Chapter 5 Performance & Budget Flashcards
Which of the following is a disadvantage of involving staff in the budgeting process?
- Staff members contribution maybe based on their local knowledge
- Staff will not be motivated by helping to set targets that they can control
- Staff suggestions maybe ignored and staff may be cone demotivated as a result
- staff will include their specific resource requirement
-Staff suggestions maybe ignored and staff may be cone demotivated as a result
In what circumstances might staff participation in budgets be effective?
- decentralised organisation
- during periods of economic difficulty
- in small organisations
- in organisations that are just starting up
- decentralised organisation
What is the name for the difference between the minimum necessary costs and the costs built into the budget ?
- budget surplus
- budgetary slack
- budgetary variance
- budgetary incentive
Budgetary slack
Which of the following best describes a top down budget ?
- a budget where proposed expenditure is scaled down until it matches available resources
- a budget that is comparable with the operational objectives of local management
- a budget where local budget holders do not participate in the budget setting process
- a budget where central costs are being budgeted prior to targets being set for local costs
- a budget where local budget holders do not participate in the budget setting process
Which if the following are advantages of a bottom up process of budgeting ? Select all that apply
- it reduces the amount of budgetary slack
- it increases the co-ordination between the plans of different divisions
- budgets are based on input from employees who are familiar with day to day activities
- it enhances the motivation of managers who are familiar with day to day activities
- budgets are based on input from employees who are familiar with day to day activities
- it enhances the motivation of managers who are familiar with day to day activities
Which of the following is not an advantage of using ratios to assess performance ?
They can be used to compare performance over time
They can be used to relate different items in the accounts to each other
They can be used as performance targets
They can be used to compare levels of gross profit
They can be used to compare levels of gross profit
Which of the following is an advantage of using annual profits as a performance indicator ?
- it cannot be easily manipulated
- it is easy to understand
- it motivates directors to focus on the long term
- it’s gives a good indication of market share
It is easily understood
Which are the following are non financial measures? Select all that apply
- number of new products introduced
- increase in market share
- fall in inventory levels
- customer retention rate
Number of new products introduced
Customer retention rate
Which of the following performance measures would be helpful for a service industry company?
- Net profit margin
- number of returning customers
- staff turnover
- comparison of actual performance vs standard production time
- Net profit margin
- staff turnover
Her age Limited is looking to introduce the balance scorecard and is considering measures to use to assess the customer perspective. Which of the following is not suitable for this perspective:
- Number of items returned
- Time taken by staff dealing with queries
- Number of items delivered on time
- Rejection rate of quality control procedures in the companies manufacturing operations
- Rejection rate of quality control procedures in the companies manufacturing operations
Number of returned items
Which of the following is the best description of “management by exemption” ?
- Using management reports to highlight exceptionally good performance, so that favourable results can be built upon to improve future outcomes
- sending management reports only to those managers who are able to act on the information contained within reports
- focusing management reports on areas which required attention and ignoring those which appear to be performing within acceptable limits
- Appointing and promoting only exceptional managers to area of responsibility within the organisation
focusing management reports on areas which required attention and ignoring those which appear to be performing within acceptable limits
Which of the following are advantages of ROI as a performance measure ?
- it’s easy to understand
- it encourages managers to make decisions in the best interest of the company
- it encourages investment in new or replacement assets
- it ignores the impact of costs that have been allocated by head office
It’s easy to understand
It ignores the impact of costs that have been allocated by head office
which of the following methods can be used to assess resource utilisation?
- idle time
- expenditure on resources
- productivity
- customer satisfaction
idle time
productivity
Which of he following would be least useful as a measure of the flexibility of a service organisation?
- Speed of delivery of service
- Time taken by staff to respond to requirements of customers
- Level of customer service at busy times
- Rate of utilisation of staff
Rate of utilisation of staff
which of the following could be used to measure the effectiveness of a marketing initiative?
- Number of customer visits
- Feedback from customer surveys
- number of complaints by customers
- Customer waiting times
Number of customer visits
Feedback from customers
