ACCA SP Advanced Performance Management (APM) 2

Question 1

In activity-based costing (ABC), which of the following is classified as a 'facility-sustaining' activity?

Accepted Answer

Factory rent and property insurance

Answer

Machine setup for a production batch

Answer

Quality inspection of finished goods

Answer

Shipping products to customers

Question 2

A multinational company uses residual income (RI) to evaluate overseas divisions. Division X operates in a high-risk emerging market. To fairly evaluate Division X, the company should:

Accepted Answer

Apply a higher cost of capital charge to Division X to reflect the higher risk

Answer

Use the same cost of capital for all divisions to ensure consistency

Answer

Exclude Division X from the performance evaluation system

Answer

Use ROI instead of RI for overseas divisions

Question 3

A company implements a balanced scorecard but finds that improvement in customer satisfaction scores has NOT led to improved financial performance. Which is the MOST likely explanation?

Accepted Answer

The assumed cause-and-effect relationship between customer and financial perspectives may not hold in this context

Answer

The balanced scorecard is an inappropriate framework for the company

Answer

Customer satisfaction is not a valid performance measure

Answer

The financial perspective should be removed from the scorecard

Question 4

A company uses target costing for a new product. The target selling price is £50, the required profit margin is 20%, and the estimated current cost is £45. What is the cost gap that must be closed?

Accepted Answer

£5

Answer

£10

Answer

£3

Answer

£2

Question 5

Which of the following is a key difference between benchmarking against competitors and benchmarking against best-in-class organisations in other industries?

Accepted Answer

Best-in-class benchmarking can identify breakthrough improvements beyond industry norms

Answer

Competitor benchmarking always produces better results

Answer

Competitor benchmarking data is always freely available

Answer

Best-in-class benchmarking is cheaper to implement

Question 6

A non-profit organisation is considering implementing a performance management system. Which framework would be MOST appropriate given that financial performance is not the primary objective?

Accepted Answer

Balanced scorecard with the mission/stakeholder perspective at the top rather than the financial perspective

Answer

DuPont analysis focusing on return on equity

Answer

Standard financial ratio analysis

Answer

Economic Value Added (EVA)