Certified Management Accountant Performance Measurement 5

Question 1

The fixed overhead volume variance arises because:

Accepted Answer

Actual production volume differs from budgeted volume

Answer

The volume variance measures the difference between applied fixed overhead (based on actual output) and budgeted fixed overhead.

Question 2

Tier-one suppliers of a manufacturer want to know the company's financial health. Which non-financial metric would be most relevant to supply chain performance?

Accepted Answer

Perfect order fulfillment rate

Answer

Perfect order fulfillment rate measures delivery accuracy, timing, and completeness, directly reflecting supply chain effectiveness.

Question 3

A profit center manager is best evaluated using:

Accepted Answer

Controllable margin (segment's revenues minus controllable costs)

Answer

Profit center managers should be evaluated on revenues and costs they can directly control, not allocated corporate overhead.

Question 4

Under the theory of constraints, which of the following actions best improves throughput?

Accepted Answer

Increase capacity or improve efficiency at the bottleneck

Answer

Only improving the bottleneck's capacity or efficiency increases total system throughput; gains at non-bottlenecks merely build inventory.

Question 5

When comparing two investment centers with identical ROI, an analyst should consider residual income because:

Accepted Answer

Residual income accounts for differences in the absolute size of invested capital

Answer

Two centers with identical ROI can generate very different dollar amounts of value depending on the size of their capital base.

Certified Management Accountant Practice Test

Certified Management Accountant Practice Test

Certified Management Accountant Performance Measurement 5