Management Information Flashcards

Which of the following is an example of a non-financial performance indicator?

Answer: Customer satisfaction score

Non-financial indicators measure qualitative or operational aspects of performance, such as customer satisfaction, staff turnover, and on-time delivery, which are not directly captured by financial ratios.

The balanced scorecard approach to performance measurement uses perspectives including:

Answer: Financial, customer, internal processes, and learning & growth

The Kaplan and Norton Balanced Scorecard uses four perspectives: Financial, Customer, Internal Business Processes, and Learning & Growth, to give a comprehensive view of organisational performance.

Absorption costing can result in higher reported profits than marginal costing when:

Answer: Inventory levels increase during the period

When inventory levels rise, absorption costing defers fixed overhead in closing inventory, reducing the period charge and reporting higher profit compared to marginal costing.

A direct cost is one that:

Answer: Can be specifically traced to a cost object

A direct cost is specifically and exclusively identifiable with a particular cost unit, cost centre, or cost object without the need for arbitrary apportionment.

Limiting factor analysis determines the optimal production plan by ranking products on the basis of:

Answer: Highest contribution per unit of limiting factor

When a resource is scarce, products should be ranked by contribution earned per unit of the limiting factor (e.g., contribution per machine hour), to maximise total contribution.

Target costing starts with:

Answer: The market price and deducts the required profit margin to set a target cost

Target costing begins with a competitive market price, deducts the required profit margin, and derives a target cost that the design and production teams must achieve.