Expected demand for Product Tom is 10,000 units.
What is the sensitivity of Product Tom, to the nearest 0.1%, to changes in demand?
Answer (Detailed Solution Below)
Performance Management Question 4 Detailed Solution
The correct option is option 1.
Additional information:
At breakeven demand, contribution of Product Tom = fixed costs
Assume breakeven demand = x
80x = (10,000 × $50)
x = 6,250
Sensitivity = ((10,000 − 6,250)/10,000) × 100% = 37.5%
Performance Management Question 5:
Greenwood Movies Co is considering whether to build a small or large cinema. The available market data suggests that there is a 30% risk that demand will be low.
| Demand | ||
| Low | High | |
| $ | $ | |
| Small | 100,000 | 400,000 |
| Large | (300,000) | 600,000 |
Greenwood Movies Co has calculated that it would be best to build the large cinema, on the basis that it has the higher expected value. However, Greenwood Movies Co could commission a survey which would accurately predict the level of demand.
What is the maximum that Greenwood Movies Co should pay for the survey?
Answer (Detailed Solution Below)
Performance Management Question 5 Detailed Solution
The correct option is option 2.
Additional information:
Expected value without the survey
= ($600,000 × 0.7) + ( −$300,000 × 0.3) = $330,000
Expected value with the survey
= ($600,000 × 0.7) + ($100,000 × 0.3) = $450,000
Maximum value of the survey = $450,000 − $330,000 = $120,000
Performance Management Question 6:
The following statements have been made about the use of expected values in decision making:
- Expected values ignore the risk associated with decisions.
- Expected values are most useful for recurring rather than one-off events.
Which of the above statements is/are true?
Answer (Detailed Solution Below)
Performance Management Question 6 Detailed Solution
The correct option is option 4.
Additional information:
Both statements are correct. Using expected values implies choosing the project with the highest expected value regardless of the risk associated with each one. Expected values are more appropriate for events that are repeated, since the expected value is an average of the outcomes.
Performance Management Question 7:
Product L, M, and S are produced by Division A, as outputs of a process at the split-off point. They may be sold externally, or transferred to Division B for further processing.
In November, Division A’s output was as follows:
| Product | Kg |
| L | 1,200 |
| M | 1,400 |
| S | 1,800 |
The market selling prices per kg for the products, both at split-off point and after further processing, are as follows:
| at split-off point | $ | after further processing | $ |
| L | 5.60 | LX | 6.70 |
| M | 6.50 | MX | 7.90 |
| S | 6.10 | SX | 6.80 |
The specific costs for each of the individual further processes are:
Variable cost of $0.50 per kg of LX
Variable cost of $0.70 per kg of MX
Variable cost of $0.80 per kg of SX
Which of the products should be further processed in Division B in order to optimise the profit for the company?
Answer (Detailed Solution Below)
Performance Management Question 7 Detailed Solution
The correct option is option 2.
Additional information:
Performance Management Question 8:
Which of the following best describes the term relevant cash flow?
Answer (Detailed Solution Below)
Performance Management Question 8 Detailed Solution
The correct option is option 2.
Additional information:
Benefit obtained from best alternative foregone describes opportunity costs, which are a type of relevant cost.
If the cash flow is unavoidable, it is not relevant.
All cash flows from a project may include non-incremental and unavoidable cash flows which are not relevant.
Performance Management Question 9:
Albrecht has received a request to make a special version of one of its products. This special version will use 2,000 units of material X.
Albrecht no longer uses material X, but there are 2,000 units left in inventory purchased at $4.00 per unit. The current purchase price is $4.75 per unit. Albrecht believes it could sell material X for $3.00 per unit. However, material X is similar to material Y that is currently in use by Albrecht and can be purchased for $6.50 per unit. It could use material X in place of material Y − however, it would cost $2.75 per unit to modify material X so that it could be used in place of material Y.
What is the relevant cost per unit of material X for the manufacture of the special version
Answer (Detailed Solution Below)
Performance Management Question 9 Detailed Solution
The correct option is option 2.
Tutorial note: The relevant cost of material X is the opportunity cost as it is not used regularly.
Additional information:
Option 1 – sell it for $3.00 per unit.
Option 2 – use as substitute for material Y. Relevant cost is the saving per kg unit of material Y ($6.5) less the cost of modifying each unit of material X so it can be used in place of Y ($2.75) = $3.75.
Option 2 has the higher benefit, so this is what Albrecht would do with the 2,000 units of material X if they are not used on the contract. This is therefore the opportunity cost
Performance Management Question 10:
Loxwood Co is considering whether to sell its product, the tom, or process it further to make a different product, the tig. It has already incurred processing costs of $3 per unit in relation to the tom. If it sells the tom, it will sell 60,000 units at $8 per unit. Each unit of the tig requires 3 units of the tom and Loxwood Co would expect to sell 20,000 units of the tig. Further variable costs associated with the tig would be $6 per unit and further fixed costs would be $150,000. The selling price of the tig would be $40 per unit
What would be the gain or loss of using the available units of tom to manufacture the tig?
Answer (Detailed Solution Below)
Performance Management Question 10 Detailed Solution
The correct option is option 3.
Additional information:
Difference = Sales revenue from selling the tig – Additional costs of manufacturing the tig – Sales revenue foregone from selling the tom
Difference = (20,000 × $40) − (20,000 × $6) − $150,000 − (60,000 × $8) = $50,000, a positive figure, therefore a profit.
The processing costs of $3 per unit have already been incurred, so should be ignored.